Population growth putting pressure on infrastructure, says Treasury boss

By David Donaldson

Wednesday May 2, 2018

Huge population growth has placed “considerable demands on government infrastructure and services” in Victoria in recent years, said state Treasury Secretary David Martine the day after the release of the state budget.

The state’s population is growing at around 2.3% — or the size of Bendigo — a year. Last financial year saw Victoria’s highest net overseas migration in its history, at 87,000 people, and the highest interstate migration since the early 1980s.

Even if it wanted to, there’s not a lot the state government can do about the population boom, as it has no control over migration, people moving interstate or births.

But it’s also been a key driver in the economic success story that Victoria has become, alongside low interest rates and an export-boosting cheaper Australian dollar.

The state economy is growing quickly, with a real increase of 3.3% last financial year, which is well above the national average of 2%. Once you account for population growth it’s not as high — per capita economic growth sits at 0.9%, compared at the national average of 0.4%.

“For the year 2016-17, Victoria’s economic growth was largely supported by strong household consumption, public investment in infrastructure and services, and business and dwelling investment,” Martine explained at Wednesday morning’s post-budget breakfast briefing hosted by IPAA Victoria.

And that economic growth is being enjoyed by average Victorians.

The state’s participation rate — the proportion of the population in work or looking for it — has “outpaced the nation” in recent years, and female participation has markedly increased since 2016, climbing to historic highs.

“The combination of these drivers has translated into rising average living standards,” Martine said.

Economic growth per capita gradually fell between the 1990s and 2014, as part of an Australia-wide trend of falling productivity growth. After dipping into negative territory briefly, it has now started increasing again.

Employment growth is high by historic standards, with the Victorian economy generating 117,000 new jobs in 2016-17 — the highest of all states and territories.

“This represented more than 70% of new jobs created across the nation over the year,” he explained. This has been relatively balanced across the state, too, with regional employment growing at nearly double the national rate.

And they’re secure, too — the number of full time jobs is growing at 3.9%, compared to a national average of 0.7%.

Yet despite the strength of the economy and the number of people wanting more work hours, wage growth has been weak — though it may be starting to pick up now.

Martine also pointed an interesting trend that has seen enrolments in government schools rise significantly since 2011, recently overtaking non-government school enrolments for the first time in decades.

He added that despite the work being done to improve the government’s digital capability, such as in the establishment of Service Victoria, the state had a lot of catching up to do.

“It’s fair to say that in Victoria we are well behind in terms of our online service delivery platform. We’re well behind compared to many other jurisdictions.

“There are many gains to be had about better use of technology across government, particularly in the delivery of services.”

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