The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

30 March 2010

NO.004

The Right Kind Of Growth

Address to the Queensland Growth Management Summit

Brisbane

30 March 2010

Thank you for the invitation to speak today and to share the stage with Anna and Bernard here.

Anna's contribution just now gives us plenty to discuss, and Bernard always has some very interesting things to say so I'm looking forward to that as well.

Can I acknowledge at the outset all of the ministers and local mayors that are here today as well - too many to single out individually.

It's always a pleasure to be back in Queensland. Unfortunately at this time of year I spend a lot of time in Canberra, with work on the budget requiring a lot of my time. But I did manage to sneak away to watch the Broncos' season opener here at Lang Park a couple of weeks ago.

The atmosphere was amazing, as more than 48,000 people took voice. It's awe-inspiring as you look around the ground, and see a big crowd like that cheering together. But it also gives a sense of some of the challenges facing this state, and the country as a whole.

I say that because according to fresh numbers released by the ABS only last Thursday, Queensland is currently growing at about 115,000 per year - enough to fill Lang Park to capacity twice over. Think about that next time you are at the footy - each year every seat in that stadium could be filled twice over by brand new Queenslanders wanting to build a life here.

Given these sorts of figures, it is no wonder that so many Australians are interested in the issue of population growth, especially the national debate that took off in the last few months, following the release of new population projections prepared for the Australia to 2050 Intergenerational Report.

The Background Paper prepared for this Summit also fleshes out how these projections will play out for Queensland. Although I do need to take issue with one point in the Background Paper - it does quote The Economist as finding that Melbourne and Sydney are more 'liveable' cities than Brisbane. Some economic conclusions are so obviously wrong it is best not to quote them!

Economic Foundations

These two reports do a great job of identifying the challenges presented by our growing and ageing population. Happily, we are in a position of strength to begin preparing now for these challenges.

The strength of our economy stands out amongst developed economies and has increased Australia's attractiveness as a destination for foreign investment and migration. As the global economy gravitates toward Asia, Australia stands to be one of the biggest winners.

I don't need to tell you our resources industry is going from strength to strength. ABARE estimates capital expenditure of $9.3 billion in Queensland in coming years on 'advanced projects', and possible additional investment through 'less advanced' projects of over $100 billion. Assuming that all the advanced projects proceed, and 75 per cent of 'less advanced' projects proceed as planned, Treasury modelling suggests this investment in Queensland resource projects could lead to a cumulative increase of around $70 billion in real GDP over the five years to 2013-14, plus the flow-on activity that this investment brings.

But we can't sit back and hope our good luck holds out. The challenge now is to take this momentum and build something lasting. To put in place the policies and investments now that will deliver sustainable growth for years to come. Growth that improves our standard of living while protecting our social cohesion and our environment.

Population

There's a broad consensus that the best way to deliver this growth is through the three Ps of productivity, participation and population.

Let's deal with population first. The Australia to 2050 report projects Australia's population could increase from around 22 million in 2010 to around 36 million by 2050, based on a continuation of current trends in fertility and migration.

Brisbane is projected to double in size over the period - growing from 1.9 million people today to over 4 million people in 40 years time. In fact, all regions in South East Queensland are expected to grow significantly between 2006 and 2031. The Gold Coast is projected to increase by over 430,000 and my old stomping ground on the Sunshine Coast is projected to grow by almost 240,000 people.

Now, we need to be absolutely clear - these types of projections are not setting targets or caps, and they are certainly not carved in stone. What they do is give us a sense of the challenges and opportunities ahead.

Queensland, particularly the south-east corner, best epitomises that tension between continued economic growth and preserving the things we love about Queensland - our relaxed lifestyles, our sense of community, our flora and fauna, the ease of getting around and the character of our housing.

I have lived my whole life in the south-east corner, so I feel that tension very personally, and very deeply.

Some say we should cap population growth to preserve our way of life. Others say that it is un-Australian to tell people how many kids they can have, and where they can and can't live. Business cries out for more skilled migration, while the broader community worries about what this means for our basic amenities, struggling to keep up with demand.

Bernard has done a lot to improve public understanding of the trade-offs involved here. He takes the view shared by many economists, that a growing population can mean improved prosperity, and that migration is one way to help tackle the challenges of an ageing population.

Anna has really been at the coalface of this issue, and has done a lot to move the debate forward, including through this forum.

Anna's on the record saying a population cap would be impractical and the real challenge is to spread the migration intake so we don't overload some parts of the state. Just yesterday, she argued in the media for national population and infrastructure policy, to provide state and local governments with much needed certainty.

I couldn't agree more, and that's why infrastructure and migration are key elements of our reform agenda.

That's why this Government has commissioned Infrastructure Australia, which has finalised a comprehensive national audit of Australia's infrastructure and identified a National Priority List to guide investment in key infrastructure - based on rigorous evaluation of our future needs.

And it's why we have begun the task of constructing a long-term planning framework for migration, to ensure that we strike the right balance between population, economic, environmental and urban and regional development outcomes over the longer term.

Thankfully, my co-panellists here don't fall into the familiar trap of too narrowly defining the debate about population policy. They understand, like I do, that population policy is as much about the composition of the population, the quality of our communities, and the contribution people can make to our prosperity as it is about the size of the population or related calls to pull up the drawbridge. It is as much about participation and productivity as it is about the narrower concerns we hear about in the debate.

I should make very clear at the outset that I don't support growth for its own sake - whether that be population growth or economic growth. For me, growth's all about supporting an improved quality of life over time. Growth's all about improving our standard of living and at the same time improving, not detracting from, our social cohesion and our environment.

That's why we are spending so much time on tackling entrenched disadvantage, water reform, and the damaging effects of climate change on the country we bequeath to our kids. It's why we have tasked Infrastructure Australia with the important work of coordinating efforts to improve the environmental sustainability, liveability and productivity of the major cities of Australia.

Because the answer isn't to stop growing, but to grow differently.

I don't for a moment dismiss the critics of population growth.

Early in January, during my regular stay on the Sunshine Coast, I talked to a lot of fair-minded locals - including some I grew up with - about their own concerns about population growth on the coasts and what it means for them. I have a lot of time for these people, but I can't bring myself to agree with those who think we can solve all our problems by putting a freeze on national population growth.

It is all too easy to speak of the costs of an increased population, and forget to mention the benefits. This is a mistake too often made.

The Australia to 2050 report shows capping population growth at 0.8 per cent per year (rather than the 1.2 per cent currently projected) would exacerbate the problems of population ageing and reduce GDP by 17 per cent by 2050.

This is consistent with the Queensland Treasury modelling cited in the Background Paper for today, which found that restricted population growth in South East Queensland would result in regional product per capita being 5 per cent lower than a business as usual scenario.

As that Paper also points out, overseas migration has been the largest component of Queensland population growth since 2006.

The Queensland Government has sponsored significant numbers of migrants to work in regional Queensland under the state-sponsored migration program. Already this year, for example, there have been 116 nurses sponsored to work in Queensland in areas outside of Brisbane.

To ensure the migration program continues to deliver the skills needed across Australia, the Federal Government is introducing State and Territory Migration Plans, which will provide States and Territories with an opportunity to target and sponsor skills that are needed within their jurisdiction. This is an opportunity for States and Territories to identify skilled occupations which are in demand for inclusion in their respective region.

Participation

In my view, you can't have a comprehensive discussion about population without also thinking about what is happening with participation and productivity.

One of the key challenges identified in the Australia to 2050 report is the expected decline in levels of participation, as a result of population ageing. By 2050, nearly one-quarter of our population is projected to be aged 65 and over, compared with around 13 per cent currently.

Older Australians have a great contribution to make to this country. We want to do everything possible to ensure they can work as long as they wish.

They certainly should not be pushed out of the workplace due to bad policy or prejudice. That is why I announced $43 million to fund pilot studies and a new consultative forum in this area.

But the reality is fewer people in this age group work, and those that do tend to work fewer hours. As a result, an older population will lead to a decline in workforce participation rates, from current levels of over 65 per cent to less than 61 per cent by 2050.

The decline in workforce participation flowing from an older population will impact on growth, and through it government revenues. At the same time, ageing and health pressures are projected to increase total Australian government spending from 22.4 per cent of GDP in 2015‑16 to around 27 per cent by 2050.

This is a key reason why we have recently announced some of the biggest changes to the health system since the introduction of Medicare, and we're discussing those with Anna and her colleagues and counterparts right now.

Productivity

The Australia to 2050 report also points to the centrality of productivity gains to sustainable economic growth. If we can lift productivity growth to average 2 per cent over the next 40 years, then living standards would be 15 per cent higher - around $16,000 per person.

That is why we are investing so heavily in reforming and investing in our infrastructure - a key part of the Prime Minister's major economic speech yesterday. That is why in our last Budget we kicked in $22 billion to improve our roads, rail and ports. It's why we are investing in the National Broadband Network. And it is why we have established Infrastructure Australia, to drive a strategic and national approach to infrastructure planning and investment.

In Queensland, we are working with the Queensland Government on $884 million of additional works on the Ipswich Motorway, $488 million of construction on the Bruce Highway, and a contribution of $365 million towards the Gold Coast Light Rail project - all to ease congestion where the pressures are greatest.

Another part of our plan to improve productivity is investing in the skills needed for the future. It's why we are delivering education reform as part of the education revolution. A 50 per cent real increase in funding for the period 2008-09 to 2012-13, compared to the period 2003-04 to 2007-08.

Conclusion

Let me finish on an optimistic note. Personally I have no doubt that a nation which has defied the worst global recession since the Great Depression is capable of harnessing the benefits of a growing population while intelligently managing the stresses it brings.

Growth that improves the quality of life for all Australians. Growth which provides opportunity and bridges the disadvantage gap, both in the cities and the regions. Growth which helps to educate young Australians, train and employ them. Growth which preserves our environment and which makes for a better society - here in Queensland and right around the country.

So thanks again for having me today and I look forward to the discussion.