One possible way of making more houses available in an area like Canberra where the government controls the release of land and makes a large profit on the sale of land is a variation on the shared equity proposals of Malcolm Turnbull.

We leave the price of housing the same but delay the realisation of profits being made by the government on new land releases. The government could defer the profits on new land sales to enable new home owners to get into the market or old home owners to build new homes. It could do this immediately by giving a no interest loan to the value of the profits from new land sale to the first resident of the house on the land.

The loan is repaid when the new owner sells the house or land or in the case of developer the loan would be transferred to the first genuine dweller. The government would still get its profits from the sale of the land - but it would be deferred. People would be able to afford to build new dwellings, and the price of existing residential dwellings would not reduce. It would encourage home ownership, increase the stock of housing, be easy to police and be done "tomorrow".

Thanks Saul, I always enjoy your articles which strip potentially emotive issues back to the facts. And finally a commentator with credibility talking about not driving demand but improving supply. I guess immigration isn't going to slow too soon (unless, paradoxically, the price of housing deters would-be immigrants from coming to Australia), and my understanding of the age pyramid is that new household formation will continue it's slow increase (until Mr Costello's 'one for the nation' generation clicks in anyway).

This may be slightly off topic, but what does concern me is that 'we' are literally betting the house on interest rates and the price volatility of oil. Oil seems to be 'sticking' around the USD60/b but any dark looks by the US or Israel at Iran seem to make it spike, so heaven help us if someone lobs a missle or two (or insults a South American president). Also the supply side seems to be only just meeting demand. I'm not suggesting a potential collapse in property prices unless there is a real 'oil crisis' but I wonder about the increasing sensitivity to any further oil price/interest rate rises for those fully leveraged (and having to drive for half a day to get to work).

I wonder why anyone would think that an improvement in the supply side of housing is going to help to make them mre affordable. It isn't going to happen, for the same reason that the supply of Oil isn't going to increase. That would only drive the price down and be against the interests of those who control all these things - the people with all the real money.

The other factor driving the price of housing higher is wages. Way back when we had single income families a twelve square house was all that we could afford. Now we have two income families with less children and twenty five square houses are the norm. That might come back a bit now that we are looking at installing rain water and grey water tanks with their associated plumbing.

Thank you, Mr. Eslake, for your article.

I often wonder if people in your position ever take into consideration the quality of life we Australians have when planning or evaluating the "economic model". It appears to me that over the last thirty years our quality of life has not changed one bit. In fact it has considerably diminished. We still sit in traffic jams, have replenishable resource infrastructure problems and now our young ones have trouble affording a house unless they are working in a mine or the family has two full time incomes.

There is no point driving the building industry by increasing the population of our country. It is a seriously false economy. We have far exceeded our island carrying capacity unless we use huge amounts of energy to maintain the supply of resources. Why are the pundit's and our Government still driving an increase in the population? It seems only a very few gain from this while the majority of us have to put up with the continuous decline in our levels of amenity.

(continued)

(continued)

When are the economic leaders going to devise an economy which will work without growth while maintaining the exceptional quality of life we have. I know I just spoke a heresy but look around and tell me what you see. You say yourself that prices will only fall if there is unemployment rise or interest rises. Why drive these up by bringing in more people? We need to reduce the load on our replenishable and renewable resources while maintaining our quality of life.

IN twenty years your children will be far worse off than you. Why? Because the economic system is seriously reducing the level of choice we had thirty years ago. Blind Freddy can see the growth economy works but for how long. If you look closely at our country you can see the cracks around the edges. Withdrawal of services in outlying areas, resource depletion, racial and civil unrest caused by large NUMBERS of people from foreign cultures, the emasculation of the public service and the serious decline in training of our youth and the deporporate expenditure on science. Working two jobs and putting your children in childcare every day just to buy a house! Working to WP A's set up by $5K per day lawyers and trying to bargain your wage on your own when you are an electrician! Working overtime without penalty rates our forefathers fought for. This is what I mean by erosion of our quality of life. Not being able to catch a fish with your kids because they are ALL sold to foreign countries!

We can debate this issue of "choice" and "amenity" here or elsewhere but the issue remains the same, if we keep travelling down this path the country will look like Egypt or Iran in less than 100 years, a strip of grass, a few goats and millions of aimless hungry people with nothing to do but fight amongst themselves and not another living thing that is not a food item or directly related to human sustenance.

Get your thinking cap on Mr. Eslake, we have work to do!

Guy V: You make some commonly expressed points, many of which I agree with partially, if not wholly. However, what proposals would you have for the future of this country? I just don't see many people in, or out of, politics coming up with many good ideas right now.

Shorbe,

It looks like you and me to solve the problem. I wonder if Mr Eslake ever reads the comments or even knows they exist?

My view is from a very practical viewpoint. The analogies are simple: We can make a Concord and fly it for 30 years with no mishap but at what cost? We can desalinate as much water as we like....but at what cost? We can import 100 million people and make NO DIFFERENCE to the rest of the world at all; you can guess the ecological and social cost for Australia?

I suggest that it is obvious that growth economics works and works really well! Look at the benefits we have reaped in the past 100 years. The point is that it has NOTHING to do with the population at all. Unfortunately there are a few very powerful people in this country and the US who have absolutely NO regards for any other thing than the almighty dollar, and they make their money by raising the population and not raising our quality of life or amenities in any way.

I would love to debate Mr Eslake or any other economist to see if they have any clue to what is happening. It appears to me economists only describe the situation AFTER it has taken place and are positively clueless when predicting where their model will lead.

The writing is on the wall and you only have to open your eyes to see what is happening to our level of choice and where we are heading.

I will give you something to think about. List what you can do now that was not possible in 1975! You can send an e-mail and a fax but that is about all....and we all had plenty of water

Guy V: So, I have a few questions.

1. To what extent are these problems caused by factors outside our or our government's control? ie. changing times.

2. As far as growth, to what extent do you believe that's a natural desire of most people? From what I've heard, our declining birthrate is not necessarily because people want fewer kids, but because they can't afford to. Immigration may not be a solution in a sense, but it's a response to that. Maybe there's a deeper issue there.

3. How would you handle the ageing population/shrinking workforce base in this nation?

4. Could you be more specific generally about how you would get Australia back on track?

SHORBE go to http://www.population.org.au/ for some answers to your questions about population control.

shorbe,

(1) The Government has control over immigration. It let's in who it wants and how many. The trouble is WHO wants and why?

(2) The natural desire for most people is to be happy, well fed and have your kids grow up healthy. Most women I know say they are happy they have a CHOICE in the number of children they can have. In the old days and third world countries the infantile death rate is extremely high so they have to have many. These countries are also the ones where men are in control of fertility either by religious or societal means.

There may deeper issues but looking at all the wealthy countries where women are educated and have a life expectancy the natural population has stabilized or is falling slightly.

(3) I think the argument about the aging population is a blind. An economy appears to work by throwing money down holes. You just have to decide which hole you throw it down and how much. Do we throw it down the military hole, the road hole, the education hole or the aged care hole. The pulse of old people will pass relatively quickly once the baby-boomers fall off the perch. The only reason we are a problem now is that we are living longer.

(4) I would like to have lots of answers but that would be my view only. I would like to open the subject up for considered debate by people who may be far better informed than I. To do this we must set up a series of questions which will answer how we wish our country to be in 50 years. A desert like the middle east or a place where we can catch a fish, climb a mountain, play a game of footy and have a beer with your mates.

We are at the brink of having to make some serious decisions and I put it to you all that sitting in a traffic jam the same as I did 30 years ago is not progress as I see it.

VK3AUU: Thanks for the link. Interesting site. Consider the following article:

http://www.population.org.au/affluence/maxpop.htm

In particular, this struck me:

"A far more likely steady-state scenario than human population falling to 1.2 billion is...populations held constant by war, disease, hunger, suicide and genocide."

To tell you the truth, I don't want to reduce my standard of living and I'd like to have three children. Having negative population growth is unnatural in my mind, and in the minds of many others. I know I'm selfish, and I know that will have massive effects on the world, including inevitable wars and famines that are very destructive. I think our past sixty years have been an anomaly (our resource usage comes from the fact that we have had relative peace). I know there will be winners and losers on a grand scale. That's nature, and I don't regard humans as anything above and beyond other species that wax and wane according to how well they can control resources. Ultimately, I just want to be on the winning side. That's all.

Guy V:

1. So, to what extent would you get rid of immigration?

2. I agree that high fertility is usually due to oppressive (maternalistic) religions or cultures. However, I see countries countries in Europe (or Japan) as largely having lost the plot. There's something suspect about a culture that won't breed even to replace itself.

3. Are you saying there won't/shouldn't be a funding problem, especially once the Baby Boomers are gone (since they're a huge generation)?

4. I agree, but see my above solution. Let China, Europe or the U.S. cut their populations to 20 million or 10 million. I don't want to see it happen here. If necessary, let Africa kill itself off with AIDS or famine so we can move in and claim what's left. Let's use what we have here so we're on the winning side of history.

Immigration policy is in need of review through direct consultation with the community. Canberra should not be surprised if an overwhelming number of voters oppose the large scale immigration we have now. The following link (thanks to another correspondent) might help to explain why people should be concerned about population growth based on economic argument alone.

http://www.population.org.au/

In our acquaintance we have seen numerous examples where lax Australian immigration policies and administration have been abused by the wily. By way of example an Indian couple from Dubai befriended us some time ago. A common theme in their conversations with us and others was obtaining citizenship, which we took positively – outside of facilitating political and other government contacts which they repeatedly asked for. During this, the mother of the family and the three young children attended Preschool and early primary education, while the father continued to work full time in Dubai with regular visits.

Last year the family obtained Australian citizenship and immediately moved back to Dubai. We recently visited on the way to Europe and were told by the mother (who was a bit disappointed of leaving Oz so quickly) that obtaining citizenship was for convenience only firstly, to get a cheap tertiary education for the children when the time comes and secondly, to ensure they have another country as a home base if required, and thirdly to take advantage of Oz medical and pension if and when required. Apparently the husband will inherit the family assets in India in due course and that is where they will reside. We were told that Australia or the other preferred choice Canada, had no particular interest for them apart from satisfying the family’s economic and world travel interests, which were the driving force.

Of course there are abuses of immigration and the government should be open in discussing them. We should also be discussing the outcomes and goals of immigration to obtain consensus. Why shouldn’t there be public, measurable goals for immigration and a 'sunset' clause to ensure regular review of the relevance of policy?

I should have added that Saul Eslake is one of the very few commentators who has admitted that immigration could have a downside, in this case contributing to the escalation of house prices and rents. Politically correct editors and politicians would have swept that bit of information under the rug.

Well said Cornflower!

I guess we have strayed from "housing" which the original article was about but it seems that the urban sprall, traffic jams and resource degradation are all a result of housing and population increase. The rorts engendered by the existing immigration policies are an extra burden born by our tax base and social structure.

If we wish to change the system I feel we have to get the economists of the calibre of Mr. Eslake to realize where the social problems lie and then think of their children and grandchildren. When we get people of his standing in the business community to wake up and see what is going on we will get somewhere.

I am seriously impressed with your, shorbe, and others comments about the issue. This does not have to be an "us and them" debate. It has to do with quality of life and choice and who is in the best position to demonstrate what can be achieved. We in Australia are perfectly placed to work out a system that will work in the long term. All we need is the political and social will to make it happen.

Saul Eslake has the ability to put things in clear straightforward non-emotive language. I agree with his explanation of the state of the housing market, but disagree with his final statement;

“...policy needs to focus on increasing the supply of housing”.

Policy needs to focus on stabilizing the overall supply of housing and the overall demand, and certainly not just forever providing more and more houses.

This is where a national population policy comes right into the picture.

I am pleased to see that this debate went straight into the bigger picture issue of population growth. That is most definitely the context in which we should be looking at what is happening in the real estate scene.

I fully agree with concerns expressed by Guy V and support his call for Saul and other economists to concentrate on how we best manage our economy and quality of life while quickly diverting the nation off of the continuous expansion paradigm and onto one based on a stable population and a strong sustainability ethic.

Saul appears to be quite open to this concept. He has responded positively to concerns that I have raised in response to other articles that he has posted on this forum. But it really does needed to be done with urgency.

Haa!

I check in here once in a while. It's good to see you 'sustainable population' crowd finally drove off all the free-thinkers! Now you're left chatting amongst the six or so narrow-minded fools. You probably think the whole world these days is in agreement with you! Nope, they've just walked away from this once constructive and potentially influential forum and left the few of you that remain walking in circles and patting eachother on the back.

"Q: "Why does this problem exist?"
A: "People!"
Q: "What's the solution?"
A: "Fewer people!*"
(c) Mercurius 2006

* 'Furrenners' specifically.

Pat-pat. There you go.
Cheerio, F.

Saul,

Thanks for this rather facile synopsis of events long past.

I must admit I’ve heard most of these opinions elsewhere from other economists, so I’m not sure much is added to our collective wisdom from their repetition. Particularly given the lack of timeliness of the discussion.

Contrast these backward looking pontifications with the foresight of Macquarie Bank economist Rory Robertson who, quite some time ago, predicted the transition to a low inflation / low interest rate environment and its implications for house prices and asset prices generally.

Mr Eslake is actually painfully careful not to make any specific call on housing in his commentary at all and that which appears to be implied in his analysis is sufficiently qualified to maintain room to wriggle out of later.

His position appears to be that: house prices are rising at a “much more subdued pace” (it seems to be implied that they will continue to do so) unless and until “interest rates and/or unemployment start rising by amounts sufficient to force some existing owners to become sellers”. Not a forecast I would bet my house on.

While the policy prescription in the last two paragraphs is clearly original thought, it defies the logic of his earlier arguments. How is providing the financing cost of an interest free loan on the “value of the profits from new land sale” economically different to the “grants or stamp duty concessions” denounced earlier as simply exacerbating the problem by putting “additional cash in the hands of buyers”?

The forgone financing cost of the loan is again simply a subsidy, albeit one that is delivered by a more indirect means and would do little to effect an increase in the supply of housing. Furthermore, no one would be naive enough to think that the price of existing residential dwellings would be “unaffected” were the policy to have its desired (but unlikely) effect of releasing more land for housing.

(continued)

(continued)

All this leads me to wonder whether Saul is being genuine here or demonstrating his venality. Perhaps he was asked by John McFarlane to write an op-ed piece on housing and was told to propose the described policy position. I’ve been around long enough to know how these things are done and it does look rather tacked on at the end.

Such a scenario appears even more reasonable when one realises that Eslake doesn’t dare to question the key factor that he himself acknowledges is driving housing demand, namely, “rising immigration”. Population growth underpins housing demand which inflates house prices which supports ANZ’s balance sheet.

The ANZ bank gains nothing and loses a great deal by advocating a reversal in current immigration policy, despite this being an obvious choice in terms of policy levers. On the other hand, a cleverly disguised subsidy that adds to housing demand and boosts prices is much more likely to suit ANZ senior executives, albeit to the profound detriment of most Australians. I wonder what Saul might say in his private capacity over a few drinks on a Friday? Probably nothing if he wants to keep his job come Monday morning.

Good luck trying to get anything sensible out of Saul Eslake, he is a paid man.

I think we are right to ask ourselves whether our current immigration policy and the modest increment to GDP growth it contributes every year, which is zero to negative on a per capita GDP basis, is worth a generation of young Australians being unable to afford to own their own homes. Not to mention the myriad negative impacts on quality of life indicators not recorded in GDP: congestion, environmental degradation, finite resource depletion and increasing social unrest, to name but a few.

If young Australian families can barely afford a home, how will they afford to raise children? Choking off the existence of the next generation of Australians to shore up the profits of the banking sector and property developers hardly seems enlightened policy. We can’t all earn half a million dollars a year like Saul Eslake.

Aaaaaaaaaaaaaaa hahahahahahah haaaaaaaaah haaaaa haahaahahaahaah

Just what this rather bland discussion needed, some real goose to liven it up a bit.

Thanks for that Foundy. Good on ya.

.
Insider, yes Saul is a paid man. And therein lies his dilemma – espouse what his employer and associates want to hear – growth, growth and more growth. Or say what OLO respondents very clearly and predominantly want – limits to human expansion.

If someone knows Mr Eslake could they please ask him to respond?

I have a limited grasp of the jargon used when describing macro economics but I can see that the driving forces, banks, government politicians and probably multinational company directors must have no children, or if they have, care nothing for their future. They obviously are blind to what is happening under their noses or they are sticking their heads in the sand.

If MR Eslake is a free agent can he please set the record straight for it definitely appears he is a "paid man" trying to find excuses to prop up a terminal economic model sponsored by the banks to the detriment of the society and environment.

I may be a little naive but unless we start to do something pretty quickly about the numbers of people and mindless consumption we are all sunk.

I guess that is the end of the discussion. Such a rational, well thought out and elloquently worded positive thought provoking retort leaves me speechless.

I can see I am guzumped by a wordsmith of astounding intellect and composure worthy of note.

Keep up the good work people.

Hi GuyV, I don't know why he bothers to stick around. He has obviously run out of cogent arguments.

I would like to hear some good argument as to why the earth, which has limited resources, is going to survive the current mad dash to dig up everything and convert it into consumer products for the 12 billion people who will inhabit the earth half way through the current century. Who is going to feed this lot? The way farming in Australia is going, we are going to be lucky to have enough farmers left tofeed ourselves.

"a) 'Ludwig', asking for limits to human expansion is rather comical coming from a man of your stature!”

C’mawwwn foundation, if you are going to bother to respond, how about telling us what your concerns are in a sensible and logical manner.

Thank you VK3AUU and Ludwig,

I cannot imagine why people are so against a reduction in the world population. Blind Freddy can see we are way over budget in consumption. I guess it is also like horses and grass, replaced by cars, oil and coal but you can still get both previous items, just not economical at transport. The stakeholders in oil and coal are terrified they will lose their market share, just like wagon builders and saddlers. Nuclear is transferring energy derived from coal and oil in one place to another, more convenient place, in a smaller lump so why are we continuing to raise the population?

We CAN continue on this path but, like the Concorde, you consume an order of magnitude more energy for the same amount of amenity. Surely we can reduce our population and give everyone a far better quality of life while continuing the superb technical advancement we enjoy. Why do economists keep banging the drum that we must have growth? They may be correct to a point but this has NOTHING to do with population. It has to do with some few stakeholders who have the ear, and probably control, of the government and the Mr. Eslake's.

How do we positive thinking and future concerned people get the ear of the people that matter? I guess we have to smack them between the eyes with some catastrophe at home before they wake up. We have a water catastrophe happening in Queensland but it is still not enough to make our silly, supposedly "smart state", government stop encouraging people to come to this State.

I ask you all, WHO DO WE TALK TO??

Saul, can I respectfully ask you to respond to concerns raised on this thread.

The main issue is how the housing market, and indeed the economy as a whole, sits with the urgent need to curtail our rate of human expansion and approach a limit in this country.

I’d love to think that the bank that I have been a customer of for decades would be open enough to allow you to entertain frank discussion on this extremely important subject.

It certainly appears as though any acknowledgement of this would not please the ANZ bank, and that you cannot speak freely on this subject. This silence is undoing your credibility.

Although I don't feel under any obligation to respond to comments on articles of mine which are posted on OLO, I'm usually happy to engage with sensible interlocutors. The only reasons I haven't in this case are that, first, I had forgotten that this article had been posted; and second, that I've been more or less continuously 'on the road' over the past two weeks and haven't had time and/or the facilities to monitor comments on this article on a regular basis.

However having now had the chance to read through what various people have written, I'm again happy to respond to some of the things which have been said.

The main view point being pushed by 'Guy V' and 'Ludwig' is the adverse consequences of continued population and economic growth. As 'Cornflower' was generous enough to acknowledge, I am conscious that there are downsides to population growth, including, at present, upward pressure on rents and (as 'Guy V' points out), traffic congestion.

Of course population growth has been slowing over the past few decades. According to the UN, global population growth has slowed from a most recent peak of 2.0% pa during the 1960s to 1.3% pa over the ten years ended 2005; and on the UN's "median variant" projections will slow to just 0.4% pa during the 2040s.

Australia's population growth rate also slowed a most recent peak of 2.2% pa in the late 1960s to 1.1% in 2004, before picking up to 1.3% over the year to September 2006 (largely on the back of increased immigration).

The main factors behind the slowdown in population growth globally and in Australia have been rising living standards and the increasing (though of course far from complete) empowerment of women, which together have led people, of their own volition, to choose to have fewer children.

Ironically, therefore, those who believe that a lower population growth rate should be pursued as an objective in its own right should support measures designed to increase the growth rate of per capita income (as well as female emancipation and empowerment).

(To be continued)

However I get the impression that 'Guy V' and 'Ludwig' also favour the pursuit of lower, and possible even zero or negative, per capita income growth as an objective.

They're perfectly entitled to do that, of course, but I doubt that their view would have majority support, either in Australia or elsewhere. Rather, it would seem to be a widely shared goal among most of the world's population, particularly in developing countries, that per capita income should rise rapidly.

And judging by the widespread opposition in affluent countries like Australia to the idea that people in developing countries should be able to improve their living standards by selling to people in affluent countries like Australia goods and services at prices lower than we can ourselves, there isn't much sympathy for the notion that we should reduce our material living standards in order to allow for increases in the living standards of people much less well off than ourselves.

And I say that in the full understanding that 'GDP' as conventionally measured includes a lot of things that don't add to 'welfare', and omits a lot of things which do.

Some of the very genuine and real problems which 'Guy V' refers to are, I believe, the result of governments failing to plan properly for population growth (and an unwillingness to borrow to fund the provision of appropriate infrastructure) rather than proof that population or economic growth are per se a 'Bad Thing'.

I don't personally argue for increased immigration on the grounds that it boosts economic growth; most of the evidence that I've seen on the question suggests that the impact of immigration on per capita GDP growth is only marginally positive. On balance, though, I think immigration brings net social benefits especially as regards the diversity of the population.

There's more I'd like to say - particularly about the offensive remarks by 'Insider' - but I've now run up against today's quota so it will have to wait another day.

Mr. Eslake,

Thank you for replying to our request. I must point out that I am certainly not in favour of returning to living in a grass hut, far from it. I suggest there must be a critical population level where ongoing technological advancement is possible. I feel that ALL populations stabilize when women are given an education and a "life expectancy". No woman wishes to have children she can not care for. Unfortunately many poor countries have no control over their fertility because it is often in the hands of control freak religious men (exacerbated by the U.S.A. and Australia's foreign aid policy).

Australia reached an unsurpassed level of amenity and quality of life in about 1975 . We have not changed since. I can give you details of how I arrive at this notion if you wish. All that has risen is the population and the length of traffic jams. Mind you I can now send an e-mail but that is about all.

As for the housing problem where this all started; I put it to you that the cost of housing is an artificial construct forced by 120,000 new people coming in to the country EVERY YEAR which provides the impetus. I also suggest that the major banks are terrified their gross wealth (IN DOLLAR VALUE AND GROWTH ONLY) will supposedly fall thus causing, supposedly, a recession which, supposedly, is a bad thing.

I suggest we re-think growth economics and use our obvious skills, education and resources which will give us and our grandchildren a future that does not look like Hong Kong or the Middle East. Think about it, you are in the hot seat, and if we let this opportunity pass the results will be a rapid slide to banal, deporporate mediocrity which most people enjoy on India.

It is interesting to note that if the world population increases at only 0.5 percent per annum for the rest of this century, the population at 2100 will still be about 10 billion. At an increase of 1.0 percent it will be about 15 billion. At 1.5 percent it will approach 25 billion.

Obviously, something needs to be done very soon to slow the rate down.

(continued)

A quick bit on the positives of immigration. Everyone loves Con the fruiterer or Tran who makes the finest bread rolls or Kwan who can make my insufferable computer sing and dance and Helena's halva with the best Turkish coffee. The problem is when we have 12,000 David's in one suburb and 10,000 Ivan's next suburb in abject poverty when they only left their home country because it is such a terrible place. Now we have a big problem! Many want to make a "home away from home" in Australia complete with all the trappings which do not fit here including the imported racial and ethnic rivalries. We have enough trouble with the Irish and the English.

Surely we would be better served to spend our money on educating and supporting people in their own country where the $ value would be far more valuable than here.

Saul, your response is much appreciated.

“...those who believe that a lower population growth rate should be pursued as an objective in its own right should support measures designed to increase the growth rate of per capita income…”

Yes indeed! Along with better wealth distribution. Currently in Australia we have high economic growth that just simply isn’t translating into significant average per-capita improvements in overall quality of life, even with the minerals boom.

“However I get the impression that 'Guy V' and 'Ludwig' also favour the pursuit of lower, and possible even zero or negative, per capita income growth as an objective.”

Not at all. Real economic growth should continue. But it needs to lead to significant per-capita improvements and not be just providing approximately the same quality of life for ever-more people, and huge wealth gains for a small fraction of the populace.

Economic growth needs to be based progressively more on sustainable industries and an innovation-oriented platform, and less on non-renewable primary industries and potential renewable industries that are being overexploitative. And it most definitely should NOT be based on continuous expansionism, ie on population growth. In short, it MUST sit within a sustainability framework.

Economic growth that is based on technological advances can continue almost indefinitely.

We need to separate the two halves of ‘growth’. They are very different things. One side of it is the expansion aspect while the other side is the good development aspect. The first is highly undesirable within a scenario of stressed resources and a damaged environment, while the second is highly desirable.

And we need to get right away from the notion that economic growth per se is the bottom line, and that we must have high population growth in order to maintain high economic growth.

continued

Saul, you don’t seem too concerned about the highly unsustainable nature of our current expansionist-based growthism. It is reaching a critical stage in Australia, especially with our water problems. There is a huge imperative to wean ourselves off of our expansion-based economic system.

This is surely the great challenge for yourself and all economists and politicians – to do this quickly while maintaining a healthy economy and implementing true per-capita economic growth that translate into significant quality-of-life improvements.

So as it pertains to the housing market, the answer to unaffordable housing must NOT be to simply free up more and more land. It must be to address the demand side of the equation by lobbying strongly for much-reduced immigration and other population stabilisation measures.

Saul,

Apologies for having the temerity to point out the extent to which your objectivity is compromised by your employment as Chief Economist for the ANZ bank. I believe it is an ethical imperative that this point be brought to the attention of your readers in order that they may assess your views in their full and proper context.

In response to your statement that: ‘I don’t feel under any obligation to respond to comments on articles of mine which are posted on OLO’; if you do not wish the quality of your opinion pieces to be the subject of critical debate, I suggest you stop having them published in the Australian Financial Review and posted on Online Opinion.

Your arrogant and dismissive attitude demonstrates a contemptible disregard for your readers. I will wager that this is the last time you ever post an article on Online Opinion and that you will petition the operators of this site to have my comments removed. As Ludwig notes, your silence undoes your credibility.

Returning to the issue at hand, I do welcome your candid admission that personally you don’t argue for ‘increased immigration on the grounds that it boosts [per capita] economic growth’. Indeed, how could anyone? Instead you found the justification for Australia’s immigration program on ‘net social benefits’ stemming from increased ‘diversity’.

In doing so you appear to be attempting to close down any debate on the issue. If anyone dares challenge you now, you can rattle off hackneyed claims of ‘racism’ and ‘xenophobia’. I seem to recall the last person to seriously question our immigration policy on this basis, Pauline Hanson, was ruined financially and eventually wrongfully convicted and sent to jail.

(continued)

(continued)

I leave the issue of diversity and its benefits, or otherwise, for others to debate and focus instead on the core issue which still remains unaddressed. Liberal and Labor governments since 1975 have presided over a deliberate policy of population growth founded on immigration. That program has done little to improve GDP per capita while pushing house and land prices beyond the reach of average Australian households.

Leaving aside other relevant factors, the exorbitant cost of housing has seriously damaged the standard of living of all Australians, particularly young families. The decline is not captured in traditional proxies of welfare like GDP per capita or real wages. The next generation of Australians are attempting to commence families while carrying an incredible financial burden unprecedented in our history, a burden for the most part represented by money lent by the major banks.

We are all diminished by the curtailed freedom of speech that surrounds our immigration policy. Bi partisan political support and a supine media has permanently removed the issue from public consideration.

If you want to talk to anyone, talk amongst yourselves. The politicians, bureaucrats and business leaders determining our immigration policy are not going to listen.

Insider: Do you think we have democracy in this country? Let me rephrase that. Do you think people really get the governments they want?

If the major parties, media, big business and perhaps some others thrown in for good measure, are conspiring against the average Australian, why do you think people put up with this?

Maybe Pauline Hanson and other minor parties or independents really are nitwits, but if the major parties, media, big business, etc. really are on the nose, then why aren't people deserting them in droves to at least follow people like Pauline Hanson who are so much more down-to-earth?

It seems to me that people are either really, really dumb, or we have some sort of fascism where elections are rigged, or maybe people actually don't find this system too intolerable. I can't find another explanation for why election after election (state or federal), we keep getting more of the same. We can't even claim it's to do with voter apathy since people must vote, and if they really didn't care, they'd either donkey vote or randomly pick candidates (and you'd expect a fairly even split between all candidates).

I can predict right now that I'll be getting a major sense of deja vu after the federal election later this year.

Incidentally, I don't know why Saul contributes articles to this site, let alone responds. Maybe it's just me, but if I were in his position, I'd be lapping up the high life ostentatiously and if I did deign to speak to a pleb like me (in my current, real form), it would be in a "let them eat cake" manner. Of course, maybe he's not as twisted an individual as I am, or he's at least better at hiding it. ;D

The only reason 'Insider' can 'point out the extent to which my objectivity is compromised by my employment as Chief Economist for ANZ' is because my name and occupation is fully disclosed on this website and in everything that I say or write. On the other hand, who is 'Insider'? Who does he (or she) work for? Why does he (or she) hide behind the veil of pusillanimous anonymity, making gratuitous (and as it happens) totally erroneous assumptions about my salary, and suggesting that my employment or my income disqualifies me from having an opinion on this particular subject?

I have no intention of petitioning the operators of this site to have 'Insider's comments removed. Nor do I have any intention of seeking to 'close down' debate on this issue by accusing 'Insider' of 'racism'. I do however challenge 'Insider' to out him/herself if he/she wants to continue making gratuitous personal attacks on me rather than debating the issue. And if he/she wants to wager that 'this is the last time I will ever post an article on OLO' then he/she will lose his/her stake.

I was not intending to be 'arrogant' or 'dismissive' in stating that I felt 'under no obligation to respond to comments on my articles on OLO'. Where is it stated that I am under such an obligation? However I went on to say (although 'Insider' chose to overlook it) that I am usually happy to do so, as I again have in this instance - as 'Ludwig' (who can attest that I do respond to comments on my articles) and 'Guy V' have been kind enough to acknowledge in this thread. I also respond to interlocutors on other sites such as Tasmanian Times and Club Troppo. I suspect I do this more willingly than many other authors whose articles are posted on OLO.

(to be continued)

'Ludwig's most recent post indicates that he is in favour of continued per capita income growth based on technological progress as distinct from growth based purely on increased population or exploitation of finite resources.

Our respective positions, though still distinct, are probably not as far apart as we initially thought. I don't advocate population growth or increased immigration for their own sake (although I'm not 'anti' them either; and I'm especially conscious that if those who were already living in Australia when my ancestors arrived here between 1838 and 1882 had sought to prevent their arrival, then I would not have had the privilege of growing up and living in this country; and so I am hesitant to deny that privilege to others who seek what my ancestors were granted).

And although I don't see anything wrong (and indeed a good deal to be gained) from digging up and selling minerals and energy to China, Japan and other countries - especially when they are willing to pay prices as high as they currently are - I also readily concede that aspects of our long-established patterns of economic growth may be environmentally unsustainable. My training as an economist leads me to the conclusion that the best way of dealing with this is to attach prices to the use of water, the emission of greenhouse gases and so forth which reflect their scarcity or environmental impact.

But I'm again approaching my word and per diem limits so any further thoughts on that subject will have to await another day.

Thank you Mr. Eslake for clarifying your position.

I suggest your article should have read "Economic factors affecting the housing market and everything else"

I hope there are many people watching this discussion as I am sure it is crucial in determining the future direction of our country, regardless of what the incumbent Government is being persuaded to do by the vested interests.

I see by your comments you are painfully aware of the situation and, like myself and other concerned people, are not in a direct position to influence immediate changes. However, this does not preclude people with good intentions, education, skills, communication and influence from setting out a future view or economic plan which can be used as guidelines for a more equitable outcome.

From my perspective I see very few highly influential and wealthy people with the ear or control of the Government decision makers. Such people obviously have little regard for any form of life other than themselves. Maybe we have to build an alternative economic scenario which includes the existing stakeholders and massages their polish and ego, while preserving what is left of our choices and environment. How do we do this? Surely with our knowledge base we can do better than Smith, Keynes and Malthus. Their philosophy has brought us to this point, now we should be able to progress.

Who do I talk to and where do we go from here?

Saul,

I support your right to voice any opinion you may care to entertain about the relationship between house prices, immigration and appropriate policy responses given a desire to achieve housing affordability for average Australians. It is the essence of the democratic process that you are afforded this right.

I do, however, contend that your employment colours the impartiality of your opinion. I further contend that your income (which defies mortal standards whatever the exact figure) far removes your own experience of home ownership from that of ordinary Australians. Accordingly, I suspect anyone reading this thread will find your willingness to trade off their ability to own their own home for the sake of ‘diversity’ absolutely galling.

In light of those circumstances, I believe you are unlikely to advocate policy options that give sufficient weight to the concerns of working and middle-class Australians. Even more worryingly, you are unlikely to advocate policy options that could be highly effective in helping to restore housing affordability because they conflict with the interests of your employer and your continued employment.

You state that you are neither for increased immigration or against it, yet one of the principal messages of your commentary was that rising immigration had been a key driver of accelerating house prices over the last 10 years. Why therefore do you fail to suggest the obvious solution of curtailing our immigration intake? It is the essence of the democratic process that I am afforded the right to articulate these concerns. I do not believe you have deigned to answer them.

(continued)

(continued)

This isn’t about me, its about the weight your readers should attach to your opinions. Why does Eslake obsess about my identity? Why does Eslake demand to know where I work? What do you think the implications would be for my future if he discovered either? The only person not debating the issue here is Saul Eslake.

Shorbe asks whether we have democracy in this country. I believe we do, but the quality of that democracy is jeopardised by the way in which public debate is stage-managed by powerful, self-interested individuals and institutions. The absence of full and frank discussion on issues of fundamental national importance demonstrates the truth of that statement, immigration being an excellent case in point.

I say again, if you want to talk to anyone, talk amongst yourselves. Public dishonesty only reaches the extent it does because individuals are not vigilant in monitoring the behaviour of those with power. There is no real sense of loyalty left in our elected officials and business leaders, we can no longer trust them to act in our interests if presented with the option of lining their own pockets.

I think Saul raises a relevant issue: Why do posters who refuse to reveal even their true names, let alone their potential and actual conflicts of interest, think that it is relevant to question the bonafides of someone who is prepared to be completely transparent? And why the obsession with Saul anyway, it's not as though he runs the country, or even the bank?

I'm happy to hold the wager for both parties on whether Saul will submit an article here again, although if Saul was "venal", as Insider asserts, it would be a stupid investment for Insider to make.

I'd also like to point out that it is only a small minority of authors who are prepared to enter into the forum discussions on their articles, and I think that the ones who do deserve some respect. Certainly it is their arguments that ought to be addressed rather than who pays their salary and they should be free from personal abuse.

“Why do posters who refuse to reveal even their true names, let alone their potential and actual conflicts of interest, think that it is relevant to question the bonafides of someone who is prepared to be completely transparent?”

Firstly, I desperately desire to be able to speak on this forum under my own full name. But I can’t as a government employee. I have been told that I can’t even espouse views that are totally in line with those of my employer, for the fear offending a client with whom my department might be dealing!! This is fundamentally against the principle of freedom of speech…and is downright bloody disgusting.

Graham I wonder how many posters on this forum are in a similar position, both in the public service and private enterprise arenas?

Secondly, how do we know that Saul is willing to be completely transparent? He certainly seems to be. But we’ve got to consider his position and his probable inability to say certain things that he might like to say as a private person. Who knows?

It is reasonable for anyone to be suspicious and to want to check ‘bonafides’.

I agree that Saul deserves considerable respect for posting articles on this forum and for entertaining subsequent debate. He should not be open to personal abuse as a result of that effort.

Ludwig, you can't be more transparent than saying who you are and who you employer is when you are commenting on an area where you are paid to comment.

You seem to be suggesting that Saul is obliged to put everything he has ever thought on the table. No-one's obliged to do that.

I have sympathy with your position as a public servant, but it means that you are not transparent. We don't even know which department you work for so have no gauge to judge who reasonable their restrictions might be, or how that employment might colour your comments.

“Ludwig, you can't be more transparent than saying who you are and who you employer is when you are commenting on an area where you are paid to comment.”

Transparent maybe, but not convincing of a non-biased presentation of thoughts or arguments.

“You seem to be suggesting that Saul is obliged to put everything he has ever thought on the table.”

No. I don’t where this thought comes from.

As I said last time;

“How do we know that Saul is willing to be completely transparent? He certainly seems to be but….who knows?”

That doesn’t mean we expect him to share everything with us. In fact, I don’t see any connection.

“… it means that you are not transparent.”

Graham, I write under a pseudonym, specifically to divorce myself from any connection with my employer or from any pressure to say what they want to hear, or not say what they have balked at in the past.

I also let it be known in my last post just how much I hate not being able to speak freely under my own name and hence not being recognised for my views and environmental / sustainability / road safety efforts on this forum... all of which should be perfectly acceptable to my employer and be seen as a good positive quality in a passionate employee. In fact, you don’t know how strongly I detest this and think that it is fundamentally against the principles of democracy and freedom of speech.

So you can rest assured that I am totally transparent and not in any way held back by my employment, or the manager who suppressed my freedom of speech for four years, resulting a formal mediation session, at which it was shown that he was acting well outside of our Code of Conduct guidelines...but received no reprimand for his actions.

Ludwig, it doesn't matter what your reasons are and whether or not they are good or bad, but you are not transparent. There is no argument on that point.

Of course Saul might be constrained by his employer's position. That's why his transparency is important - so you can take that into account.

But you can't say that about many who criticise him on this forum for allegedly having a dishonest agenda.

Graham, you can insist that I am non-transparent if you must, despite my assertions to the contrary.

But I know I am totally transparent, honest, forthright and completely unconstrained by my employer or anything else. A small number of friends know this as well.

The irony is that if I was writing under my own name, many more people who know me would know this to be true, as was the case for many years during which I wrote copious letters to the editor of my local paper and other papers, and got commended left, right and centre for my efforts. But my employer / manager would be bound find something disagreeable in my 1400 posts on this forum and make trouble for me, despite the fact that the overwhelming majority of comments are fully in line with, or irrelevant to, my employer!

I have extremely strong feelings about this business. So I assert for the final time that I am totally transparent and will not in any way be subdued or biased in my expression by my employer………..apart from the disgusting antidemocratic pressure to write under a spewdonym in order to avoid conflict

38% of the cost of a house/land is directly due to mostly State taxes and charges.There is also another factor of the slow release of land to keep prices high so State Govts can profiteer from first home buyers.

Throw into the mix OH&S ,home warranty insurance that has eliminated many builders from the market,and the cost of housing has skyrocketed in the last ten yrs.

We need rapid train transport systems like they have in Europe so we can decentralise our populations and still let them commute to our major cities for work.This coupled with computers will see the pressure taken off land in our major cities.

Too much bureaucracy in all our Govts has seen infrastructure deteriorate to it's lowest ebb in decades,let alone have visions of a futuristic transport systems that other countries now take for granted.