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The Forum > Article Comments > Smash’n’run or reform with care: local government in NSW > Comments

Smash’n’run or reform with care: local government in NSW : Comments

By Robert Gibbons, published 20/9/2012

Intergenerational improvement and a solidly based holistic planning and funding cycle are needed.

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There is a fundamental conflict of interest here due to population growth, which Robert Gibbons is trying to paper over. When a population is growing, there are always additional pressures on the environment, dilution of natural capital per person, and the need to supply people with expensive infrastructure, long before they can contribute enough to pay for their share. In the early stages of settlement, however, the benefits of having more people are likely to outweigh these considerations, and outweigh them for the whole community, not just the rich. Think of a little band of pioneers who have enormous natural capital per person but are too few to make effective use of it.

Australia is well past that stage. More people do boost the total GNP, but the 2006 Productivity Commission Report into Immigration found a depressing effect on wages and only a miniscule benefit to GNP per capita, mostly distributed to the owners of capital and the migrants themselves. (Skilled migration would have to be the best case argument for population growth.) See p. 154 and the graph on p. 155

The people at the top still do benefit from the distributional effects pf population growth, however, and they are the ones who donate to the politicians. They get bigger domestic markets, easy profits from control of real estate and other vital resources, and a cheap, compliant work force.

The rest of the people pay for their advantages with skyrocketing housing costs and utility bills, crumbling infrastructure and public services, more crowding and congestion, reduced amenity, etc. Privatise the profits and socialise the costs.

"Poor planning" is not the issue, unless the politicians can spin straw into gold. In a recent paper in Economic Affairs, the economist Jane O'Sullivan calculted that our 1.4% population growth in 2010/2011 cost us 9.6% of GNP for additional infrastructure, but revenue only went up with the population. It is easy to see why we have a $770 billion infrastructure backlog.
Posted by Divergence, Friday, 21 September 2012 4:23:33 PM
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