So, does size really matter?

The recently released Australian Infrastructure Plan once again raises the central issue of population policy as one that needs to return to the cabinet table and to the dining tables of our nation’s homes. Demography is destiny in economic development, and while it is never simply a question of ‘more is better’ it is always a question of understanding the nature of your population and how plans to increase it - or to deal with falling populations (if that’s your plan) - need to be managed. Leaving this central question of economic management unattended is not however a solution.

In this respect the Australian Infrastructure Plan is dealing with a catch-up of our infrastructure needs, given the recent growth of our population - which reached the 24 million milestone some 17 years earlier than forecasts (of only a couple of decades ago) predicted. What we need is to not only catch up with our infrastructure needs but begin matching future growth ambitions with an infrastructure plan to ensure we grow both in tandem. This is how quality of life is preserved along with economic growth.

Having said that, Australian cities are not fairing too badly. There are four Australian cities that rank in the world’s top ten most livable on the measures of some ranking organisations. Given we only have four genuinely large cities, that’s an achievement in itself.

Our major cities have increasingly been at the forefront of population growth in this country and this is meeting resistance from many in the community who point to rising congestion levels (among other things) as evidence that ‘we are getting too big.’

Meanwhile, many of our regional centres – well serviced with water and other critical service infrastructure – have languished, with many of working age and family-formation age residents leaving to look for work and lifestyle opportunities in capital cities. A cohesive population policy matched to an infrastructure plan for the long term might mean that these regional centres can share more equitably in the opportunities of a changing economy. It could even mean that we have several more major centres ranked as ‘most livable’ in future world rankings.

Growing these many regional centres, and maintaining quality of life alongside growth in our capitals, is not something that will happen if left to accident. Infrastructure planning is central to expanding economic capacity. As the Australian Infrastructure Plan points out, for all the major public transport projects it proposes as priorities for capital investment, we are still likely to see an Australia in 2030 with some 94% of people making their journeys by car. That can work fine, provided transport networks are designed to cope, and don’t become choke points. A combination of population policy and infrastructure planning is needed to identify this as something which, in the absence of strategy, will become an even bigger problem.

The solution however is not, in our view, just to stop growth. A rigid population cap (as some propose) would handicap our ability to respond to economic opportunity and to grow our productivity (thereby enhancing our lifestyle). Imagine if we had had a rigid ‘no growth’ policy on population when the mining ‘boom’ first arrived. We wouldn’t have coped.  There would have been insufficient people to hire to service the extraordinary demand. A chronic shortage of labour would have seen an even more explosive wages bubble and exacerbated the hangover even further, had the party even got underway in the first place. Capital is high mobile on a global basis and so are people – unless rigid policies prevent them from being so.

The reality of Australia’s 24 million is that there are still too few of us to reach critical mass across a range of industries, from tourism to manufacturing to a number of service industries. Our aim, through an effective population strategy and infrastructure plan, should be to reach critical mass milestones without compromising quality of life measures.

Is it simply a question of ‘size does count’? Hardly. Put into context, our near neighbor to the north – Indonesia – has the equivalent of the entire population of Australia in just one city (Jakarta).  But their quality of life is nothing like ours. But there are places like Singapore – population 5.5 million in an area of just 720 square kilometres – who are showing the world how to deliver and maintain high standards of living. That population is a million more than Sydney has now, in an area only 6% of metropolitan Sydney’s 12,400 square kilometres.

Singapore has taken population policy and infrastructure planning very seriously for many years and for such a small island nation, is a remarkable example of what can be achieved. Australia, given our size and abundant resources, has no excuse for not doing something equally as smart.

The answer is that population size is important, but without a cohesive infrastructure plan that works in tandem with growth, our economic performance will not improve.

Crowd on Bondi Beach Sydney

Ross Elliott Senior Business Advisor E: 
Ross brings close to 30 years’ experience in property and business consulting to Macroplan. Ross previously worked for the Property Council, as Executive Director and later National Chief Operating Officer. He was also inaugural National Executive Director for the Residential Development Council.  A prolific writer on urban economics he has a number of publications to his name and is nationally recognised for his ongoing contribution to public policy debate. 
About MacroPlan: MacroPlan’s experienced and qualified economists align their understanding of macro-economic forces with micro-economic variables such as geographic and industrial characteristics, demographics, labour market shifts, resource demand and commercial realities.  Contact Ross Elliott, Senior Business Advisor, today to discuss your property research requirements.