The Smarter way to get your business news - Subscribe to BloombergQuint on WhatsApp
(Bloomberg Businessweek) -- Want to go for a dip at Sydney’s famed Bondi Beach? Prepare to be jammed for an hour against sweaty bodies on a bus trapped in traffic. With Australia’s population growing at the fastest pace of any major developed country, what used to be a stress-relieving outing has instead become a stress-inducing ordeal. The country’s head count will hit 25 million sometime this month—an incredible three decades sooner than the government had originally predicted in 2005.
Immigration has been an integral part of Australia’s story, from the arrival of the first English settlers in the late 18th century through the gold rush of the mid-19th century and the post-World War II boom years. While vestiges of the White Australia policy that favored Anglo-Saxon immigration endured into the early 1970s, an influx of Vietnamese, Lebanese, Chinese, and others since that decade has given rise to a truly multicultural society.
Under a framework that has been in place since the late 1980s, migrants applying for residency are scored on criteria such as English-language ability, education level, and professional skills. While the system has often been cited as a model for countries seeking a more managed approach to immigration, Australia’s largest cities are starting to strain under the continued influx, which is equivalent to one person arriving every minute.
Clare Wimshurst, who moved from London 4 1/2 years ago and settled in a Sydney suburb not far from Bondi, says the thing she misses most about the U.K. is the Tube, which even with its well-chronicled problems beats the transportation network in her adopted city. Pregnant with a second child who’ll add to Australia’s population, Wimshurst is aware that there’s an increased debate around the nation’s immigrant intake.
“There’s obviously some fairly polarized opinions around immigrants,” she says, adding it would concern her to see intolerance directed toward arrivals “in the name of ‘we're getting too full, there’s no room for anyone else’ kind of thing.”
Some may scoff at the thought that 25 million people makes Australia—which in terms of land mass is the sixth-biggest country in the world—feel crowded. After all, there are cities in Asia with a population bigger than that. Yet the majority of Australia’s 3 million square miles is uninhabitable desert, and even many of the greener parts along the coast struggle to secure adequate supplies of fresh water and face periodic drought and wildfires.
For residents in cities that have traditionally ranked among the world’s most livable, life is getting tougher. Home prices are high, roads clogged, classrooms overcrowded, and wages stagnant. Many Australians blame immigration—and inadequate planning to cope with it—for the problems.
“Sydney and Melbourne are transforming into global cities like London and Hong Kong in terms of scale,” says Philip Davies, chief executive officer of Infrastructure Australia, a government body charged with identifying spending priorities. “The ultimate risk is to our quality of life.”
There is one clear winner: the economy. The nation, whose fiscal year ends on June 30, just marked its 27th year without a recession. New arrivals have been a key driver of that remarkably long streak: Annual population growth that’s averaged 1.5 percent for the past four years has essentially produced the equivalent gain in gross domestic product.
Things don’t look nearly as rosy when measured on a per-person basis, though, so even as the country as a whole gets richer—and some businesses and individuals prosper—many aren’t feeling the benefit, as wage growth remains near record lows.
The discontent is fueling an increasingly strident debate in the approach to national elections that must be called by May of next year. Among the central questions are: How many people can the world’s driest inhabited continent sustain, and are Australians willing to sacrifice their quality of life to see their economy grow? “The conversation in Australia is long overdue,” says Liz Allen, a demographer and social researcher at the Australian National University in Canberra, adding it’s bound to “be an uncomfortable one, no matter where you position yourself in that debate.”
The consequences of curbing immigration could include falling house prices, reduced workforce participation as the population ages, and shrinking tax revenue. “Strong population growth is a key contributor to economic prosperity,” says Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada. “We are mindful that the population debate is not simply economic, but we also worry that the economic discussion in this context can be distorted and diluted.”
The antiforeigner sentiment that’s brought Brexit and Donald Trump and propelled nationalists into office from Italy to Hungary is also resonating Down Under, where anti-immigration parties are picking up votes from the fringes. And in Australia, where voters rank candidates on a ballot in order of preference, fringe parties can influence the center.
Immigration Minister Peter Dutton caused a stir recently when he said residents of Melbourne were afraid to go out for dinner at night because of the threat of Sudanese gangs. Earlier this year he floated the idea of fast-tracking visas for white South African farmers, who he said “deserve special attention” because they are the target of land seizures and violence at home. Dutton also has kept up the ruling Liberal-National coalition’s tough line on asylum seekers, blocking boats packed with refugees from docking in Australia and dispatching those who managed to evade interdiction to camps in remote Pacific islands, where living conditions have been described as squalid.
The vast majority of immigration into Australia is through official channels. Tony Abbott, a leading voice in the Conservative party who served as prime minister from 2013 to 2015, is advocating a more restrictive approach. He says it’s an “iron law of economics” that more supply cuts price, meaning that more new Australians leads to weak wage growth. Similarly, he says, higher demand boosts price, hence the negative impact on housing affordability.
“Plainly, more people mean more pressure on roads and public transport, as anyone trying to move around Sydney and Melbourne knows,” wrote Abbott in an opinion article published in the Australian newspaper on July 27. “We owe it to the people already here to scale back the rate of immigration considerably.”
It’s an argument that blurs traditional party lines. Bob Carr, former Labor foreign minister and premier of New South Wales state, home to Sydney, is also in favor of cutting back. “When you contemplate the eastern suburbs of Sydney, access to the beaches, which is a natural space, recreational space, what do you do?” he says. “When the population around Bondi, for example, reaches the sort of intensified level that means the roads are choked most days in summer, do you start to ration access?”
To contact the editor responsible for this story: Chris Bourke at email@example.com, Cristina Lindblad
©2018 Bloomberg L.P.
. Read more on Businessweek by BloombergQuint.