|Michael Stutchbury, Economics editor From: The Australian April 06, 2010 12:00AM
THE Labor government's new population focus first needs to explain that a "big Australia" is a desirable and unavoidable byproduct of the rise of China and India.
History and recent experience suggest that being Asia's main supplier of mining and energy resources will generate much bigger demand for labour, and not just in mining centres. Australia's national prosperity will become even more of a magnet for immigrants. Trying to cap population growth by limiting our resource development would risk our economic security and even national sovereignty, given the new geo-political balance of power in our Asian region.
But Labor's new focus then needs to examine why our population growth has been siphoned into a handful of state capital cities and created a shortage of land for housing in one of the planet's most sparsely settled continents.
And one of the best-placed thinkers is this area, former NSW Treasury secretary Percy Allan, suggests the answer lies in Australia's political model of an expanding federal government and a handful of state governments that are highly centralised in their capital cities.
"No other developed nation, let alone continent, is as lopsided and myopic in its spatial development as Australia," Allan says.
But his dramatic solutions are unlikely to be what Kevin Rudd's new Population Minister, Tony Burke, and his bureaucratic support in Treasury have in mind.
As Treasury secretary Ken Henry points out, Australia combines some of the highest levels of urbanisation with some of the world's lowest urban density. Nearly 90 per cent of Australians live in urban areas. Nearly 40 per cent live in Sydney and Melbourne; another 22 per cent in Brisbane, Perth and Adelaide.
Yet Australians also enjoy "very low levels" of urban density, including the biggest new houses in the world. Henry ponders what "incentives in our current arrangements" have led to this peculiar pattern of settlement.
Allan's answer is set out in a soon-to-be published book, What If?, edited by Peta Seaton, a protege of former NSW Liberal premier Nick Greiner, a former NSW Liberal frontbencher and most recently a staffer with NSW Opposition Leader Barry O'Farrell. Seaton's book resurrects much of the Greiner agenda of political devolution and government accountability from the rubble of NSW Labor's disastrous mismanagement.
Allan was NSW Treasury secretary for nearly a decade under Labor (Neville Wran and Barrie Unsworth) and Liberal (Greiner and John Fahey) premiers before Bob Carr attempted to put the growth shutters on Sydney. And his What If? chapters argue that regional development has been stunted by the centralised mindset of both Canberra - a hallmark of the Howard and Rudd governments - and the states.
Australia lacks the sort of regional government with revenue-raising and development powers that's found in the US and Europe. This concentrates resources - including good schools, hospitals, jobs and so on - in the suburbs of the big capital cities where much of the professional and decision-making class then locates, even with the advantages of the internet.
Allan notes that NSW, which covers a landmass larger than Germany, Britain or France, has one of the most centralised political jurisdictions in the world. Nearly 70 per cent of the state's economy and its political, administrative and political power is jammed into the 1 per cent geographic area of Sydney.
Allan's dramatic solution includes moving the NSW parliament and state government 160km north from Sydney (population 4.4 million) to Newcastle (population 530,000). With its historic architecture, Newcastle and its surrounding Hunter Valley would become the state's new growth centre.
Although it might appear radical for Australia, it would be commonplace in the US. After the 1906 earthquake, California shifted its state capital from San Franciso to Sacramento. After embracing decentralisation, California now has 59 cities with populations of more than 100,000. With one-fifth of California's population but less of its aridity, NSW would have 12 cities over 100,000 people if it had the same degree of decentralisation. Instead it has only three: Sydney, Newcastle and Wollongong.
Allan says regional development will not work unless power is devolved to the regions. He knows because he was part of attempts to do it. "NSW should stop being run like a penal colony that is micro-managed through heavy-handed commands and controls from Governor Macquarie Tower, " Allan writes. "It should become a modern state that funds a network of public, not-for-profit and private organisations to serve the public, which are then held to account against agreed yardsticks".
Allan's solution maintains that Australia's constitutional fathers expected the federation to move beyond the six states as its population increased, just as the US expanded from its o