Planning for Australia's future population
27 March 2019
Property Council Of Australia, Melbourne
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Last week, the Prime Minister, Minister Coleman and I announced our Population Plan.
It is an integrated plan to ease the population pressure in our big capital cities while supporting the growth of those smaller cities and regions that want more people.
It is a plan to accelerate infrastructure construction to deal with congestion now.
And it is a plan to put in place the mechanisms to work more cooperatively with the states and territories to ensure that we can better deal with growth into the future.
Today, I would like to take you through these elements and some of the specific initiatives that underpin them. I will also address some of the questions that people have raised since the release of the Population Plan.
Congestion and Growth
Let me start, though, by recapping how we got to this point.
Australia has been a fast growing country since federation. Our current growth rate is about 1.6 per cent, which is around twice the pace of recent growth in the United States and almost three times the OECD average.
This kind of rapid growth would present enough of a challenge for governments and town planners, even with all other factors remaining equal.
But it is made even more challenging because the distribution of that growth has not been uniform.
Rather, Melbourne, Sydney and South East Queensland have been growing exceptionally fast—accounting for 75 per cent of our entire population growth—while other parts of the country have minimal population growth and are often crying out for more people.
Melbourne grew by an incredible 2.7 per cent in 2016–17, with Sydney and SEQ not far behind. Only two other cities in the English speaking world added more people than Melbourne during that year: Atlanta and Houston.
Sixty per cent of all our population growth has been driven by migration, but it is even higher in Melbourne and Sydney at 65 and 83 per cent respectively.
But while we have had extraordinary growth in Melbourne, Sydney and South East Queensland, there are other parts of Australia that are growing more modestly.
I have regional mayors come and see me almost weekly asking for assistance in finding workers for their communities.
A place like Dubbo, for example, has an unemployment rate of around 2.0 per cent . Not long ago, the front page of the Warnambool Standard screamed “Wanted: 1,000 more workers!”
This is frequently not understood by people in the big cities. Many think that there are no jobs in the smaller cities like Adelaide or in the regions. In some places, that might be true, but in general, regional Australia has been growing strongly and often can't get workers.
I have heard from businesses in regional areas who are crying out for more people, where jobs are going unfilled and opportunities are being missed, because there are not enough workers with the right skills.
Analysis undertaken by the Australian Government Department of Infrastructure, Regional Development and Cities shows that outside the big three cities—Sydney, Melbourne and Brisbane—there are around 58,247 job vacancies. This is up 1.5 per cent from around 57,414 vacancies a year earlier, and 12.4 per cent from around 51,805 two years ago. This includes 40,608 job vacancies in the regions outside Australia's mainland state capital cities.
A report yet to be released by the Regional Australia Institute shows this trend is evident across some very different parts of regional Australia: Far North Queensland; Geelong and the Surf Coast; and the Riverina and Murray. All three regions show an upward trend in vacancies since 2016.
In Geelong, job vacancy numbers are 15 per cent higher than three years ago, in Far North Queensland they are 34 per cent higher and in the Riverina they are 57 per cent higher.
Job vacancies in regional areas have been growing at double the rate of metropolitan centres since 2016, across a range of skills and occupations.
That is why it is so important that our Population Plan addresses the different challenges facing different parts of Australia. Managing our population growth well has also been challenging because of our federal structure.
We at the federal level largely control the population growth rate—through the migration settings—while the states, territories and local councils have primary responsibility for delivering the infrastructure, housing approvals, schools, hospitals and other services.
The levels of government have not always been aligned.
In Sydney, you actually had the two levels of governments working in opposite directions in the early to mid-2000s. You had Premier Bob Carr who famously said that “Sydney was full” and was consequently not building the infrastructure for the future, while just a few years later, Kevin Rudd became PM and turbo-charged the population growth into Sydney.
The infrastructure couldn't keep up; the housing approvals couldn't keep up.
In Melbourne, the infrastructure simply hasn't kept pace with the growth.
The outcome of fast population growth particularly into our big capitals and infrastructure and services not keeping up, is massive congestion.
People have felt the slowdown of the traffic; they have felt the crush in the trains. And they are saying “Enough! Give us a breather”.
The data backs up what residents know from experience. For example, a 30km Melbourne inner freeway journey in peak morning traffic took 39 minutes on average ten years ago. Now it takes an hour.
This congestion doesn't just impact on livability, it also has an economic impact. The cost of congestion in our capital cities is estimated to rise to up to $40 billion by 2030 if there is no change.
Congestion and livability are key factors in considering our population growth settings, but we also need to take economic considerations into account.
Migration is a key driver of GDP growth for the country, not just in an absolute sense, but also in GDP per capita. That is, it has made us each wealthier.
Treasury estimates that about one fifth of our increase in wealth per person over the previous four decades is due to population factors.
This is mainly through increasing the participation rate of our nation and boosting productivity. It increases the participation rate because we bring in migrants when they are young—with a median age of 26 years old—and because we focus on skilled migration. That is, they come here to work and help deal with the aging population.
Currently there are four working aged Australians to every one person over the age of 65. Without migration, this ratio would halve to just two-to-one by around 2066.
It also boosts productivity of the nation because of the skills that we are able to bring in.
Which underscores the importance of getting migration settings just right,
Having described briefly the nature of some of the challenges, let me outline our proposed approach. There are many elements to our Population Plan, but they can be broadly categorised into four parts.
1. Reducing the migration cap and creating incentives for new migrants to go to the small cities and regions.
The first part of our plan is to reduce the migration cap from 190,000 per annum to 160,000 and to maintain the lower figure for the next four years.
Right now, the vast majority of new migrants go presently to the big capitals and so reducing the migration rate is the first step to easing the pressure on Melbourne and Sydney particularly.
Then, within this 160,000 cap, we have allocated 23,000 places specifically for areas outside the large capital cities.
On top of this, we have provided new incentives for international students to seek opportunities in smaller cities like Adelaide or Canberra or the regions.
These measures work together to help ease the pressure in the big capitals while supporting stronger population growth elsewhere.
There has been a lot of discussion about these new settings, in particular about how the 23,000 allocation will work.
The answer is straightforward. It will work in the same way as the existing highly effective geographically-restricted visas work.
It is not widely known that we already have conditional visas for new migrants to settle in areas outside the big cities, such as the 489 visa. We will use essentially the same methodology but with much larger numbers.
Under the 489 visa, for example, new migrants must live outside the big capitals for two years as a condition of that visa. They prove their place of residence in the normal ways: employment records, tenancy agreements, electricity bills etc.
Unsurprisingly, there is an exceptionally high compliance rate with that visa condition: 99.8 per cent. Why is it unsurprising? Because any breach of a visa condition puts one's long term residency prospects in Australia in jeopardy. People don't take this risk because permanent residency in Australia is a golden ticket that millions around the world seek.
But do people then leave after two years and go to Melbourne or Sydney afterwards, defeating the purpose of the geographical condition of the visa? No they don't. In fact, over 85 per cent of people who settle in a regional area or smaller city are still there five years later.
These geographically restricted visas work already and our new 23,000 allocation of places for areas outside of the capital cities will work in the same way. People will be asked to stay for three years as a condition of their visa before applying for full permanent residency.
No one will be forced to take these dedicated places, but I suspect there will be thousands of people who will see those spots as a great opportunity to migrate to Australia and make a home in Adelaide or Bendigo or any of the other great locations outside of the big four capitals.
New incentives for international students are also geared to ease pressure in Melbourne, Sydney and Brisbane.
International students have been a large part of the population increase in recent years. On one method of counting, they have comprised 19 percent of the total population increase in the last decade. But like with other migrant categories, about 80 percent have gone to Melbourne, Sydney or Brisbane. Yet we know that other areas want international students and they are a great means of boosting local economies.
We are introducing two incentives. The first is to provide an additional year's work rights for graduates of regional or smaller city universities. This will be an effective incentive because it will give many graduates the full three years of work rights that they need to then be able to apply for permanent residency.
Second, over 1,000 scholarships will be provided each year for students to study in a regional university. This will be available for both domestic and international students and are strongly supported by Universities Australia.
These are significant changes to our migration settings and will have an impact.
However, we have been careful in making these changes to ensure that they continue to support economic growth and family reunion.
For example, while we are reducing the migration cap, we have actually increased the portion allocated for employer sponsored visas from 35,528 in 2017–18 to 39,000 places in 2019–20.
We have also introduced a Global Talent Scheme of 5,000 visas within the 160,000 cap. This is a specific category to fast track people into the country who are recognised as being outstanding in their field. We will be actively seeking out this global super talent to come to our country.
We have also maintained the family reunion category.
The main area where we have reduced the numbers is in the independent skilled migration stream, which has not been achieving strong employment outcomes.
We have got the settings right to ease the pressure on our fast growing big capitals, support the growth of areas that are looking for workers, and also supporting the ongoing economic growth of the nation.
2. More infrastructure to ease congestion and decentralise.
The second part of our Population Plan is to build more congestion-busting infrastructure and fast rail to our regional cities to support decentralisation.
Put a different way, even as we are ease population pressure on the big cities by lowering the migration cap and encouraging more new migrants to the regions, we are massively increasing our infrastructure spend to address congestion.
We are doing this in three ways.
First, through big city and region-shaping infrastructure under our record $75 billion infrastructure plan. The Government has invested in more than 600 major infrastructure projects since 2013. Under the Program, there are currently 162 projects in construction or development; 167 in the pre-construction stage; and 279 that have been completed.
This includes major projects such as WestConnex in Sydney, the Monash Freeway upgrades, M80 upgrades and Airport Rail in Melbourne and the Gateway and Ipswich motorways in Brisbane. It also includes massive regional road and rail investment such as Inland Rail and the Bruce Highway.
Second, we're addressing local pinch points through the $1 billion in the Urban Congestion Fund, which targets local bottlenecks. Sometimes it takes as much time to get through a local congested intersection as it does to travel on the freeway. Our approach is to fix those bottlenecks fast.
Third, by investment in Fast Rail, connecting the big capitals to the surrounding regional cities.
Our 20 year Fast Rail Plan is a major new development. It is a practical plan to connect Melbourne, Sydney and Brisbane respectively to their surrounding regional centres with the express purpose of supporting decentralisation and growth in regional centres.
We are ambitious in what we would like to see achieved over twenty years, but we are taking a practical approach to making it happen.
Over twenty years, we would like to see multiple fast rail connections built from Melbourne, Sydney and Brisbane respectively to surrounding regional centres.
From Melbourne, to centres such as Geelong, Bendigo, Ballarat, Shepparton, Wodonga and Traralgon. From Sydney, to centres such as Newcastle, Wollongong, Parkes and potentially all the way to Canberra. And from Brisbane, to centres such as the Sunshine Coast, Gold Coast and Toowoomba.
To make this happen, we are doing several things. We are investing $2 billion into getting the first project built: fast rail from Melbourne to Geelong. This would enable a journey of around half an hour. We hope the rail line can be under construction within a couple of years.
This was chosen to be the first one built in part because the Victorian Government has also prioritised it with their $50m planning investment underway already.
This route also complements our investment in Melbourne Airport Rail. The Melbourne Airport Rail link will go from the Melbourne CBD to Sunshine and then onto the Melbourne Airport, with the most expensive element being the infrastructure to increase capacity from the city to Sunshine.
The Geelong fast rail would leverage this investment to Sunshine. It would then involve the duplication of track from Sunshine to Wyndham Vale and upgrading of track and signaling from Wyndham Vale to Geelong.
Having made a serious investment to get the first project complete, we are also funding the business cases of other corridors, including Sydney to Wollongong, Sydney to Parkes, Melbourne to Albury-Wodonga, Melbourne to Traralgon and Brisbane to the Gold Coast. This will enable the government to determine future priorities. Our investments here complement those being undertaken by state governments.
We are establishing a new National Faster Rail Agency, supported by an Expert Panel, which will lead the development and implementation of the Faster Rail Plan. The agency will assess the outcomes of the faster rail business cases.
People have talked about faster rail for a long time. We are making it happen with a practical plan and a specific purpose to support the population agenda.
3. Working with the states and territories to plan better for the future
The third part of our Plan is to work more closely with states and territories to manage population growth right across the country. State and local governments are in the best position to know how much growth their infrastructure and services can support, and where additional growth is needed. They need to have a greater say in the migration settings so their infrastructure and service plans align with population growth plans.
Last December, the Prime Minister led a discussion with states and territory leaders who have now all agreed to develop a national Population and Planning Framework. The Framework will provide greater certainty and transparency over population growth, including a better process for taking account of state and territory inputs to the migration program, improved population data sharing, and a focus on skills requirements at a regional level.
We have also set money aside for a new Centre for Population which will take a leading role in the analysis to underpin the Framework. The Centre will help all levels of government and the community better understand how the populations of our states, cities and regions are changing and the challenges that change presents.
We will also be negotiating more City and Regional Deals. These “Deals” are a new mechanism pioneered by our government which facilitate a long term plan across the three levels of government for a particular city or region. The strength of them is that they bring together all three levels of government, across multiple parties, and outline long term plans to support and manage growth.
We have already signed City Deals for Townsville, Launceston, Western Sydney, Darwin, Hobart, Geelong and Adelaide. We are also working with the Queensland Government and South East Queensland Mayors on a South East Queensland City Deal.
This process marks a turning point in the way population is treated across government, with a move to greater collaboration, transparency and longer term planning.
4. Keeping Australia together
The final part of our plan is to keep Australia together. Australia is the most successful multicultural country on earth where we have welcomed people from around the world and in the process, we have been enriched.
But we must continue to work to ensure that everyone has the opportunity to contribute to the Australian success story, is welcomed and included, and is encouraged to integrate.
We have done this better than any other nation, but we are putting in an additional $71 million into new programs to further this effort. This includes:
- $20.4 million for the National Community Hubs Program, helping migrants with school aged children to connect with their communities. The expanded program will focus on encouraging community participation and pathways to employment.
- $19.6 million for implementing Sport 2030, a program which will fund a range of initiatives supporting Australian sport and the role it plays in promoting social inclusion.
- $10 million for the Community Languages Schools Multicultural Grants Program which will invest in teaching community languages at schools.
A Better Future
There is no better country than our great nation. We are free, prosperous, harmonious and have some of the most livable cities and regions in the world.
But there is no room for complacency. Over the last decade, our cities have been stretched to capacity and the infrastructure has not kept pace. Meanwhile our regions are often crying out for more workers and more economic development.
Our population plan addresses these problems now and sets up a framework to plan better for the future.
It immediately eases the population pressure on Melbourne, Sydney and South East Queensland; it fixes the congestion hot spots while building the city shaping rail and freeways; and it sets up better planning arrangements with the states to guarantee our livability in years ahead.