December 2nd 2017


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COVER STORY Turnbull redefines terms of marriage vote

CANBERRA OBSERVED Turnbull is running on empty as margin shrinks

GENDER POLITICS Northern Territory proposes recognising fluid genders

NATIONAL AFFAIRS Our clinging to the fringe is stultifying development

ENVIRONMENT Sea levels are not on the rise: research

FREEDOM Where to now after the marriage redefinition vote?

EDUCATION Unions and the ALP have gutted the curriculum

ECONOMICS The West faces tests of its own resilience

CULTURE The mysterious birth of technology

DRUGS AND SOCIETY Addiction and the cultural repression of spiritual values

OPINION Don't stand by as the fight for freedom begins

LITERATURE Britain's Kazuo Ishiguro a worthy Nobel laureate

HUMOUR Whispers from court side

MUSIC Funny tones: Playing it for a laugh

CINEMA Murder on the Orient Express: First-class mayhem

BOOK REVIEW Disentangling the free-market fraud

BOOK REVIEW Not inscrutible, just ambitious

LETTERS

GENDER WARS If children can decide to change their sex can they join the army or marry?

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NATIONAL AFFAIRS
Our clinging to the fringe is stultifying development


by Chris McCormack

News Weekly, December 2, 2017

Ask any big-city dweller and topping the list of concerns (if they are employed) are paralysing traffic congestion, out-of-reach housing prices leading to commensurately high rental prices, and crime rates.

Housing unaffordability and congestion in Australia’s capital cities continue unabated but a fair-dinkum government policy of decentralisation could arrest these problems by encouraging population growth outside the capitals.

The problem is threefold. Large-scale immigration, ranging from 176,500 to 299,900 arrivals each year between 2007 and 2016, is placing a strain on capital city infrastructure. Between 2006 and 2016, 77 per cent of Australia’s population growth was confined to the capital cities, adding another 2.9 million people to capital cities out of a total population growth of 3.8 million.[1] Regional and rural centres do not seem to be attracting many immigrants.

Second, rural demise through government policies that have allowed cheap food imports to destroy local agricultural producers and a 900 per cent increase in the average cost of temporary water between 2012 and 2015 as a result of the Murray Darling Basin Plan’s increased “environmental” flows have ravaged rural centres. Farms have folded and businesses kept alive by farming communities disappear.[2]

Manufacturing has also virtually disappeared from regional Australia as free-trade agreements have enabled cheap imports to usurp local products. As the economies of these regions decline, job seekers retreat to the big cities to find work; while those wanting to escape the downside of big-city living (or can’t afford it) have fewer options in terms of making a living in regional or rural centres.

Third, governments have artificially inflated housing prices through urban containment policies that limit development around an urban area and limit or prohibit greenfield-housing development on the urban fringe. All of our major housing markets have urban containment policies, which has led to Australia having the third most expensive housing market in the world, trailing New Zealand and Hong Kong.

Before urban containment policies were implemented, up until the late 1980s, Australia’s housing market was affordable, with a median multiple below three (that is, the median house price divided by median household income – with 3.0 or less being affordable and 5.1 and over being severely unaffordable). That number has now risen to 5.5 (severely unaffordable).[3]

Contributing to the dearth of opportunity in regional and rural Australia is the seemingly insatiable demand for resources and infrastructure in burgeoning metropolitan centres at the expense of the rest of the country.

The 2016 Census results showed that 67 per cent [4] of Australia’s 24.2 million people (24.75 million as of November 21, 2017) resided in the Greater Capital City Statistical Areas (GCCSAs).[5] Population growth in the GCCSAs increased by 21.7 per cent between 2006 and 2016, while the rest of Australia recorded an increase of 12.2 per cent. At the 2011 census, 64 per cent of Australian-born residents lived in a major urban area and 85 per cent of those born overseas lived in a major urban area.[6]

If the approximately 200,000 new arrivals each year are not to overload a straining metropolitan infrastructure, government policies must encourage decentralisation. This will have the dual benefit of alleviating pressures on house prices and congestion in metropolitan areas while strengthening regional economies. First though, strong incentives must be provided to businesses to relocate away from the capital cities (Darwin being a possible exception, with a population of only 146,000).

Government departments could also relocate to regional centres, as has the Australian Pesticides and Veterinary Medicines Authority, which relocated from Canberra to Armidale. This rationale could be applied to both federal and state government departments.

The federal National Party is advocating for decentralisation, including relocating federal government departments, citing reduced rental costs for the government, better housing affordability, increased regional jobs and a better living environment for families in regional Australia.[7] There is also the argument that departments dealing with regional, agricultural, mining and biosecurity issues have more relevance situated outside metropolitan areas. The business cases for relocating departments are due in December, after Coalition ministers were asked to nominate which departments were most suited to relocation by August.

A successful decentralist policy, however, must go beyond just moving a limited number of government departments. Large-scale migration of people away from the capital cities to regional and rural areas is necessary to make any meaningful dent in the problems both metropolitan and regional Australians face. Housing unaffordability is a blight on the economy, redirecting money away from starting a family (or having a larger family), investing in starting a business or just maintaining a decent standard of living, towards servicing a huge mortgage.

Minister for Resources and Northern Australia, Matt Canavan, wrote (News Weekly, “The financial and social costs of cramming ourselves into just five coastal cities”, December 17, 2016) that Australia’s housing stock is valued at $6 trillion. If one third of that value, $2 trillion (more than our GDP), were to be utilised elsewhere in productive industries it could create the economic boom the country is so desperately in need of.[8]

The problem with having $6 trillion tied up in property is that an economic downturn similar to the global financial crisis (GFC) could effectively wipe trillions of dollars from the value of Australian property, enslaving the many Australians who have racked up $1.6 trillion in combined owner-occupier and investor loans.[9]

The debt-fuelled housing market has contributed to Australians having the highest private per-capita debt in the world, equal to 190 per cent of GDP.[10] In comparison, the United States had a private per-capita debt of 140 per cent of GDP in 2007, just before the GFC.[11]

Another risk with the metro-centric nature of Australia is that large tracts of the north are sparsely populated. The “Brisbane Line” was an alleged plan in World War II to abandon the country north of a line from Brisbane to Perth in order to shore up defences in the southern half in the event of a Japanese invasion. Should Australia ever be subject to invasion from the north, having more and larger population centres, and correspondingly more numerous and larger defence bases, would serve as a greater protection against invasion.

Defending vast tracts of land in northern Australia should be taken more seriously, and surveillance of our coastline from distant locations is problematic. We do not want to face the prospect of a “Brisbane Line” in the future.

Australia’s north has vast resources, be they mineral, agricultural or hydrological, and the area should be a template for decentralisation via large-scale projects. Currently a feasibility study is being conducted into building a dam at Hell’s Gate on the Burdekin River in North Queensland. A spokesman involved in the project said the dam was of national importance as it would make possible large-scale irrigated agriculture and electricity generation in the region west of Townsville.[12]

A Hells Gate development proposal was drafted in 1998, although an earlier study occurred in 1983 and it had been considered as early as 1929.[13] Nearly 20 years after an in-depth proposal, we are still conducting a feasibility study. Green-leaning governments and a barrage of red and green tape facing large-scale projects is crippling Australia’s ability to be innovative and visionary in the way that led to the Snowy Mountains Hydro Scheme.

The Queensland Labor party, true to its anti-dams ideology, does not support the proposed dam.[14] Katter’s Australian Party MP Bob Katter said the 5.7 million megalitre dam would end the “protein drought” by providing a reliable water source and in so doing add value to the northern cattle industry, taking its value to $5,000 million annually.[15]

Adam Joseph, a former Howard government and Abbott opposition tourism and development adviser, wrote in the Townsville Bulletin that the benefits of the dam were not confined to food production, manufacturing needs or water security, but included the “visitor economy”, be it through patronage of caravan parks, fishing, yachting or new rowing clubs, and attracting all manner of recreational and water sports activities.[16] As the saying goes, “if you build it, they will come”.

The Hells Gate Development Council found in 1998 that annual surface run-off from the Great Dividing Range in North Queensland was 126 million megalitres, almost one-third of Australia’s annual run-off and six times the run-off of the Murray-Darling Basin. The Basin produces 40 per cent of Australia’s agricultural output.

North Queensland also lays claim to 15 million hectares of fertile black earth soils, equating to half of Australia’s prime agricultural land. If the political willpower is there, the potential for a vast northern food bowl attracting jobs and new communities is glaringly obvious.

The Queensland Labor Government’s backflip during the recent election campaign on approving a $1 billion Federal Government concessional loan to Indian company Adani to build the railway line linking the Galilee Basin coalfields to the Abbot Point port near Townsville is a major blow to rural Queensland and the country as a whole. It puts in jeopardy at least 10,000 jobs created by the Carmichael coalmine project, the largest coalmine in Australia, and threatens more jobs associated with the development of other coalmines in the Galilee Basin.

Regardless of Northern Australia Infrastructure Facility approval for the loan, the veto of the state government would scuttle the loan. The Liberal National Party has indicated it will approve the loan if elected.

While not necessarily decentralist in design, the effect of such projects is decentralist in that they create a lot of employment for a long time in rural areas, potentially drawing people away from metropolitan areas. Such projects are vital for the nation’s economy and for maintaining a reasonable standard of living, especially for rural and regional Australians.

In addition to large-scale projects, tax incentives are necessary to encourage populations to settle in regional and rural areas. While Senator Matt Canavan indicated that section 99 of the Constitution prohibits federal laws which preference one area over another, he also noted that northern Australia has had a zone tax rebate since 1945, even it amounts to a paltry $57 a year.[17] Would it not be possible substantially to increase this amount or seek clarification on the interpretation of section 99.

Failing this, changing the Constitution via a referendum could occur. If the potential benefits to everyone were fully explained, a “Yes” vote might succeed. Without tax incentives, it is difficult to comprehend mass migration away from the metropolitan areas.

What Australia needs is some lateral thinking in order to effect a decentralist plan that actually makes a difference and relieves the pressure on the capital cities. Without it, congestion, housing unaffordability and crime will continue to rise.

 

References

[1] “Regional Population Growth, Australia, 2016”, Australian Bureau of Statistics.

[2] “Southern Murray-Darling Basin”, Australian Government, Department of Agriculture and Water Resources ABARES.

[3] “Housing Affordability in 2016:Geographical Summaries”, 13th Annual Demographia International Housing Affordability Survey: 2017, pp18-19.

[4] “Census reveals two-thirds of our population live in Australia’s capital cities”, 2016 Census: National Capital Cities, Australian Bureau of Statistics.

[5] “Population Clock”, Australian Bureau of Statistics.

[6] “Where do migrants live?4102.0- Australian Social Trends, 2014, Australian Bureau of Statistics.

[7] “Decentralisation is not just good for the regions”, Nationals.org.au

[8] Senator Matt Canavan, “The financial and social costs of cramming ourselves into just five coastal cities”, News Weekly, December 17, 2016.

[9] Adam Creighton, “Higher Australian household debt mounts to ‘unsustainable’ levels”, The Australian, June 4, 2016.

[10] Jackson Stiles, “Australian household debt breaks new records”, The New Daily, July 3, 2017.

[11] Ibid.

[12] “Townsville team named for Hells Gate study”, Industry Queensland, May 15, 2017.

[13] Matt Sherrington, “Hells Gates dam site proposal launched”, North Queensland Register, March 22, 2016.

[14] Adam Joseph, “Hell’s Gate dam to make or break the Turnbull government”, Townsville Bulletin, August 16, 2016.

[15] Op. cit. [13]

[16] Op. cit. [14]

[17] Op. cit. [8]




























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