Rapid population growth smashing hip pockets, straining vital services

“Rapid population growth – at rates above 2 percent, common in most developing countries today – acts as a brake on development. Up to a point, population growth can be accommodated… but the goal of development extends beyond accommodation of an even larger population; it is to improve people’s lives. Rapid population growth in developing countries has resulted in less progress than might have been – lost opportunities for raising living standards, particularly among the large numbers of the world’s poor.”

That’s an extract from a 1984 World Bank report “The Consequences of Rapid Population Growth.” It defines “rapid” as growth above 2 percent and its focus was on developing countries. Advanced economies were not trying to grow populations at the same speed as those of the third world.

Except, it seems, for us.

Australia’s population grew by 2.1 per cent in the year ending June 2024. Of the 550,000 additional people, only 106,400 were from natural births over deaths. The rest – some 445,000 or a city the size of Canberra – were a result of deliberate federal immigration policy.

Unrestrained growth has many supporters in the big end of town. Property speculators often target population growth as a key driver of future value. But the consequences of rapid growth are being felt acutely by many more others, and can actually lead to a deterioration in amenity and standards of living.

The most obvious evidence of these adverse consequences is the current housing shortage.

We simply are not building enough homes, fast enough, to accommodate these levels of rapid growth “hotspots.”

Worse, new housing approvals are falling to record lows at a time of record demand growth.

Only on Tuesday (7 January), the Australian Bureau of Statistics reported the total number of dwellings approved fell 3.6 per cent in November. The fall in dwellings approved was across all residential building types. Approvals for private sector houses fell 1.7 per cent, while private dwellings excluding houses dropped 10.8 per cent.

Oddly, the housing crisis has been pigeon holed as a supply problem only. Few talk about the law of “demand and supply.” It seems it’s now just the law of supply.

Far-reaching expense implications

The focus on housing shortages and people without homes is one thing. It is also leading to excessive costs for those with roofs of their own – whether rented or being purchased. 

Rents have surged and vacancies tightened, causing significant cost of living pressures for the third of our society who rent, while those with recent mortgages are similarly stretched. As a result, consumers are cutting back on spending across a range of discretionary items. It’s been an average Christmas for many retailers as a result. That’s an adverse rapid growth consequence few talk about.

Other rapid growth consequences are far less discriminatory. Large parts of the country are facing brown outs and power rationing during periods of intense heat. A hot summer is nothing new for Australians, but our energy grid – down to suburban substations – is ageing and not intended for the loads of the modern, higher density suburb (where every home is airconditioned).

The “density is destiny” mantra - parroted for more than 30 years - has almost entirely been around population and housing: little has been said about the wider infrastructure consequences of putting more people in the same space.

As the World Bank noted 40 years ago, the objective of growth should be to improve people’s lives, not worsen them.

Schools, health and utilities under pressure

Hospital shortages are another obvious sign of rapid growth consequences with ambulance ramping and bed shortages now commonplace. Hospitals are expensive things to build or to expand, and they take a lot of time to build. Keeping pace with rapid population growth is a Sisyphean challenge.

Schools will also soon be a telling pressure point. For every 100,000 increase in population there’s a commensurate increase in the number of children needing schools – around 16,000 in fact. That either means more schools (which we aren’t doing much of notwithstanding the challenge of finding sites in already built out areas) or bigger class sizes.

Congestion is another obvious adverse consequence of rapid growth. Mostly we are using the same roads and transport networks that supported a population of half our current size.

We are now looking at doubling that population again within another 20 years, all getting around on (largely) the same network. Local governments do what they can, but with only 3.6 per cent of taxation revenue (the Federal Government, responsible for population via immigration, collects 82 per cent of tax revenue) their ability to fund and manage transport infrastructure needed for a rapidly growing population is severely constrained.

Water shortages will also emerge: more people require more water to drink, wash clothes, fill pools, and so on. The same water infrastructure that comfortably supported a population half our size is simply not going to be able to support a population double our size. Dams that are full now will drain faster with more people needing that resource.

Rich more insulated than the rest

Two ironies emerge from all this.

First, those voices most loudly in support of continued rapid population growth are also those least likely to bear responsibility for the consequences. Developers like demand for more apartments - but are rarely around for discussions on hospital or school shortages, rising congestion, over stretched energy infrastructure or water shortages.

People with financial security (high income earners) are best placed to insulate themselves from the adverse consequences of rapid growth: they simply pay more, where demand exceeds supply. Whether that is private health, private education, well located real estate … money talks and buys your way out of problems if you have enough of it.

The other irony is that the density mantra was originally intended to make use of underutilised urban infrastructure, most typically in inner urban areas which were at risk of “hollowing out” (as happened widely in the US). With falling inner urban school enrolments, for example, it made sense to increase the local density to make better use of existing infrastructure than build entirely new infrastructure on urban outskirts.

But that’s no longer true.

A new vertical school in an established urban area targeted for more density is vastly more expensive than a “traditional” build; retrofitting below ground infrastructure (sewer and water) in existing locations is more costly than in new areas; apartments are more expensive to build than detached houses; building tunnels (whether for public or private transport) below existing areas is a great deal more expensive than surface networks in new areas… and on it goes.

In adopting the density model to accommodate rapid increases in population, we have now not only committed to a more expensive urban form, but one that also takes longer to deliver.

Hardly the formula for enhancing standards of living in a rapid growth scenario?

Surely we either moderate our rates of growth or we adopt new models? Or, as the Planning Institute has sensibly suggested, we adopt a national settlement policy that ties the Federal Government – whose immigration policies are driving record growth – to the local consequences of that rapid growth.

Otherwise those high growth markets could start to go backwards.