What would low population growth mean for Australia?

Australia relies mostly on net overseas migration to sustain its rate of population growth. Our population grew by 1.6% in the year to March 2018, or by around 380,000 people. Of this, natural population growth contributed over a third (144,000) while overseas migration contributed the rest (237,000 people).

So what would happen if growing community opposition to population growth – and in particular high rates of overseas migration – meant a slowdown in our population growth rate? The pressure is growing for just such a change in policy, and many in industry fear the worst for Australia – especially property – should our growth rates slow.

To try understand what this might mean, I’ve taken a look at some low population growth countries and also at high growth countries. The data sources aren’t consistent from one measure to the next nor are the time periods the same for each country due to differences in reporting times (and data availability) but the results are pretty confronting nonetheless.

First, some countries with low rates or negative rates of population growth are listed below. Australia is there for comparison purposes only – our rate of population growth easily eclipses this group.

Is there an obvious correlation between population growth and the economy and housing? The answer it seems is no. Japan’s population is shrinking, but its GDP per capita is healthy and on a par with the UK and NZ and certainly among the wealthier of nations by this measure. Its housing, relative to incomes, is on average cheaper than the Australian average (for all major markets… Sydney and Melbourne are of course in a league of their own) and Japan is experiencing housing price growth of around 1.46% - even with a shrinking population.

Denmark also has a very low rate of population growth but a high GDP per capita and modest housing price growth. The Asian tiger economies like Taiwan and Hong Kong have negligible population growth rates but high GDP per capita and in HK’s case, outrageously expensive housing which has been rapidly rising in price.

Canada and New Zealand have rates of population growth that are roughly half ours while their GDP per capita is high by global standards. They also have expensive housing markets and high rates of price growth. (Australia’s high GDP per capital reflects our high value resources exports with a relatively small population, leading many to argue that a growing population only dilutes our prosperity given resource sector exports are not related to population).

Here is the table showing a selection of low population growth countries compared with Australia:

Country	POP GROWTH RATE	GDP PER CAPITA (IMF data)	Housing median multiple (Demographia, major markets 2018)	House price growth (IMF Global Housing Watch, latest for each country)
Japan	-0.21%	$38,440	4.2	1.46%
Russia	-0.08%	$10,608	na	-5.45%
Taiwan	0.17%	$24,577	na	0.69%
Denmark	0.22%	$56,444	na	3%
Hong Kong	0.32%	$46,109	19.4	11.80%
China	0.41%	$8,643	na	3.18%
United Kingdom	0.52%	$39,735	4.6	1.94%
Switzerland	0.69%	$80,591	na	-0.86%
Canada	0.73%	$45,077	4.3	5.53%
New Zealand	0.79%	$41,593	8.8	4.78%
Australia	1.60%	$55,707	6.6	3.02%

So economic prosperity and housing markets are not, on this sample at least, connected to high rates of population growth. There are nations very similar to ours with much lower rates of population growth but which are equally prosperous and with equally healthy (or too healthy?) housing markets.

What about nations with higher rates of population growth than Australia? Again, the list is not convincing. Without even looking into their housing markets or economic measures, the list of nations with higher rates of population growth than ours gives little comfort to any link between high rates of population growth and economic prosperity.

I’ll leave you to peruse the list below (which lists all countries with population growth above our 1.6% per annum) and choose where you’d rather live. 

In the meantime, where does this leave us? Do we still need “a big Australia?” and is high growth essential to our prosperity? Personally, I have always believed we need a larger population to give us a critical economic mass across a range of measures and for many different reasons. Equally though, it seems odd in a country so large as Australia to concentrate nearly all growth in mostly two cities and ask them to bear the infrastructure burden to cope with that growth while other regions perfectly capable of absorbing growth with less stress are overlooked.

It’s going to be an interesting and ongoing debate and opinions will not be in short supply. Pro-growth and anti-growth proponents will dig their trenches and wage their wars. The evidence (also known as truth) is - as the saying goes - the first casualty in war and this will probably be no different. But hopefully a quick look at the evidence might leave some of us better informed. Balanced arguments, while possibly overlooked in the short term, may just find an eventual foothold in public policy debate about a very important topic.

Now here’s that list of countries growing faster than Australia, in descending order:

1	South Sudan	3.83
2	Angola	3.52
3	Malawi	3.31
4	Burundi	3.25
5	Uganda	3.2
6	Niger	3.19
7	Mali	3.02
8	Burkina Faso	3
9	Zambia	2.93
10	Ethiopia	2.85
11	Tanzania	2.75
12	Benin	2.71
13	Western Sahara	2.7
14	Togo	2.64
15	Guinea	2.61
16	Cameroon	2.56
17	Iraq	2.55
18	Liberia	2.5
19	Madagascar	2.5
20	Mozambique	2.46
21	Rwanda	2.45
22	Egypt	2.45
23	Equatorial Guinea	2.44
24	Nigeria	2.43
25	Senegal	2.39
26	Sierra Leone	2.38
27	United Arab Emirates	2.37
28	Congo, Democratic Republic of the	2.37
29	Afghanistan	2.36
30	East Timor	2.36
31	Gaza Strip	2.33
32	Yemen	2.28
33	Qatar	2.27
34	Bahrain	2.26
35	British Virgin Islands	2.25
36	Mauritania	2.17
37	Ghana	2.17
38	Djibouti	2.16
39	Turks and Caicos Islands	2.16
40	Central African Republic	2.12
41	Congo, Republic of the	2.11
42	Gambia, The	2.05
43	Jordan	2.05
44	Oman	2.03
45	Cayman Islands	2.01
46	Somalia	2
47	Luxembourg	1.98
48	Anguilla	1.97
49	Namibia	1.95
50	Solomon Islands	1.94
51	Gabon	1.92
52	Chad	1.86
53	Guinea-Bissau	1.86
54	Vanuatu	1.85
55	West Bank	1.84
56	Cote d'Ivoire	1.84
57	Singapore	1.82
58	Belize	1.8
59	Guatemala	1.75
60	Sao Tome and Principe	1.72
61	Papua New Guinea	1.71
62	Algeria	1.7
63	Kenya	1.69
64	Comoros	1.64
65	Sudan	1.64
66	Tajikistan	1.62
67	Honduras	1.6

How we lit the fuse on the population bomb

We’ve been here before – concerns about our capacity to house a large population are not new. But lately, hostility to rapid rates of population growth is gaining traction. There have been calls for a population enquiry and former PM Abbott has called for immigration (and hence population growth) to be slashed. He joins a chorus of other voices, from business to community groups. Voters are pushing back against growth and political leaders are feeling the pressure.

But these pressures are confined to mostly two cities: Melbourne and Sydney (and perhaps to a lesser extent Brisbane). There are other capitals and countless regional cities who covet growth but who find it eludes them. Instead, stupidly (it has to be said) we continue to cram accelerating population numbers – mostly driven by immigration – into a couple of urban centres. 

Melbourne was first settled by whites in 1835 and took 165 years to reach 2.5 million people (by the year 2000). Bernard Salt predicts the next 2.5 million will be added in just 21 years with the city reaching five million by 2021. He thinks it will sail past eight million by 2050. Sydney has a similar story.

According to the Productivity Commission’s 2016 Migrant Intake into Australia report, 86% of migrants settled in major capitals, compared with 65% of the Australian born population. More recent information suggests the trend has grown, with only 6% of recent migrants now settling in regions.

The Government has toyed with the idea of insisting that migrants settle regional areas where there are genuine labour shortages but there seems little determination to back the threats with action, which in itself could be difficult (and possibly illegal) to police.

Outsiders observing Australia’s handling of growth must be incredulous to learn that much of the concentration of growth has not occurred by accident, but is widely endorsed policy. Higher urban densities have since the late 1990s been at the core of urban development policy to handle population growth in the very cities now feeling the most resistance to growth. The benefits promised as a result of increased density were many and the public were assured that they would share in an improved quality of life as a result of these policies. Take this example from the 2013 Draft Metropolitan Strategy for Sydney to 2031:

“A home I can afford. Great transport connections. More jobs closer to where I live. Shorter commutes. The right type of home for my family. A park for the kids. Local schools, shops and hospitals. Livable neighbourhoods.”

And the result? For Sydney and Melbourne especially, housing affordability is as bad as the worst in the world with entire generations locked out of housing. Congestion is chronic. Private and public transport systems are under more pressure than ever. Commutes take longer and housing choice has been compromised. Is this livable? Talk about over promise and under deliver. If these promises had been borne out by the day to day experience of average Australians living in these cities, there wouldn’t be the push back politicians are feeling now.

Even more incredulous is that, confronted with the political challenge of an increasingly hostile public, some suggest (from the comfort of their high priced inner urban enclaves no doubt) that what’s needed is not change, but more of the same. The Planning Institute of Australia recently suggested as much, responding to a challenge from ABC interviewer Ellen Fanning on the 7.30 program that we are ill prepared to cope with “stuff(ing) another three and a half million people into Melbourne and Sydney both”.

The PIA responded that “We’ve got a great challenge to ensure that we don’t end with megacities like Lagos or Manila. We want Tokyos, Parises, and New Yorks – and we can do that by planning well.” (emphasis added).

Really? Tokyo, Paris and New York might be on our bucket list of cities to visit, but how many average Melbourne or Sydney residents would live in hope they’d one day see their own city turn into a version of Tokyo or New York? I can think of no public opinion poll where we Aussies have put up our hands to using Tokyo as a business model for urban development. Any politician suggesting as much would last a nano second before being turfed out.

It serves to illustrate how wide the disconnect has become between public policy makers and the wider community. The “we” word is used when the “I” pronoun is what’s really meant.

Maybe it’s time for a genuine reality check? I’ve always held the view Australia can readily support a larger population but in getting there, infrastructure standards need to keep up with growth, not continuously lag it. Housing and lifestyle choices don’t have to be further compromised to serve a model of urban development which is at odds with broader public opinion. The idea that much of this growth should continue to be concentrated in just a handful of cities already feeling considerable strain while other centres with infrastructure capacity and abundant, affordable housing find growth eluding them is plain crazy.

The answer I suspect is not in forcing people to settle cities and regions that are capable of absorbing growth but in making these cities and regions even more attractive as places to settle. Jobs, industry and economic growth lie at the centre of this. Positive economic attraction strategies, reduced tax or red tape burdens, abundant and low cost utilities (power, gas, water), ‘special economic zones’ – all are elements capable of attracting employers and industries, and with them jobs for workers and their families. And if regional employment was further supported by the type of place making and related infrastructure support more typically only on offer in the centres of major capital cities, there’s no reason at all that centres like Mackay, Armidale, Wagga Wagga, Orange, Casino, Bendigo and plenty of others can’t enjoy growth without the accompanying political pain.

Sadly, even this rather obvious policy option isn’t being explored. According to a recent report in the Sydney Morning Herald: “Inner-city centres on the east coast have amassed the greatest share of Australia's new public service jobs under the Coalition government as outer suburbs, bush towns and Canberra took cuts to their ranks of bureaucrats.” So we not only concentrate our population into a few centres but government jobs as well. This is hardly spreading the load or sharing the benefits.

Stopping growth by rapidly closing down immigration would be disastrous for industries which have come to rely on it but this is increasingly looking like it’s possible. But equally, persisting with our current approach will only further aggravate hostile electorates in the major cities, while electorates in centres with little growth could be equally cranky with governments for failing to produce growth where it’s wanted.  

The fuse on the population debate has been lit. And maybe we are the ones that lit it. 

Why we need more ways to measure CBD health

Above: Brisbane in 1982 - then and now. 

The Property Council’s “Office Market Report” (OMR) has long served as a proxy for the market health of our CBDs. But the nature of CBDs has evolved and changed dramatically over time, and office markets alone are no longer the indicator of city centre economic vitality they once were. Here’s why it’s time to broaden the thinking. 

The collection of data for the Office Market Report dates back to the late 1970s or early 1980s, for what was then BOMA (the Building Owners and Managers Association) but which from 1996 became the Property Council of Australia. The OMR was central to BOMA’s industry interests then – given the focus early on was almost exclusively on the investment and management of CBD office buildings. The OMR provided a catalogue of CBD Office buildings, their lettable areas, quality grades, vacancies and future supply. This was essential for assessing the demand for space and tracking market changes. Excel macros are today vastly superior to the early pen and ink paper calculations, but the OMR methodology and metrics remain largely the same since then. 

In those days, CBDs were primarily for business (the ‘B’ in CBD) and that business was conducted almost exclusively in various office towers. People flooded into work in the mornings and vacated in the afternoons. After hours and on weekends, CBDs were ghost towns. The idea of going to the city for a weeknight restaurant meal was almost laughable. The idea of shopping or entertainment in the city was equally limited in appeal.

Consider Brisbane in 1980. There was no Queen Street Mall (its first stage opened in 1982). The Myer Centre didn’t open until 1988. There was an old McDonnel & East Department Store in George Street but that was about it for retailing. There were almost no restaurants, with a couple of notable exceptions (anyone remember Milanos?) mainly focused on the business lunch trade. They mostly did not open for dinner. The Sofitel Hotel (which opened as a Sheraton) above Central Station didn’t open until the late 1980s, as did the Hilton (opening 1987). Prior to this, we had Lennons (now Next Hotel) and the Crest (now Mercure) and that was about it. The city in this era was all about office buildings and the office workers in them. Studying demand for office space was a suitable proxy for the health of the CBD economy because there wasn’t much else to it.

Above: A lot has changed since the 1980s. Maybe our measures of CBD health need to change too? Pictured is a photo titled "At the pub, Brisbane 1982" by photographer Rennie Ellis. 

How things have changed. In addition to a raft of new office buildings which have doubled the CBD office space stock since then, there have been even more significant changes to the composition of what makes the CBD tick. The Queen Street Mall alone now counts 7 shopping centres and over 40,000 square metres of retail space. In addition, new retail precincts are springing up along spines of the CBD. There are multiple new and recent hotels, adding nearly 2,500 rooms in the 2014-16 period along, with nearly 3,000 more to 2020 and roughly the same again predicted beyond 2020. Brisbane’s CBD and inner city accommodation industry sells more room nights than the Gold Coast. There’s also been an explosion of restaurants, cafes, bistros and eateries, there have been new cinemas and entertainment venues and a raft of luxury apartments added to the CBD as well. 

By now, the CBD was only partly for office workers; it was also a hive of activity for travellers, shopping, dining and recreational pursuits. On weekends when most of the office buildings are empty, the city can still be alive with activity. 

Now think about the new projects currently proposed for the CBD – many of which will further add to the variety of economic activity taking place in the city centre. Office projects, while still important, do not dominate.  

The $3.6 billion Queens Wharf project alone will add 1,000 hotel rooms across five hotels, 2,000 new apartments, a Casino, and multiple retail and dining options. Brisbane Quarter has recently added the W Hotel and will soon add a new residential tower, an office tower and extensive retail space. AEG Ogden’s Brisbane Live is a $2 billion entertainment focused proposal for the Roma Street Railyards which includes redevelopment of the Brisbane Transit Centre. The Howard Smith Wharves redevelopment will add a new 165 room Art Series Hotel, a range of dining, retail and tourism related attractions, meeting rooms and extensive public domain space. And Dexus’ proposal for a redevelopment of the Waterfront Precinct proposes two new towers with a combined 175,000 square metres – where possible uses are hotel and residential along with office space – plus up to 10,000 square metres of new dining and retail space. 

The point is that increasingly our CBDs are diversifying. Relying on an office market index now provides insight into only one aspect of the market. What is potentially needed is a new dashboard of indices to help shed light on the overall vitality and economic performance of a city centre. 

That dashboard would continue to include office market metrics, but in addition it would be good to measure other increasingly important parts of the city centre economy. Logically, such a dashboard would also include measures of hotel performance (occupancies, room rates and future supply), retail performance (vacancies, rents and turnovers), commuter traffic numbers (which should be readily available in real time via key transport corridors and public transport stations), performance of restaurant and catering establishments, and performance of the residential apartment market (vacancies, rentals and sales prices along with new supply). 

Not only do these uses contribute substantially to CBD employment and economic activity, they are also increasingly the focus of considerable public and private investment. There are compelling public policy and private industry reasons why a broader assessment of CBD performance is now timely. Those founding members of BOMA who were once focused on investment in CBD office buildings have evolved over time into institutions and private developers/investors with interests across the spectrum of built form uses now increasingly evident in our CBDs. 

The OMR served us well for 40 years and while an ongoing focus on office markets will remain important, the extent of changes to our CBDs means it alone is no longer sufficient as a measure of city centre economic performance or future prospects.