The obvious and sensible solution is less people.
Win win all through.

ateday, that way we get neither good infrastructure nor the means to fund it.

I am all for infastructure in our big city's, as long as it is the right sort of new works. There is a limit to the amount of cars you can stack into a city.
We need more public transport,from outer city limits to city.
The people that live within city limits should be enough traffic within, without the addition of more from outer limits.
There needs to be a circle around an area, those outside the circle are on public transport.
There has to be space within city for the uninterupted flow of public transport.
Put public transport ahead of more roads and more cars on the city roads .

Ateday is right. Immigration is running ahead of capacity to pay for increasingly more expensive infrastructure in cities not designed for those numbers.
About 70,000 net pa , one third of current, would enable infrastructure building to catch up. Those who advocate high immigration and complain about not enough infrastructure should nominate what extra taxes they wish to see imposed to pay for it.

Both wacko parties are are the same: big immigration and wasting our money on junk projects instead of infrastructure. Again, there is only one answer. Refuse to vote for the blockheads, and demand better politicians.

Outrider, I would like to see it financed with extra debt rather than extra taxes. Firstly because future generations will be the main beneficiaries so it's a bit unfair to have the present generation bear all the cost. Secondly because the infrastructure will boost productivity, causing tax revenue to rise even without higher tax rates or new taxes. And thirdly because the economy is currently weak; a fiscal stimulus is needed.

It also needs to be pointed out that infrastructure renewal and maintenance are also a big part of the problem. It has been calculated that on average, infrastructure has a lifetime of something of the order of fifty years, so we need to factor that into the equation.
Aiden, I would take issue with your proposal that this activity should be financed by debt. We are hocked up to our eyeballs already. In general, the country can collectively afford higher taxes. We just need to accept that we are already living too high off the hog and all need to make some sacrifices in order to preserve a viable environment for future generations. Unfortunately this is the elephant in the room that neither political party has the balls to confront.

David

VK3AUU, Australia has very little government debt by world standards, despite unlimited credit being available.

Aidan,

So we keep building up he debt because "we have so little". Catch up to Greece etc? Why is this little bit of debt causing us so much trouble?

It is clear that you are an economic genius, as were the ones who got us into debt. You should have no trouble answering.

Aiden

I think there is a clear case for debt-funded infrastructure when that infrastructure is charge supported – for instance, gas or electricity infrastructure or toll roads. This simply extends the “user pays” principle over time, and is both equitable and efficient.

The case for debt financing of tax-funded social and uncharged infrastructure such as schools and suburban roads is in my view more complicated. There is nothing inherently more equitable and efficient in financing a road in Adelaide from taxes paid by Perth residents in 2020 rather than Sydney ones in 2015. The whole point of tax-funded infrastructure is that users DON’T pay, and so the equity link between beneficiaries and funders is weaker (though not non-existent – as you point out, the benefits of productivity growth are widely spread). Furthermore, if we are borrowing to finance infrastructure investment and running deficits on current spending, we are effectively hitting future generations twice – they will paying for both the infrastructure they will use and the services we used.

Obviously these things should not be too rigid, but as a principle I’d say that its ok for public trading enterprises to borrow to enhance infrastructure (assuming it has a sound business case), but the general government sector should aim over the medium term to grow the real per capita net balance sheet (debt and assets) by no less than real GDP growth. That would mean we can run cyclical deficits on current spending but should aim for a structural surplus over the business cycle. And we can borrow to finance infrastructure, but only if we have raised at least enough revenue to sustain and replace the capital stock we inherited and grow it in line with population and the economy.

Aidan,

The 2006 Productivity Commission report on immigration and a number of other reports here and in other countries have found that the per capita economic benefit from mass migration is very small and mostly goes to the owners of capital and the migrants themselves, while there is a slightly negative effect on average wage growth for the bulk of the population

http://www.immi.gov.au/media/publications/statistics/popflows2005-6/Ch6pt3.pdf

Population growth does increase total GDP, giving Big Business and the politicians more to skim, and they also benefit from the distributional effects. A bigger population means more customers, easy profits from real estate speculation, and a cheap, compliant work force. Unlike small business, they don't have to worry about the extra population attracting competitors. These people also tend to be insulated by their wealth from the problems that they are causing for others.

Jane O'Sullivan in an Economic Affairs paper has estimated the cost of infrastructure for an additional person at about $200,000, with about $100,000 to $120,000 representing government infrastructure.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1999200

The economist Ralph Musgrave has estimated non-housing infrastructure costs of 30,000 pounds per migrant for the UK (as of 2008)

http://ideas.repec.org/p/pra/mprapa/6869.html

Musgrave points out that if is likely to take a generation before the migrant has contributed enough to pay the community back for his share of the infrastructure that he has been using since his arrival. No wonder our infrastructure backlog is more than $700 billion.

Now tell us why the bulk of the population, who don't benefit from the population growth, haven't contributed to it, and may even be hurt by it in terms of their quality of life and access to public services, should be more heavily taxed, either directly or by having their taxes diverted to debt repayment, for more infrastructure for more people. How about beneficiary pays?

Providing more infrastructure in a big city that is already built out is also far more expensive than putting it into a greenfields site. It is Big Business and the politicians who have also decided to concentrate most of the development in a few big cities,

ttbn, of course I have no trouble answering. Japan would be a more appropriate example of a high debt country because (like Australia and unlike Greece) Japan has unlimited credit. But it's not a matter of catching up with anyone; rather we should be doing what's economically advantageous for Australia, without our decisions being distorted by an irrational fear of debt.

This little bit of debt isn't directly causing us any trouble whatsoever. What's causing the trouble is the politicians' reaction to it. Taking on more debt was the most economically responsible course of action for the Rudd government after the GFC hit, but the Liberals fooled the public into thinking it was economically irresponsible. It's the Gillard and Abbott governments' attempts to get us back into surplus that are causing us so much trouble.

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Rhian, future generations aren't under any obligation to pay off the government debt. But I am in favour of running structural surpluses – not because of the debt itself but because doing so keeps interest rates down. Even if we had no government debt, I'd still advocate running structural surpluses for that reason.

_____________________________________________________________________________________

Divergence, if infrastructure were planned better then we wouldn't have to spend so much on it. High costs are caused by years of inaction (resulting in loss of skills) followed by frantic spending on grossly overengineered megaprojects.

Whereas if we were doing it right, a higher population would bring economies of scale, and the benefits would flow to everyone including those who'd been there all along.

An aspect of this that's not mentioned in this is why we need to have so many people travelling to jobs in or near CBDs. There has been some exploration of alternatives but overall far to little.

Travel into a single geographically small area with limited opportunity to dramatically improve transport routes because of existing high density occupancy for large numbers of people will always lead to congestion at key times of the day.

I doubt that for a lot of jobs full time working from home is an ideal solution (much though I would like to do more of it) but there is certainly plenty of scope for outer suburban office hubs in many of our cities. People would still need to commute but not to the same concentrations in a single area.

It would require some different ways of organising a lot of offices, for instance greater use of teleconferencing if an organisation has workers spread around a city but many organisations already successfully deal with geographically dispersed workforces and teams.

I don't think there is one single solution and we should be exploring a range of alternatives that could be part of any fix rather than pouring lots more money into trying to make what we do now work better under worse conditions.

R0bert

Here are three projects for the author to carefully consider and report on. The Myki ticket, the Victorian desalination plant and the North South pipeline. All three in Victoria and organised, if I can use that word, by the same government/public service.
I am one of the suckers paying the billions of dollars and suffering the resultant debt.
Perhaps the author can understand I am going to suggest the way to pay for anymore infrastructure spending is to sack her and her dopey organisation. Also reduce immediately all upper echelon public service and politicians salaries and pensions.

Aidan,

You say, "This little bit of debt isn't directly causing us any trouble whatsoever".

You pointedly say 'direct' but do not refer to any 'indirect' harm. No matter, you are clearly a disciple of Bill Shortonsense, who is in complete denial of the awful truth about the economic mess that Rudd/Gillard/Rudd left us in.

Going into debt as Rudd did was not a "responsible course of action"; it was particularly stupid. It is not a good idea to go into debt unless there is a guaranteed chance of return on the money borrowed. Rudd's GFC spending bash was a hideous debacle, leading to death (pink batts) and unwanted and unused toilets and school halls - just as were the same blunders of overseas goverments who employed the long-discredited socialist idea that you can spend your way out of debt.

That's what addicted gamblers do. It's totally inappropriate for politicians, using other peoples' money.

Since Keating and Costello, there hasn't been an Australian treasurer who would walk away from the "Shark Tank" with a loan.

And, by the way. I don't remember Gillard doing anything about a surplus, as you claim. I do remember Swan promising a surplus sometime down the track at least 5 times, even when he was still spending borrowed money like a madman.

Coalition governments only are capable of leaving surpluses behind for Labor socialists to blow in a short time.

But, there will be no surplus this time if Abbott and Co get tossed out. I wonder how the socialists would travel with that!

We could have been on the way to recovery now, if it wasn't for the crackpot blocking by the socialists, whose 'expertise' you admire, and the silly senate - all economic illiterates like you.

RObert, "An aspect of this that's not mentioned in this is why we need to have so many people travelling to jobs in or near CBDs"

I thought you might be entertained by this example from Canberra. because it is the will of knobs to be with each other and their restaurants and clubs are centralised,

http://www.canberratimes.com.au/national/public-service/tuggeranong-one-couldnt-possibly-move-there-says-finance-department-chief-jane-halton-20150325-1m6fry.html

Proof too that women knobs are no different from any other (knob).

The problem of business being done in the cbd is multiplied by the gentrification of inner city areas. That is to the very sad ejection of retired people and age pensioners, many of whom are widows, from the homes in which they have raised their families.

Also, the formerly cheap boarding houses and flats that serviced single people both young and old (different houses served the different ages) have been put out of business. That was done by local and State governments at the behest of tenants unions and RTAs (driving unrealistic requirements of owners), but succeeding in closing down the economic accommodation instead.

The biggest influence however are the overseas investors building posh apartment buildings for the well to do. That wipes out the available accommodation for middle class and below, pushing them to the outer city fringes.

Aidan,

The problem with your argument is that there are diseconomies of scale as well as economies of scale. For example, a rich coastal city that outgrows its natural water supply can desalinate water, but the desalination plant is a prodigious consumer of electricity and the desalinated water is 4 to 6 times as expensive as dam water. If you look at the links in my previous post, the Productivity Commission wasn't able to find any sort of big economic benefit from mass migration, even though our cities are already a lot bigger than they were 30 years ago. Among the developed countries, there is no link between prosperity and population size, density, or growth rate. There is a negative correlation between population growth and prosperity in the poorer countries (compare, say, Thailand and the Philippines). There is no link between growth in productivity and growth in population in the OECD countries (scroll down to the first graph)

http://theconversation.com/the-tenuous-link-between-population-and-prosperity-38291

You want to blame our inadequate infrastructure and other problems on the fact that our politicians are incompetent clowns, but if there were such a benefit to be had from a bigger population, then all the other countries in the OECD must also be run by incompetent clowns.

I am not disputing that there are cultural and educational benefits to having some immigration, or that there are some very talented people who would be an asset anywhere (leaving aside the issue of poaching), but we don't need hundreds of thousands of migrants a year for such benefits. Nor do I dispute that there were probably benefits from high population growth in the past when our population was a lot smaller. You need to accept, however, that it isn't 1900 anymore, or even 1950. It is good that your bones were growing when you were 8 years old, but if they are still growing in the same way when you are 40, then you have a very serious problem.

ttbn, I obviously didn't make myself clear enough. Apart from the harm caused by the politicians' reaction to it, the debt the Rudd government took on has caused no harm whatsoever to the Australian economy.

Failing to spend more at that time would have been grossly economically irresponsible, as Australia would have then fallen into recession. This would have resulted in a decline in tax revenue, so Australia would still have gone into debt but would have nothing at all to show for it.

And before you yell "China", look at what happened to the ore prices during the GFC. It wasn't China that kept us out of recession.

With hindsight, the safety standards for roof insulation were totally inadequate. But many people benefitted from the home insulation scheme, and so did the environment. And the school halls scheme was good value except where state governments outsourced the running of it to the private sector. Surely the most important lesson we can learn from it is we need a capable public sector?

It would of course have been better if we'd had some better value shovel ready projects to spend the money on. But we didn't, and I don't think Rudd had been in long enough for that to be his fault.

I don't watch Shark Tank, so don't understand the reference.

Under Gillard, Swan made significant cuts, trying to achieve a surplus before the economy was ready for it (a futile exercise) and this has only accelerated under Abbott and Hockey. Fortunately the Senate protected us from the worst of the cuts they tried to make, but you only have to look at the unemployment rate to see how much worse they've made things.

Look at http://blogs.crikey.com.au/pollytics/files/2009/09/cashbalance.PNG and you'll see the budget outcome depends far more on the economic cycle than which party's in charge.

If we go for growth (with bigger deficits now and cuts after the private sector's fully recovered) we will return to surplus much sooner than if we try to cut now.

Wonder where we will put all these new People
Lets try Sydney. nope already to crowded and housing is out of control
Lets try Brisbane. nope seems like every month now they get flooded
no place for them there.
Lets try Adelaide nope its just about dead great work pollies.
Lets try Perth nope they are about to go into recession
Lets try Hobart No jobs
Whats left OK Darwin and Melbourne problem solved im sure these cities can squeeze in another 10 million or so no problem

Everytime I hear anything about this right wing BS called the IGR, it is just dogma to justify current and upcoming federal government budget philosophies. Any predictions about the future in 4 decades fails miserably to comprehend the rapid advancement of A.I into our lives and the subsequent diminishing of, or in some cases, radical restructuring of jobs & careers that are virtually unheard of or even invented today. On top of all this, is the ever encroaching effect of climate change with its inherent troublesome unpredictability. To try and plan cities with a vision of 40 years from now, is just plain silly and absurd.

This obviously does not just effect Australia, its a global thing, this advancement of A.I, robotics and technology overall. Driver-less motor transport as an example making redundant any commercial driving jobs.

Don't kid yourselves, I see a future where one of the deep philosophical conundrums is going to be how on earth are people going to get money to live? If technology does practically everything for us! Yes, even going so far as to assist, if not, eventually and completely overtaking the complex occupation of something like a surgeon as another example. This is something I heard discussed on a BBC radio program about 6 months ago.

Did people even just a decade ago let alone 4 decades previously envision the processing power of today's common smartphones? So what other shocks and shaking up of the status quo is in store? Bottom line way I see it... no one knows..and anyone who 'thinks' they do is basing it on assumptions and you know what they say about those who 'assume', you can make an 'ass' out of 'u' & 'me'...

Aidan,

Your beliefs are obviously sincerely held, and we'll have to agree to disagree. I can never accept that anyone, individuals or governments, are wise to try spending themselves out of trouble. True, some people did benefit - many of them rent-seekers, some of them shonks who had no previous experience of doing the work they botched, and some honest people who did OK. But, Australia was no better off. We survived because we are remote from many of the sharp, global finanacial practices; we have a strong, disciplined banking system, and the previous Coalition government (like them or not) left the country in good shape. Just as the socialist New Deal in the U.S didn't work (the market, as usual came good) the idea that throwing good money after bad helped Australia is an illusion.

Aidan is mostly right, we just don't need to raise more tax?

Take interstate rapid rail. All of that could be funded via interest free self created social credit/thirty year self terminating bonds etc; and repaying that, by selling some of the resumed/rezoned land, once the rail links had massively swelled property values.

And traveling on rail isn't necessarily unproductive time, given modern technology could allow things like video conferencing/getting productive with the lap top!

Many commuting highways have grass divider strips down the middle, and an ideal place to locate a express monorail system!

If they were designed as endless loops able to move as many passengers as individual gondolas could carry once fully loaded, rather than be stuck by a (peak demand) timetable; they'd move many more; and maximize available profits.

Given they'd all be traveling in the one (anticlockwise) direction! And just seconds apart if that were convenient?

Once the weight sensors sensed a full load the doors would slide shut and the loading ramp withdrawn; the individual gondola could move off and accelerate to a matching speed.

At the end of the loop would be another (switch) loop capable of storing as many gondolas as were in service, and another for routine maintenance purposes; and therefore operational (computer controlled driverless) gondolas able to be rolled out with actual demand; or one every (half) hour when most of the peak demand had gone?

So late night revelers and shift workers would still have a public transport option to fall back on?

And swiped smart cards would eliminate most of the staffing needs and just be limited to security?

And disembarkation points could be supported by weight sensing moving walkways to eliminate the usual bottle necks that slow down a rapid transit system?

The only thing preventing transport rationalization, are the usual (solution-less) nay sayers, who as usual, know all the reasons it can't be done!
Rhrosty