Sir Richard Branson is right to point out the downside of Australia’s small population, given the sheer size of Australia, which is a continent after all (Sir Richard Branson advocates big Australia):

A bigger population would create a much bigger economy without negatively affecting the people’s way of life.

Sir Richard’s call for policies to attract the wealthy from other countries probably doesn’t follow logically from this observation, however.  Given our large current account deficit, Australia isn’t lacking in capital coming in from overseas to finance Australian investment projects, so there’s probably not much benefit in having many more wealthy people here.

In the future, Australia is most likely to need low and medium skilled workers from overseas to perform service jobs, particularly in the aged care sector, as labour force growth slows down due to mass retirements of baby boomers.

That said, Sir Richard’s intervention in the national population debate is welcomed.  The Commonwealth Treasury, which is advising our Sustainable Population Minister Tony Burke, most likely agrees with Sir Richard’s view.  In a 2006 Treasury working paper on Australia’s Productivity Prospects, Treasury economists observed:

Partly as a result of nineteenth century history, Australia’s population is concentrated in a few large cities situated hundreds of kilometres apart. Cities are much more closely situated in the US. As a result, while average citizens in the two countries live in cities of similar sizes, the US has nearly eight times as many cities of substantial size as Australia in a given area.

These differences in geography and history mean that Australia misses many of the benefits of proximity that accrue to the US. Such benefits include the economies of scale, intensity of competition, and low transportation costs that are available in more densely populated markets.