State is ill-prepared for population growth

Economics: 'If you will it, it is no dream

 Economics: 'If you will it, it is no dream." With these words rabbi Theodor Herzl espoused an idea 100 years ago that was to become a reality. Four decades later and 2,000 years after its original destruction, the state of Israel sprang up. Some seven million Israelis now live in a country of just under 21,000sq km, up from two million at its foundation in 1949.

That rapid growth has brought huge political problems. But it was, somehow, achieved. Recently NCB stockbrokers Dermot O'Brien and Eunan King estimated that the Republic's population would grow to 5.3 million by 2020. The idea is not far-fetched. In 1841, some 6.5 million persons lived in what is now the Republic. External economic and demographic conditions hold out the chance of a return to pre-famine population levels by the end of this century.

The famine cut Ireland off from the exponential growth in Europe's population during the 19th century. Adherents of Malthus - a 19th century economist who believed that populations could only grow so far - saw Ireland as an argument for population control.

But the situation in Ireland at that time was caused by a combination of imbalanced land ownership, a lack of control over our own policies and agricultural protection, rather than population growth per se. The first two problems were corrected early in the last century by land reform and the achievement of independence.

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Pre-famine times showed that Ireland could, under proper political and economic conditions, support a population density that was the equal of other European states with a temperate climate. But external protectionism and a weak industrial culture prevented the economic growth that would have allowed our population to grow. By 1961, over 100 years after the famine, population was still falling and had reached a level not seen since the 18th century.

When the Republic set about opening its economy to foreign investment and trade in the 1960s, its population was amongst the lowest in Europe. Since the 1960s we have abandoned protectionism, become fiscally responsible and drawn in a flow of multinational investment far larger than justified by our share of Europe's population.

EU membership has given other European workers access to our labour markets. Euro membership has made prices and wages here more easily comparable with other countries that migrants might want to go to. Cultural barriers to emigration have also fallen. The world's poor migrants are learning English, making Ireland an easier place for them to come to than Germany or France.

In Israel's case, population growth was motivated not by economics, but by historical and cultural factors (those emigrating to Israel from the US or Europe are probably expecting lower living standards).

But the Republic's population story is definitely an economic one. The population here has increased from three to four million over the last 30 years. The natural increase in the population - births minus deaths - has been broadly stable over that period. What really pushed our population up was a sea change in net migration, immigrants minus emigrants. From the early-1970s to the mid-1970s we went from negative to positive net migration. The general policy incompetence between the mid-1970s and 1980s knocked us temporarily back to negative net migration, but since around 1991 we have had net immigration and our population has rocketed.

NCB's prediction that this trend will continue is plausible. In its 2003 census returns, the Central Statistics Office estimates over the next 25 years there will be an annual average of 63,300 births, 32,400 deaths and net migration of 25,000.

It estimates our population will reach 5.5 million by 2030 - broadly comparable to the NCB forecast.

But the CSO is not in the business of making economic forecasts. NCB has forecast that potential economic growth will continue at 5 per cent per annum up to 2020. A closer look at CSO statistics on our population trends shows why this is out-turn could be hard to achieve.

Firstly, the number of people living in any household - which has fallen from 3.8 in 1979 to 2.9 - will continue to fall. CSO population predictions for 2030 are broadly comparable to NCB's projections for 2020 but also contain interesting information on the number of households in that year. The CSO says that while our population will grow by 1.5 million by 2030, a rise of 38 per cent, more people living alone and smaller families mean that the number of households will jump from 1.3 million to two million, a rise of 50 per cent. So the need for housing will rise even faster than our population, putting yet more pressure on house prices.

The CSO also shows that the share of commuters driving to work rose from 37 per cent in 1986 to 55 per cent in 2002, with only 10 per cent using public transport in that year. The average distance travelled to work is up from four miles to 10 miles, while one in eight workers now travels more than 20 miles to work.

In short, the Republic has failed to accommodate population growth over the last 30 years. There is little sign of improvement. The Government's spatial strategy has been pulled apart by its backbench TDs. Our public transport system remains underfunded and poorly organized. Broadband access - crucial to rural development - remains largely a Dublin affair.

So even if rising population drives our economic output higher, without better urban planning and transport there is likely to be low productivity and congested growth that will do little to improve the standard of living here, never mind the quality of life.

Like Herzl a century before we should dare to dream about the future. But like him we must apply a will to that future, or it will be no dream, but a nightmare.