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Economy

Australia weighs the costs of the coming population boom

'Lucky country' worries that high immigration will compromise its lifestyle

People take pictures of themselves in front of the Sydney Opera House.   © Reuters

MELBOURNE -- A report on housing affordability by a prominent Australian think tank has rekindled debate on population size and quality of life in a country whose large migrant intake has resulted in the fastest-growing population in the developed world.

In its report, titled "Re-imagining the Australian Dream," the Grattan Institute said Sunday the government should establish a formal population policy, while suggesting immigration might have to be curbed to control housing prices.

While not offering a specific target, the Melbourne-based institute said the federal government should consider reducing immigration as a "lesser evil," if state governments do not act to increase the housing supply.

That suggestion followed a call by former Prime Minister Tony Abbot in February to slash immigration to ease pressure on housing prices, infrastructure and social cohesion.

While policymakers in countries such as Japan, China and South Korea brace for declining populations due to low birth rates, Australia is on track for a demographic explosion.

Government figures released in December showed the number of people living in Australia increased by about about 388,000 in the year to June, up 1.6% from the same period a year earlier. That was well ahead of the United States' 0.7% gain and Canada's 0.9%.

The current population of just over 24 million is forecast to balloon to 36 million in the next three decades, the equivalent of a new city the size of the capital of Canberra every year for the next 30 years. Most of that growth is expected to be in the major coastal cities. By mid-century the two biggest cities, Sydney and Melbourne, are anticipated to be about the size of Hong Kong and London today.

Australia's population density is among the lowest in the world, behind that of even sparsely inhabited Iceland. But high housing and living costs, increasing congestion, and untamed urban sprawl in cities such as Sydney have led many Australians to ask if their country is becoming too full.

By mid-century Australia's two biggest cities, Sydney and Melbourne, are anticipated to be about the size of today's Hong Kong, seen here. (Getty Images)

Media outlets have aired stark predictions of a future in which life in the "lucky country" has been reduced to a shadow of its former self. One recent headline in the sensationalist but widely read Daily Mail Australia warned of Australians living like caged hens in high-rise tower blocks, anathema to the Australian dream of a detached house with a backyard.

In an opinion poll by the Australian Population Research Institute late last year, 54% of Australians said they favored reducing immigration from current levels.

"They're not forcing us into high-rise buildings, but they're basically making the Australian dream, if you like, unaffordable," said James Ward, president of Sustainable Population Australia, which campaigns for limited population growth on ecological grounds, in an interview, referring to current government policy.

Ward said even though the country has an abundance of space, its cities suffer from a lack of vision and planning.

"What we have at the moment is neither fish nor fowl. It's trying to shoehorn a growing population into a low-population lifestyle," he said.

"So I think we should have a conversation about that and say, as a country, 'Which way do we want to go?' We can't just keeping sprawling out into the wilderness and having these dysfunctional, low-density but fairly unpleasant suburbs that we've got at the moment."

I want to bring people in as young as possible, as highly skilled as possible, so they're paying taxes for longer, they're contributing to Australian society and they're helping build our nation

Home Affairs Minister Peter Dutton

Others, however, see opportunities in an immigration-fueled population boom. Many economists have cited high levels of immigration over the last two decades as one reason Australia has avoided recession for an unprecedented quarter century.

Home Affairs Minister Peter Dutton, who controls the immigration portfolio, said in February he supported the current annual permanent immigration cap of 190,000 people.

"I want to bring people in as young as possible, as highly skilled as possible, so they're paying taxes for longer, they're contributing to Australian society and they're helping build our nation," he told reporters following calls from Abbot, his former boss, to reduce immigration.

Treasurer Scott Morrison struck a similar note, warning that economically, Abbot's proposal would be "cutting off your nose to spite your face."

Major industries such as education are heavily dependent on new arrivals. International students, almost a third of them Chinese, contributed A$28 billion ($21.7 billion) to the economy in 2016-2017, according to the Australian Bureau of Statistics. 

"The education system has been heavily subsidized by Australia's openness to immigration," said Salvatore Babones, associate professor at the University of Sydney, adding that the real estate sector has also benefited.

"Many people consider rising house prices a problem: 'Oh, my child can't get on the real estate ladder.' But of course for Australian homeowners, rising house prices have been a godsend," he said. "The reason their home prices have been rising is constant immigration. Take away the immigration, and home prices would be stagnant or fall."

The federal government has so far appeared reluctant to fiddle with current levels of permanent migration after tightening the rules last year for temporary migrants, which once had a relatively straightforward path to permanent residency.

While there is no widespread consensus on optimal population size, there is agreement on the need for careful planning for inevitable growth in the coming years. In a February report looking forward to 2046, Infrastructure Australia, the national agency for large-scale public works, warned against inaction.

"If we fail to effectively anticipate and respond to growth, the likely results will be declining economic productivity, increasing environmental pressures and a marked reduction in each city's quality of life," the report said.

"We must act now to preserve and enhance the elements of each city that make them such attractive places to live and work."

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