The Australian Population Research Institute is an independent research organisation. It is devoted to understanding and communicating the nature of Australia’s demographic and economic situation and the policies and factors influencing this.
It is a not-for-profit Institute with no funding from corporate Australia. Its members are all participating researchers who contribute to the Institute’s work.
New research report, 20 July 2022
Bob Birrell and Ernest Healy, The Suburban Rail Loop: Not needed, not fit for purpose and a debt bomb
The Suburban Rail Loop SRL) (SLR) is an orbital heavy rail line between Melbourne’s middle suburbs, eventually intended to link Cheltenham with Werribee.
The Victorian Government frames the SRL as the pinnacle of its Big Build. This has become the political focus of the Government, representing its can-do, no-delay capacity to tackle Melbourne’s transport problems.
So it is with the SRL. It was announced as a visionary project just prior to the 2018 State Election. That was it. There was no opportunity for any public examination of its merits.
In pursuing the Big Build the Victorian Government has committed to massive capital expenditure and borrowings. The latter reached $60 billion in 2019-20, doubled by 2021-22 to reach $119.4 billion, and are projected to reach $182 billion in 2024-25. This number does not include the cost of the SRL, which will be at least an extra $34.5 billion, just for the first stage to Box Hill.
The SRL is justified by the huge growth in traffic expected to flow from the State Government’s confidence that Melbourne will grow from 5.1 million today to 9 million by 2050. Much of this traffic is expected to stem from higher density housing in established suburbs. The SRL is intended to provide new public transport options from these suburbs to activity centres on its pathway.
Melbourne has 20 per cent of Australia’s population. Over the past couple of decades it has been attracting a third of Australia’s net migration intake. It has also attracted a large net inflow of residents from elsewhere in Australia.
Melbourne’s population is more likely to reach 7 million than 9 million by 2050. This is because Melbourne is losing its comparative advantage in providing affordable housing, relative to other locations in Australia.
By late 2021 Melbourne had become the fifth most expensive city in the Anglo world for separate housing. As a result, the overseas migration influx has slowed and existing residents are voting with their feet to move to more affordable locations.
The housing affordability crisis is driven on the demand side from an increase in young adult households looking for family friendly separate housing. This mainly derives from migrant households stemming from the surge in young migrants to Melbourne since the early 2000s.
They confront supply side constraints resulting from the Victorian Government’s restrictions on fringe housing development. A further constraint is that over half the existing stock of separate houses in Melbourne is occupied by householders over 50 years of age. This proportion is certain to increase.
The situation will be long lasting, thus generating a prolonged demand/supply imbalance for such housing and continuing affordability problems.
Though Melbourne will continue to grow, it will do so more slowly than the planners assume.
It is not just that the overall size of Melbourne’s population will be less than the Victorian Government expects. The housing affordability crises also challenges the SRL planners’ assumption that there will be high levels of infill in the middle suburbs. The high cost of housing sites for closer density means that new family friendly flats and town houses are also becoming unaffordable.
The SRl planners do not acknowledge that there are other cheaper and more flexible ways to provide public transport options than the heavy rail SRL. Buses are the obvious alternative. Nor do they consider the likelihood that increased working from home will remove much of the SRL’s prospective patronage
The SRL is a debt bomb. It will add to existing infrastructure debt at a time when there are far more important uses of investment funds. One is the State Government’s aspiration to complete a renewable energy transition. This will require far more State investment than is presently assumed. A second is the aspiration to modernise the Victorian economy.
The Victorian Government will have to make choices. The SRL is a third-order priority.
Victoria is a mendicant State. It needs to borrow just to finance the operating costs of providing health, education and caring services for its expanding population, let alone the escalating costs of its Big Build. The State Treasury has been telling Victorians that this is not a problem because of low interest rates. It is a problem now. For new borrowings the Government will have to pay the much higher rates that lenders are demanding.
Unlike other Australian States, Victoria cannot rely on revenue from commodity exports. This is why the modernisation of the economy is so important. Victoria needs new competitive industries.
By 2021 Victoria’s exports of Elaborately Transformed Manufactures had flat-lined at $10 billion. Meanwhile imports of these goods have surged to over $60 billion.
This situation will not change without a State-led industry policy in which the State shares the capital investment costs.
Research report, 17 June 2022
David McCloskey, Impacts of Structural Changes In Australia’s Economy (2006 – 2016) on labour productivity, income inequality and competition in local markets June 2022
Economic policies have an impact. The ‘reform’ and trade liberalisation agendas of the 1990’s have been touted as the key to Australia having a record of more than 20 years of uninterrupted nominal economic growth.
But what has been the cost of this nominal growth? This study has examined the impact of the open market policies and reforms on the structure of Australia’s jobs and industries over the period from 2006-2016. It identifies the actual changes in Australia’s economy that have occurred under these policy settings.
Calls for more reform and more labour market deregulation are based on the idea that they will promote improvements in productivity, better allocation of resources to productive sectors of the economy, and will lay the foundation for future economic prosperity.
These ideas are mistaken. While nominal economic growth has been achieved the policies have had perverse outcomes. High productivity sectors, such as manufacturing have experienced a structural decline of 60%, while there has been a boom in low productivity jobs (both high and low wage) in people servicing industries.
Our analysis of the structural changes that have taken place in the Australia’s economy from 2006-2016 shows that these policies have led to the off-shoring of jobs (more than 210,000). They have also been accompanied by an increase in automation which has led to the loss of at least 223,000 jobs, with a further 150,000 loss of jobs due to digital transformation.
The study also highlights the impact of the concentration of market power on jobs in the retail sector and the failure of the ACCC to maintain competitive retail markets.
Many middle-income jobs have been lost through these structural changes. They have been replaced with both more low-paid, insecure jobs and also more very highly-paid jobs, leading to a hollowing out of middle-income jobs.
At the same time these structural changes have increased our dependence on imported essential items. Market competition has also suffered with the concentration of market power into the hands of large businesses through their purchasing policies, market saturation and selling price policies.
To compound these problems our economy has become heavily reliant on an aggressive China for export sales of coal, iron ore and gas (employing a minimum number of people).
At the same time we have become dependent on China for manufactured goods (employing many Chinese people).
The structural changes identified in this study suggest that Australia is increasingly vulnerable to economic shocks with a huge reliance on high commodity prices. There is an urgent need for smarter, evidence based economic policies to be developed that will allow Australia to compete in the high productivity knowledge jobs of the future.
Blog post, 25 November 2021
Different survey methods, different results: What do Australians really think about immigration numbers?
There have been two recent opinion surveys about Australians’ attitudes to immigration numbers: TAPRI’s and one by Essential Research. They yielded markedly differing results. This blog post analyses the reasons for this. There are important implications for survey design and interpretation of results
Research report, 14 October 2021
Katharine Betts and Bob Birrell, Politics and the population question during the pandemic: The 2021 TAPRI survey
Survey results: There is a huge gulf between Australia’s elite and Australia’s electorate on immigration policies – a gulf which has hardened since the Covid pandemic began in March 2020.
The Coalition government, as well as leading business and employer groups, have declared that they wish to see Australia’s immigration intake restored to around net 240,000 a year when Australia’s borders are opened. This is the Big Australia target.
TAPRI’s survey found that, in late July 2021, only 19 per cent of voters agreed with this target. The rest supported lower levels, including 28 per cent who wanted the inflow and outflow of people from Australia to be the same. That is, they wanted nil net migration.
This outcome is despite 18 months of advocacy since the pandemic began on the part of the Government and business interests for a revival of Big Australia.
This advocacy has fallen on deaf ears.
The report sets out the data and then goes on to analyse their implications for the 2022 Federal election.
Blog post, 4 May 2021
Bob Birrell’s op ed from the Herald Sun, Feds must resist visa push from business, published 26 April 2021 is now online.