The concern is that this elevated level of growth (roughly double the rate of the 1990s) is the trajectory towards a projection of 36 million by 2050 as suggested by the Intergenerational Report.

I have several issues with this figure and its assessment.

The first is that this is not a record. This nation's peak population growth was actually recorded over the 12 months to March last year. The current growth rate is now on the leeward side of the population mountain. This means that subsequent ABS data releases in June and September (closer to the election) will confirm that "the worst is over".

Australia's current growth rate actually reflects a type of "hyper growth" caused by the confluence of unique circumstances which will ease in the future. These include a high birthrate, Australia's push into the international education services market, and the fact that this nation is (rightly) perceived as a safe harbour amid the global financial crisis.

My third point is that the current rate of growth is not part of the trajectory to 36 million by 2050. If we maintained current rates we would in fact have 41 million by mid-century. The annual growth needed to deliver 36 million over 40 years is 350,000, including 180,000 in net overseas migration. We could cut current net overseas migration (of 297,000 per annum) by 40 per cent and still reach the 36 million figure.

The problem is that Australia's hyper growth has occurred at a time when national attention has focused on future population levels. Australians living in capital cities and in seachange communities "feel the squeeze" caused by hyper growth and conclude that this is the pathway to 36 million.

No it's not. This is a short-term consequence of the global financial crisis (and is a better consequence than, say, 10 per cent unemployment) and of our shift into the international education services market.

In order to understand what is driving Australia's near-record population growth it is important to consider the "cogs" that drive this figure. In the following discussion I compare national population growth over the year to September last year (most recent data available) with the same data exactly five years earlier (when national growth was a "normal" 237,000).

1. Natural increase: Over the past five years this figure has increased by 38,000 due to the fact that births are rising faster than deaths. This might be due to the baby bonus introduced in 2004, but it might also reflect the confidence young Australians have in the future of this nation. The possible removal of the bonus would be unpopular, and I'm not convinced such a policy would have an immediate effect on the birth rate. Mind you, the other option is to increase the death rate, but no one seems keen on such a policy.

2. Permanent migrants: Flow into and out of Australia; over the past five years this net movement has jumped by 18,000. This figure comprises traditional migrants including business, family reunion, refugees and people on 456 visas (sponsored by business because they have unique skills). This category also includes New Zealanders who decide to move permanently to Australia. There are half a million Kiwis in Australia as compared with 60,000 Australians living in New Zealand. Over the year to June 2008, the Kiwi influx topped 26,000. If cuts are to be made to the growth rate, then one could be made here, but it would have to be made with surgical precision to avoid impacting on our skill base.

3. Expat Aussies coming and going: includes Australian residents who leave Australia or who return after having been away for at least 12 months. This includes Generation Y backpackers, but it also includes what I would call Australian "global workers" who work in places such as London, New York, Shanghai and Dubai. In comparison with the situation five years ago, expat Aussies are returning faster than global Aussies are leaving; this factor has upped our growth rate by 25,000. However, my view is that once the global labour market recovers, these global Aussies will exit, thereby placing downward pressure on the growth rate. And from a policy perspective, who's going to tell expat Aussies in London that they can't come home?

4. Expat foreigners coming and going: Just as there are Aussies who flow into and out of the country for periods of 12 months or more, there is also a flow of foreign workers, backpackers and students who flow into and out of Australia. This figure has jumped 119,000 in five years. Part of this jump is due to a definitional change, but the scale of the jump remains undeniable. If an Indian student comes here for 11 months they are counted as a visitor; if they stay for 12 months or more they are counted as a resident. Over the past five years Australia entered the business of delivering education services to a global market. This has ramped up population levels in capital, and some regional, cities. This category also includes workers on 457 visas (for example, Pacific Island workers who go home after 12 months).

When you disaggregate Australia's current rate of population growth and look at areas where cuts could be made it is clear that there is an economic price to pay for any reductions. We could, for example, drop our growth rate by 100,000 immediately if international student numbers were capped. But this would severely impact on the education sector. We could also cut skilled migration but this exposes us to the risk of leaving business without access to specific skills. For example, do we really think its a good idea to cut the intake of registered nurses? What about doctors? What skills don't we need?

This is not to say that we should not look at ways in which Australia's hyper growth can be better managed. My view of the way forward is to clearly understand the ramifications of cuts being made to any of the components of growth. And, perhaps more importantly, it is also advisable to understand the underlying momentum of the figures: if growth is naturally slowing then perhaps it's not necessary to fiddle with the system.

Source: The Australian