Kuta Beach

Kuta Beach

Sunday, 18 July 2010

Gillard Pushes for Sustainable Immigration Policy

Some some weird reason, Blogger won't allow me to post URLs on my blog posts!

Australia's Prime Minister Julia Gillard has now called for an election only having been in the job for a few months. One of her main advertised policies is that Australia's population growth should be slowed so that it is sustainable.

The Australian government already pays around $5000 for citizens to produce babies. This was seen as necessary because of Australia's ageing population. An ageing population would result in a massive public fiscal imbalance as government expenditure on hospitals to treat the old soars while tax revenue to fund these programs fall because working-age young people are retiring. It's questionable whether the baby bonus has much impact on birth rates because many of those who are paid to have babies were going to have babies anyway. Increasing immigration could help with the ageing population, but its impact is limited because immigration brings in not only young people but also old people. If the immigration program were tweaked so that it favors younger people (e.g. the older you are, the more you have to pay to get in) then immigration can help significantly with the ageing population.

However, both Labor and Liberal want to pull back immigration citing lack of infrastructure and yet the Baby Bonus policy exists simultaneously? That makes no sense.

It is true that sending more people in will crowd the country. I can see more and more crowding on the roads and trains already. But this problem is easily fixed. If more people come, simply build more. Where will the money come from to build these roads? It will come from taxes. It need not come from income taxes or value-added tax (called the GST in Australia) but infrastructure can easily be funded by applying an infrastructure levy whenever land is sold in an area that has no infrastructure. Suppose building infrastructure (roads, train lines, lighting, sewarage, and so forth) costs $10,000 per square kilometer. To make a city bigger to fit more people, the state government can simply extend the urban growth boundary and auction the extra land to property developers or even to individuals. When the government sells the land, it adds a $10,000 per square kilometer infrastructure levy that is used to fund infrastructure.

Some people argue that this continuous release of land at the urban fringes won't solve the overcrowding problem because people who live in the outer suburbs still need to commute to the city. Many people in Melbourne argue this because Melbourne city is marked by one central business district (CBD) with suburbs sprawling all around it. Many argue that if immigrants come to Melbourne and go to the city to go to work, they will clog up roads and trains. But this need not be the case. When government extends the urban growth boundary at the fringes, it releases not only residential-zoned land but also land that is designated for industrial and commerical use. Businesses can then take advantage of lower rent in these areas and move. This will divert traffic so that a significant amount travels from the central business district rather than towards the central business district.

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