Joining up the dots of stress

A SECOND major defect has emerged in Australia’s federal system.

This is the population policy imbalance. The first, of course, was the vertical fiscal imbalance – a fancy way of saying the Feds raised most of the money but the states had the job to spend it, instead of each government being responsible for raising the money it spends.

The imbalance leads to buck-passing: “The Feds don’t give us enough money.” “The states mess up the execution of their spending programs.”

Something similar is happening with population. The Feds determine the level of population growth through setting immigration targets and the states (and territories) have to work out how to provide those extra people with education, water, shelter, health services and transport.

Hitherto, we have not seen the sort of buck-passing generated by the fiscal imbalance, rather the silly states and territories have joined the population bandwagon, oblivious to the impending political backlash.

Victoria was a case in point. The stress population growth put on its infrastructure and services caused voters to say the government was not up to the job.

Most voters probably only saw the infrastructure and services shortfall without blaming the underlying cause: federal immigration policy. But they will wake up before too long.

The ACT is a good example of the population policy imbalance.

In the past few weeks many of the dots became more visible. All we now have to do is join them together.

A report by Cardno to the ACT Government warned of traffic chaos in Canberra’s north unless large sums of money are spent on various roads and intersections. At present, the solutions offered are more roads and perhaps more public transport.

The Centre for International Economics warned that the Murray-Darling Basin plan will cost the ACT $220 million a year because of its proposed cuts to the ACT water allocation. The solution offered is to change the plan.

Health Minister Kay Gallagher reported that the ACT Government could not keep up with health demands with the present tax base. Health spending was growing at 8 per cent a year, she said. The solution offered: higher taxes or more money from the Feds.

No doubt as the school year begins, we will have pressures on the school system with the usual solutions: higher taxes or more money from the Feds.

And then this week the Australian Bureau of Statistics joined up the dots to report that the ACT’s population growth had hit 1.8 per cent, higher than the national average which itself is a very high 1.7 per cent – Third World rates, and we all know how Third World countries have coped with providing services to their burgeoning populations.

But there were at least some signs of a growing understanding of the underlying cause of so much stress on government services and infrastructure: more people using them.

Gallagher noted the aging population AND population increases were causing the health difficulty.

Water Minister Simon Corbell rightly pointed out the extra costs Canberra will face as the population grows, particularly if people are forced from smaller places in the Basin to find work in larger centres, particularly Canberra.

Canberra is Australia’s largest inland city. It is going to be the first to feel the pressure of water shortages.

Corbell pointed the finger at a federal policy – its water policy. It is only a small movement of that finger to say: “The water policy is not the problem; it is the number of people using the finite amount of water that is the problem.” And then it is only a small finger-pointing movement to blame federal population policy, rather than federal water policy.

When that happens, the Feds might start listening. At present they are only listening to the big end of town which sees extra profit for the small number of people at the top and too bad for the rest and too bad for the environment.

In the ACT, and in Ausgralia generally, business argues that we have a skills shortage so we must import more people with skills. This is a perverse argument. Those extra people will add yet even more demand for services and infrastructure and make the skills shortage even worse.

If you import a plumber you will need a teacher to teach his kids and doctor to attend to his bad knees.

The unspoken text in the business argument is that a “skills shortage” means that workers, particulary tradespeople, will be able to charge more for their labour, shock horror.

This argument is a bit rich when it invariably comes out of the mouths of very highly paid industry spokespeople and spruikers. At least the tradespeople are doing something useful for their extra dollars.

The answer to the skills shortage is not, generally speaking, to bring people in (either to Australia or to the ACT) but to train our own and to streamline some of the training requirements.

Ultimately, the lower participation rates caused by the hump of ageing baby boomers will have to be dealt with, and we are likely to be better off if we don’t do it by straining the environment, government services and infrastructure by pushing population growth. There are lots of skills in the aged population that can be used without necessarily harnessing people to full-time work.

Gone are the days when Australia had lots of spare capacity to cope with high population growth.

Water might well be the tipping point. The Centre for International Economics report projected Canberra’s population to be 460,000 in 15 years’ time and 680,000 in 40 years’ time.

Under the Murray-Darling Basin Authority’s plan the ACT would have to give up 18 gigalitres of water a year for environmental flow, regardless of population increase, and that population increase will be higher (worse) because of people coming to Canberra from other parts of the Basin because of lack of water.

Worse, as Corbell rightly points out, Canberra makes far better economic use of the water than other parts of the Basin.

But the solution should not be to cut the environmental flow: there are limits to what you can keep taking from the environment without it harming the whole system.

The solution is obvious: don’t have a Canberra of 460,000 in 15 years’ time. The Basin authority is working from the wrong premise.

We have got to start seeing the obvious: higher population means poorer economies and a worse environments. And the states and territories should be vociferously putting the blame where is lies: of the Federal Government which is beholden to big business, big polluters and big donors.

The blame has got to start hurting the parties in power more than any threat of withdrawal of campaign donations.
CRISPIN HULL
This article was first published in The Canberra Times on 26 December 2010