Secretary of Treasury sounds alarm on Australia's overpopulation

Photo of Ken Henry engaged in wombat care was adapted from the original here.
Candobetter has used parts of an analysis of Ken Henry's speech by Mark O'Connor, co-author of the rivetting book about how Australians are being lied to about overpopulation and what is causing it, Overloading Australia (2009) now in its second edition and available from EnviroBooks Australia.
See also the You-Tube promotion by Bob Carr
Listen to audio on ABC radio.

IN HIS SPEECH YESTERDAY (22 October 2009), "The Shape of Things to Come: Long run forces affecting the Australian economy in coming decades", Australia's Secretary of the Treasury, Ken Henry, expresses serious concerns about our growing population numbers. The speech was to the Queensland University of Technology Business Leaders' Forum.

Note that the Australian Academy of Technological and Engineering Sciences is a very strong advocate for overpopulating Australia and has teamed up with the Scanlon Foundation and the Australian Multicultural Foundation in a worrying report that looks like a blueprint to create our current burgeoning problems.

He starts with what seems like the conventional business lobby line about the worries of an ageing population, yet the graph he offered (Chart 2: Participation rate [not available here]) showed the percentage of Australia's population in working years (aka. the participation rate) falling "steeply" over the years till by 2050 it is just below what it was in 1980. In other words, it is currently close to an historic high, as we escape the years of having far too many persons too young to work, and move towards having too many old people. (This is on the assumption that we will always need a lot of human labor). (Page 4ff of the speech.)

How will our cities cope?

He then expresses strong concern about the fate of our overcrowded major cities if they are required to double their populations. (Page 6).

"How will Sydney cope with a 54 per cent increase in its population, Melbourne a 74 per cent increase and Brisbane a 106 per cent increase? Surely not by continuing to expand their geographic footprints at the same rate as in the past several decades. Surely not by loading more cars and trucks onto road networks that can’t cope with today’s traffic."

We don't know how we might sustain 35 million people in Australia

He expresses great pessimism about the environmental consequences: (Page 7)

"Are Australia’s natural resource endowments, including water, capable of sustaining a population of 35 million? What are the implications for environmental amenity of this sort of population growth? Must it mean an even greater loss of biodiversity difficult as that might be to imagine, given our history of species extermination?"

"We don’t know the answers to these questions, even though all of us would have opinions. My own opinion on the last of these sets of issues and I must stress that it is a personal view, not to be taken as a Treasury view is pessimistic."

Henry then spoke of the kangaroo industry:

Commercial slaughter of 49.9 million kangaroos

"In the last decade, permits have been issued to allow the commercial slaughter of 49.6 million kangaroos primarily to give household pets a bit of variety in their diet. That is but one instance of a set of behaviours that suggests that, with a population of 22 million people, we haven’t managed to find accommodation with our environment. Our record has been poor and in my view we are not well placed to deal effectively with the environmental challenges posed by a population of 35 million."

After this he spoked about climate change, before returning to more conventional economic issues.

Concerned about mineral resources, but vastly overestimates durability of supply[1]

On p.18 Ken Henry remarks:

"And Australia is considered to have a high level of remaining reserves of key mineral commodities, with iron ore reserves currently expected to last another 65 years, black coal another 90 years, alumina another 85 years and brown coal another 500 years."

Mark O'Connor, co-author of O'Connor and Lines, Overloading Australia, suggests correctly that these figures must be based on constant rate of extraction rather than on the ever-increasing rates of current trends and based on the anticipation that coal will be used to replace falling supplies of other fossil fuels.

Population Ageing overshadowed by Overpopulation

In his conclusion Henry remarks:

"Population ageing will have an even more pronounced impact on GDP per capita growth over the coming decades; and the prospect of a much larger than previously forecast population raises some fundamental questions about where Australians of the future will live, how governments will interface with them, and the large scale economic and social infrastructure investments that will be required to sustain economic and social activity. A larger population also raises some confronting questions relating to environmental sustainability."

"... all of these changes will test the limits of sustainability; economic, social and environmental. It will only be by recognising those limits and adjusting policy accordingly that this generation will be able to say with confidence that it will hand to its children and grandchildren an even higher level of wellbeing; an even greater capability to choose lives of value."

Does Ken Henry mean, by "adjusting policy" that we should stop growing the population or does he mean that we should squeeze down human rights to fit the business case? This needs more clarification.

More extracts and editorial comment:

"Population Ageing"

"Most of you will be familiar with the changing age structure of the Australian population, driven by the collapse in the birth rate in the 1960s and 1970s, as the baby boomers decided to have fewer children than their parents, and accentuated by increasing life expectancy."

Ed. The reader should be vigilant to the Secretary of Treasury's language here. "Collapse in the birth rate" is a sensationalist exaggeration of a slowing down from a sudden pronounced rise in marriages and birth rate that coincided with cheap fossil fuel in the post Second World War era, which could never be sustained indefinitely.

"To recap, the proportion of the population aged 65 and over has increased from 8 per cent in 1969 to around 13 per cent today. By 2049 we think this figure will rise to 22 per cent a little over one in every five Australians being aged 65 or over 40 years from now. By any measure, this is a dramatic change in the age structure of the Australian population. Perhaps even more remarkable is the projection that, by 2049, 5 per cent of the population - one in twenty - will be aged 85 and over, compared with around 1.7 per cent of the population today."

Ed. If our population is unable to support a five per cent rate of dependency, then there is something very wrong with the economy. I know what the problem is too. It is that the high cost of land - which has been artificially inflated by political stimulation of rapid population growth and too big a population - makes the cost of living so high that little is left over for the ordinary responsibilities of society towards its young and elderly.

The Treasurer notes, however, that old people are not useless people, even in terms of the Greedy Domestic Product measurement:

Population Aging causing positive GDP

"As the population ages the share of the population making itself available for employment - what economists call the participation rate - will fall, increasing the dependency rate (which measures, broadly, the number of people not working per person in the labour force) and exerting a drag on potential per capita output growth. What many people might not realise is that over the past several decades, this same population-ageing process has made a strong positive contribution to GDP per capita growth rates.

That is because the proportion of the population of prime working age has been increasing through all of that period, boosting the participation rate.

The Global Financial Crisis hit the Australian economy just as the proportion of the population of prime working age was about to reach its highest level. By the time the Australian economy uses up all of the spare capacity generated by the recent slowdown, and gets back to potential output, we will already have passed that peak and be on the downward slide."

[Chart 2: Participation rate]

"The looming prospect of this population slide, and its implications for GDP per capita performance, several years ago motivated an interest in policy reforms to drive stronger contributions from the other two ‘Ps’ of participation and productivity. Notwithstanding that motivation, in the years before the crisis hit, we were dealing with an extremely tight labour market, with skills in increasingly short supply, and productivity outcomes that had been disappointing. The case for securing better outcomes in workforce participation and labour productivity, already strong before the crisis hit, will be sharply more apparent after it has passed.

Ed. Nothing here about how Australian and state governments have failed shamefully to train and educate Australians to enable a functioning economy rather than the sham real-estate economy that we currently support with taxes and debt.

Overpopulation a much bigger worry than Ageing population

"Until recently, we had been thinking about population dynamics in terms of ageing and a rising dependency ratio. But last month the Treasurer shone a light on a whole new dimension of our thinking when he announced that, since publishing the Intergenerational Report 2007, our long term projection for Australia’s population had increased from 28.5 million in 2047 to more than 35 million people in 2049.

This 25 per cent increase in our 40 year projections reflects the combined effect of higher net overseas migration and a recent pick up in the fertility rate of Australian women.

Today’s population is about 22 million. So we are now projecting an increase of 13 million people, or around 60 per cent, over the next 40 years.

A population expansion of this order has a host of implications for the Australian economy and society; and it raises a number of profound issues for economic policy.

First set of issues:
"Where will these 13 million people live in our current major cities and regional centres or in cities we haven’t yet even started to build? We have given this matter some thought in the Treasury. On quite reasonable assumptions, we can imagine Sydney and Melbourne growing from 4½ and 4 million people today to cities of almost 7 million. Brisbane will, we think, more than double in size, to be 4 million people 40 years from now. Among them, Sydney, Melbourne, Brisbane and Perth will have almost as many people as the entire Australian population today.

"How will Sydney cope with a 54 per cent increase in its population, Melbourne a 74 per cent increase and Brisbane a 106 per cent increase? Surely not by continuing to expand their geographic footprints at the same rate as in the past several decades. Surely not by loading more cars and trucks onto road networks that can’t cope with today’s traffic.
However our cities do cope, they will have to find ways of securing a sustainably higher level of investment in public infrastructure.

Second set of issues:
What sorts of jobs will this larger population want? How will they acquire the skills they need to do those jobs?

How will the location of the jobs be reconciled with preferences about where people want to live?

Third set of issues:
What types of services will our governments of the future need to provide to their citizens, both young and old?

Fourth set of issues:
Are Australia’s natural resource endowments, including water, capable of sustaining a population of 35 million? What are the implications for environmental amenity of this sort of population growth? Must it mean an even greater loss of biodiversity, difficult as that might be to imagine, given our history of species extermination?

We don’t know the answers to these questions, even though all of us would have opinions. My own opinion on the last of these sets of issues and I must stress that it is a personal view, not to be taken as a Treasury view is pessimistic.

In the last decade, permits have been issued to allow the commercial slaughter of 49.6 million kangaroos in the last decade1 primarily to give household pets a bit of variety in their diet. That is but one instance of a set of behaviours that suggests that with a population of 22 million people, we haven’t managed to find accommodation with our environment. Our record has been poor and in my view we are not well placed to deal effectively with the environmental challenges posed by a population of 35 million [See http://www.environment.gov.au/biodiversity/trade-use/wild-harvest/kangaroo/stats.html

Whether you share that pessimistic view or not, and whatever your opinions on the other sets of issues I have outlined, one thing on which we will all agree is that substantial additional investment, in both private and public infrastructure, economic and social, will be required to support our larger human population. We should also be able to agree that quite sophisticated infrastructure planning is going to be required if we are to address these questions in a way that improves the well-being of the Australian people in a sustainable way."

Be wary but keep looking

Ed. Be wary. Look at that last paragraph carefully: "Whether you share that pessimistic view or not, and whatever your opinions on the other sets of issues I have outlined, one thing on which we will all agree is that substantial additional investment, in both private and public infrastructure, economic and social, will be required to support our larger human population. We should also be able to agree that quite sophisticated infrastructure planning is going to be required if we are to address these questions in a way that improves the well-being of the Australian people in a sustainable way." Then consider that similar infrastructure-friendly foundations also underpins the Howard and Rudd policies. In fact the big link is probably here: "Scanlon report underpins threat to Australian democracy".

We could read Ken Henry's speech as one that is telling the growth lobby that they are going to have to chase up more investment money to keep growth going. Where Ken Henry mentions the slaughter of all those kangaroos, it looks as if he cares, and probably that is how it is supposed to look, but he is still expressing himself as if growth is going to go ahead and as if, despite the concerns he flags, it might still somehow be 'sustainable'. In fact, apart from what he has to say about kangaroos, his speech isn't much different from Bernard Salt's article in the Australian - (Links here: http://candobetter.org/node/1538. )

The Scanlon report also flags this 'need' for sophisticated infrastructure and it isn't too fussed about democracy.
The message is always: "More infrastructure to cope with more population".

But then again, Could Henry could have signalled his reservations with population growth any more clearly and still have kept his job? Henry is also the Australian Treasury chief who took 5 weeks off once to go and look after endangered hairy-nosed wombats. (I wonder if Candobetter can get an independent report from Wombat carers about his performance there.)

Stay tuned to Parliament and occasional speeches like this to see if there is anyone in Australian mainstream politics with a backbone, who doesn't talk out of both sides of their mouth at once, apart from Kelvin Thomson.

[1] Durability of supply of black and brown coal in Australia and the world will be affected downwards by the ongoing expanding need to replace declining cheap petroleum in the context of exhaustion of easily exploited wells and the world's huge population and intensification of industrial production of consumables. See Seppo Korpela, "Coal Resources of the World", in Sheila Newman (Ed.) The Final Energy Crisis, Pluto Books, UK, 2008. It is also likely to be affected, for the same reason, by declining supplies of uranium, if the technological hopes for breeder reactors using thorium are not fulfilled - which is quite likely.