Governments want to increase the population because they think that
will increase growth.
Unfortunately the politicians and many economists believe this due to
their ignorance of the truth of the matter.

Growth is dependant on energy availability and its other half the cost
of energy.

That is it, nothing more to it.
The more population the greater the demand and so the higher the cost
of energy and the less available per head and so the less economic
product available to the population.

It has reached the state where the pie cannot be grown bigger so each
slice must be smaller.

All wise observations. But, Hasbeen, we can cap the population in certain areas if we wish. In a democracy we can do anything we wish. The easiest way to cap Sydney's population is to introduce very high stamp duty on land purchases in Sydney and remove all stamp duty on regional and rural cities and towns, then increase the existing zone allowance in the Tax act to give a 50% tax concession to anyone for their first 10 years in a regional or rural city or town. That is very much how Darwin and Canberra were populated. The present NSW government and its predecessor could not provide even the m,ost basic infrastructure, schools and hospitals, to cater for our existing population.