Never fear, Smith is here

I regard Dick Smith to be a fairly smart fellow.  His wealth and notoriety are testament to his intellect and deserved success.  To get where he has he would have had a lot of smart ideas and made a lot of smart moves, but I think his latest idea falls well short of something that has been thoroughly thought through.  Believing that Australia’s population is too high, he has offered $1M to any young person who designs what he thinks is the best population plan for Australia.

It is apparent that having wealth in this country provides one the privilege of having an opinion that can be thrown out to the masses.  It also can give one an ego:

Mr Smith, fiercely opposed to immigration, said he would devote the rest of his life to educating other Australians, including politicians, about the need to keep the nation’s population from exploding.

The above comment displays a man who believes that his own ideologies should enter into the public discourse plus be adopted as Government policy.  That appears to be the aim of his message.

I certainly won’t be listening; not because of a clash in our attitude to immigration, but on the economic argument that I believe weighs heavily in favour of an opposing view to that held by Mr Smith, which I will discuss shortly.  Firstly, I will consider Mr Smith’s side to the argument where he states that:
There are now 22 million Australians and . . . if that number grew beyond 26 million, the nation could struggle to feed its own people.

The fact is, that eventually, our population will pass 26 million.  One day it will even pass 35 million.  It will never be stagnant.  Whilst I see his point I do believe that the figure of 26 million is open to debate and I am certainly unaware of how this number was produced.  Or if it is credible.  Or if it is just pie in the sky.  One or more of you dear readers may be able to shed some light on this.

Nonetheless it is an issue for the future.  But not now.  To start implementing population control measures within the next 10 years would create an economic (and perhaps social) catastrophe for this country, and one that we are already headed for.

I pay a lot of attention to Australia’s most respected demographer, Bernard Salt.  Salt points out the obvious fact that over the next ten years the last of the baby boomers will retire from the workforce.

. . . baby boomers have been in the workforce paying taxes for 40 years; the premiums have already been paid; now it’s pay-back time.  The problem is that much of the tax paid by boomers since they entered the workforce in the 1970s has been spent.  Future retirees must rely on current workers to fund their lifestyle.  This system worked well enough for 40 years because the worker base was always expanding.  But from 2011 onwards the rate of growth in the working age population of Australians slows: more boomers exit at 65 than Gen Ys enter at 15.

In a nutshell, how are we going to fund their retirement if there are less taxpayers in the workforce?  What economic pressures will this put on Government?  Where else will the money have to come from?  What services would need to be cut?  These situations can only be avoided if the workforce were able to increase, thus increasing the number of tax payers and Government income.

In Canberra alone, there is expected to be a labour shortage of 30,000 people once the last batch of baby boomers have retired.  In such an environment where will business owners find staff?  How will some businesses survive?

Tony Abbott’s much ridiculed suggestion that Australians should have more babies and let in less migrants offers no short-term solution.  More children would also place pressure on the welfare system.  People who complain now about a 50 cent flood levy are in for a horrible shock when the news filters down that the country will run out of money unless taxes are raised to fund all the new retirees (and zillions of babies under the Abbott plan).

I would ask Mr Smith if he has an answer to the impending financial problems that slow population growth would attract, or better still, if he is even aware of the economic ramifications.

There is only one answer.  We need more workers migrating to Australia, skilled or unskilled.  Ignore the shock jocks or the emails from the right-wing scaremongers who tell you the horrifying news that immigrants are handed pensions or income support payments the moment they step foot in the country.  This is simply not true.  Have a look at the eligibility for Centrelink payments and you will see that the scaremongering is a great lie.  The current Government is committed to bringing workers into this country and not providing them with a pension, but spending money on providing them with work and job ready skills.

Every one of us relies on the success of this program.  If we cannot attract people to this country, whether they come by plane or boat, and we cannot have a job ready workforce built up over the next decade, then the economic and social fabric of this country will undergo a horrible change.  Rich people, meanwhile, offer $1M for someone to come up with a model to ensure that this change could soon be a reality.

As Zachary used to say: “Never fear, Smith is here”.  This claim was always followed with a debacle.

And again, so it will be.

20 comments on “Never fear, Smith is here

  1. Good article Migs and I agree with you. My parents came in with the skilled migration wave of the 50’s. Dad was a welder at the time and they were in massive demand here, but he never did one welding job, another story for another time.

    So is Smith saying that the migration wave in the 50’s that was desperately needed to advance this country, or it would have become a backwater, was OK, but immigration now for the same reasons is not OK?

    And at Smith’s age isn’t he a direct beneficiary of that migration wave of the 50’s and owes his wealth to it, yet he’s now saying future Australians have to do it alone and cannot benefit from the skills and knowledge of those who could migrate here.

    I will contend one point and that is we turn too quickly to importing skills because we don’t have in place the training and follow through entities to create a great skill base within Australia. Rudd has gone some way to alleviating that situation whereas Howard was going someway to undermine it, probably on behalf of business so as to bring in more 457 visa workers.

  2. Smith says “Australia can’t sustain a bigger population.” In my mind Dick Smith starts his argument with an incorrect assumption. The solution is decentralisation. Australia has many regional centres whose populations have been steadily dwindling mostly due to lack of employment opportunities.

  3. Exactly Min, which is another big argument for the NBN. Access to communications for regional centers enables them to operate much more competitively, particularly given their lower overheads in other areas.

    Mind you, I’m not against succesful businessmen floating ideas, after all, these are achievers, so I guess at somewhere along the line, they knew what they were talking about. More dialog doesn’t hurt. It is this idea of him attempting to ‘educate’ others that is worrying. He has the money and leverage to run a campaign that ‘educates’ people to his ideology. That’s where he loses the plot imo. While I would take what he says seriously under normal circumstances, trying to ‘educate’ me really turns me off. After all, didn’t the miners recently ‘educate’ us over the mining tax. It all turned out to be a bit of a furphy.

  4. Min, Agriculture is a thing of the past in many rural areas, due to a large increase of importation from overseas, and what is left in farming is mainly owned by overseas interest where the 457 visa workers and backpackers are employed at dirt cheap wages.

  5. I can see that population growth is a major cause of emissions. Limiting growth of population seems to be the (environmental) elephant in the room that few wish to address or consider.

    Endless population growth is an economic Ponzi scheme. Why not start to consider the consequences now?

  6. Agreed Crowey but there are many other industries which can operate just as efficiently in a rural area especially after the introduction of the NBN.

  7. Migs, that argument from Smith is nonsensical as Australia’s birth rate is currently around 1.9% an increase from 1.7% but still below the ‘replacement rate’ of 2.1%. Therefore why limit families to 2 children when we’re not even replacing our existing population.

  8. “These situations can only be avoided if the workforce were able to increase, thus increasing the number of tax payers and Government income.”

    With the greatest of respect, the idea that we need to keep feeding the population funnel in order to fund the retirement of baby boomers is a furphy that has been foisted on the Australian people and passes for an accepted matter of fact.

    It’s nonsense.

  9. Reb, I beg to differ. The baby boomers account for a significent percentage of the workforce and like it or not we’ll be helping to pay for their retirement.

    But I do believe that in about 25 years time the Age Pension will be practically a thing of the past. Keating’s super initiatives of 20 years ago will make the babyboomers welfare costs less severe on the taxpayer than they would have been, and better still, once his initiatives have been in place for 45 years we could assume that any person entering the workforce after 2015 will be expected to fund their own retirement.

    The Age Pension has been around since year dot and in the mindset of the older generations that was all they had to look forward to after a lifetime of hard yakka. Twenty years ago most of the workforce hadn’t heard of super. As a bloke who was working with the AMP at the time I was horrified at how ignorant people were and even more horrified that many workers considered that super wasn’t worth the effort. Keating changed all that.

    While working with a finance company during the 80s their super plan was only available to managers after x amount of month’s service and only after it was offered by the company. The rest of the staff missed out. Keating changed all that to.

  10. “I do believe that in about 25 years time the Age Pension will be practically a thing of the past.”

    I agree, however I also think that people have a a greater capacity to fund their own retirement these days. And inevitably many retirees downsize their primary dwelling freeing up cash as they approach or are in retirement.

    The West laughed at China when it introduced the “one child policy” citing the reasons that you have laid out – not enough people to support an ageing population etc, and their society is a lot better for it.

    The mistake is in just thinking of it as a “numbers equation.”

    People in their 50’s, 60’s and 70’s are much more healthier and active – physically and mentally – these days than they used to be, thanks to advances in healthcare, medicine, technology etc…

    We can also expect a skills shortage, therefore there is greater likelihood of ongoing participation in some kind of employment (or voluntary work) for those that want it.

    But I think China is the best example to highlight that the theory that we need some sort of surge in population growth to cater for boomers in retirement is a furphy and in fact will only compound “the problem.”

  11. People in their 50′s, 60′s and 70′s are much more healthier and active – physically and mentally – these days than they used to be, thanks to advances in healthcare, medicine, technology etc…

    Personally, if a fellow in his mid 60s is healthy, happy and enjoys his job then I see no reason why he can’t remain in the workforce if he wishes to.

    Which gives me an idea. Why not encourage baby boomers to hold off on retirement or even to seek reduced working hours?

  12. “Why not encourage baby boomers to hold off on retirement or even to seek reduced working hours?”

    Indeed. We could even increase the pension eligibility age to 110 as an incentive!

  13. The most disappointing aspect is that the Howard government halted the superannuation contributions form employers at 9% which was the mandatory level when they were elected.

    Reason : Business was going broke and could not afford anymore.

    Reality :We had 11 boom years of massively increasing profits, IPO issues in the multi billions, take overs and consolidation.

    Had the 9% increased by 1% per annum to 15% by 2002 as proposed, we would now have had 9 years of 15% contribution and many more retirees able to be self reliant.

    This was a vision for the future that was totally annihialated by a backward government which could not see the end result. The end result being a much lower cost to the tax payer ensuring ability to cover the health costs of the aging population without the need for aged pensions as well.

    A truly lost opportunity.

  14. And let’s not forget Rudd’s plan to boost super as part of the Resources Tax, which was vehemently opposed by Abbott. Paying workers benefits does not sit well with the rich.

  15. What many “younger” people forget is that until 1992 people actually paid higher taxes with the expectation of a government pension …

    … PJK planned for the Compulsory Super to be @15% long before 2011 – but along came Howard & The Private School Bullies …

    The super that baby boomers actually have to retire on is frighteningly low – particularly single or widowed women.

  16. Agreed TB. People today fail to realise that, through no fault of there own. A lot of things that are taken for granted now, which were a luxury or unheard of in our day.

  17. Another one, and economics is certainly not my forté is the effect of inflation. However, I always remember my dad’s words: I used to put in my 6 pence and when I retired I got my 6 pence back.

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