How migrants will sustain us over the next 50 years

Without immigration our population will shrink. That simple fact means hurdles for property and politics alike as we add up to 20 million people.

Although a topic of heated debate, stifling immigration can cause untold damage to the Australian economy.

Australia’s population growth has long been a topic of debate, sparking controversy and diverse opinions. Nevertheless, grasping the demographic composition is essential to comprehending the opportunities and challenges that lie ahead. Population projections serve as an excellent tool for this exercise.

The ABS population projections dataset is updated about every two years post-census, offering insights into Australia’s population trends up to 50 years ahead.

What sets this data apart is its segmentation by age and its presentation of three distinct scenarios (high, medium and low) based on varying assumptions about fertility, migration, and longevity.

With the Australian population at 26 million in 2022, under a high population growth scenario encompassing increased fertility, migration, and longevity, it is forecast to reach 46 million by 2071. In a medium scenario, the projection is 39 million, while under a low scenario, it is estimated to reach 34 million.

The Demographics Group’s Hari Hara Priya Kannan.

Regardless of the scenario, the 10-year average annual growth rate, standing at 1.4 per cent, is expected to diminish to a range between 0.2 per cent and 0.9 per cent.

Simultaneously, the median age, presently at 38.5 years, is anticipated to rise to a range of 43.8 to 47.6 years. This trajectory indicates a slower population expansion compared to preceding decades. The decelerated growth coupled with an extended life expectancy is poised to result in an ageing population, leading to a higher median age.

Population growth is comprised of natural increase (births minus deaths) and overseas migration. Fertility rates and life expectancy rates play a key role in determining the natural increase in population.

The latest figures for fertility rates stands at 1.63 at 2022. The fertility rate has continued to gradually decline and has remained at 2 or below since 1976.

The consistent decline in fertility rates indicates a long-term trend of smaller family sizes. This suggests factors such as societal changes and economic conditions are influencing family planning decisions.

In the high projection scenario, the fertility rate is estimated at 1.75, 1.64 in the medium scenario, and declines to 1.45 in the low projection scenario. Even in the high projection scenario, where fertility rates are assumed to be slightly higher, the increase is not significant, indicating a persistent trend towards smaller family sizes.

With fewer births, there are fewer young people entering the workforce.

This can result in labour shortages, reducing economic productivity and potentially hindering economic growth. It may also lead to increased competition for skilled workers, driving up labour costs.

On the other hand, life expectancy stands at 81.2 years for males and 85.3 years for females and has steadily been increasing since 1992. The steady increase in life expectancy is due to advancements in healthcare, improvements in living standards, and better access to health services.

This trend is expected to continue, with life expectancy rates projected to be higher than current figures in all three projection scenarios.

Among the anticipated shifts in Australia’s population, ageing is widely regarded as the most profound, heralding substantial alterations to the population’s age composition.

Projections show a drop in the percentage of children aged 0-14 years from 18 per cent in 2022 to 13-16 per cent by 2071.

Although a political football, immigration is vital for Australia to sustain its services.

Similarly, the working-age population (15-64 years) is expected to decrease from 65 per cent to 59-60 per cent by 2071.

Conversely, the proportion of people aged 65 years and over is forecast to rise from 17 per cent in 2022 to 25 -27 per cent by 2071. Additionally, the percentage of individuals aged 85 years and over is projected to increase from 2.1 per cent in 2022 to 5.2-6.4 per cent by 2071.

An ageing population has implications for healthcare, social services, labour force participation, and economic growth.

Policymakers may need to address challenges such as providing adequate healthcare for elderly populations, ensuring sufficient retirement income, and promoting workforce participation among older adults.

Despite variations in fertility and mortality assumptions across projection scenarios, the overall impact of natural increase on population growth is limited.

In all projection scenarios, overseas migrant arrivals are assumed to exceed departures, resulting in positive net overseas migration between 9.2 million to 14.3 million in total between 2022 and 2071.

Overseas migration is key to Australia’s population growth.

To help us understand the key role played by migration, this data offers us a zero-migration assumption where the population growth is based on natural increase alone. According to this assumption, without migration Australia’s population will gradually decline, dropping to 23.9 million by 2071.

A declining or stagnant population can lead to a shrinking workforce, resulting in labour shortages and reduced productivity.

Additionally, a smaller working-age population may increase dependency ratios, where fewer workers support a larger retired population.

With fewer people in the workforce contributing taxes, governments may struggle to fund social welfare programs, healthcare, and pensions.

This can lead to increased pressure on public finances and necessitate reforms to ensure the sustainability of social safety nets.

This data underscores the crucial role of migration in driving Australia’s population growth. While a rise in population currently brings about notable housing challenges, a decline in growth will introduce fresh hurdles in the housing and real estate sector. A shrinking population can result in surplus housing supply, diminishing property values, and difficulties in rejuvenating urban spaces.

Prioritising the growth of regional cities such as Newcastle by establishing jobs hubs is critical for their prosperity.

Addressing the current housing challenges necessitates the construction of more homes and the diversification of housing options to accommodate individuals from diverse backgrounds and socio-economic statuses.

Moreover, a declining population will exacerbate the already low economic growth in regional areas where population growth is vital for the area’s development. In such regions, a diminishing population can lead to decreased economic activity, limited job opportunities, and reduced demand for goods and services.

This downward spiral can impede investment and infrastructure development, hindering the region’s ability to attract businesses and retain skilled workers. Thus, population growth from migration is essential to stimulate economic growth and promote sustainable development.

While migration plays a crucial role in ensuring Australia’s population and economic growth, its imperative to acknowledge the challenges that become more pronounced with increased population, particularly the pressing issue of housing.

Australia’s high population growth, combined with the concentration of half the population in the three largest cities and the urban layout characterised by high-density CBDs and expansive low-density suburbs, has led to a scarcity of well-located land. This land, essential for living close to jobs and services, is becoming increasingly scarce and unaffordable for many Australians due to rising costs.

The Australian continent is huge in terms of landmass and the issue of overcrowding and housing shortages are primarily attributable to inadequate planning.

Decentralising job precincts presents an opportunity for people to disperse while still enjoying the urban advantages.

Establishing multiple job hubs across cities and prioritising the growth of regional populations are essential for achieving sustainable population growth.

However, this endeavour necessitates significant infrastructure projects to facilitate the relocation of jobs and people.

By pursuing this approach, we can also enhance the attractiveness of cities such as the Gold Coast, Geelong, and Newcastle, thereby encouraging further population growth and fostering balanced development.

Hari Hara Priya Kannan is data scientist at The Demographics Group