Many people will be aware that Australia’s population growth has rebounded after the lean COVID-19 years. Unprecedented levels of overseas migration have reversed the minimal population growth from the June Quarter of 2020 to the September Quarter of 2021. The strength of the rebound has come as a bit of a surprise, given the levels of pessimism regarding Australia’s demographic and economic outlook during the peak of the pandemic only two years ago.
The increase has been unprecedented with the latest data showing a net migration gain to Australia of almost 387,000 people in the year ending December 2022. This is the highest gain to Australia since records began. One of the major reasons that the net increase has been so large is that departures for overseas are relatively subdued. This is because fewer temporary visa holders, such as overseas students, have arrived in Australia in the last few years due to the border closures. See below.
What could change this outcome?
The Australian migration program tends to act as a stoking
mechanism for the Australian economic fire. As unemployment remains at low
levels and there are still labour shortages in some industries and in some
regions, higher than average overseas migration levels may eventuate. On the other hand, the higher interest rates
and higher inflation has caused severe belt-tightening for a large share of the
nation’s population. If this continues to bite, Australia could be heading for
recession. This would reduce both the push factors for people to come to
Australia from outside, as well as the pull factors from within Australia for
overseas migration.
What does this mean in the longer term?
The interesting thing for demographic analysts, planners, service providers and business with age sensitive consumption is how this
population growth reversal plays out over the coming years. The vast increase in the rate of growth was not anticipated during the COVID-19 period, when uncertainty around the unwinding of lockdowns and the re-opening of international borders was so fraught.
It is more than likely that net overseas migration will again settle down around an average of about 250,000 per annum after the current surge, but what if the surge was sustained?
We have compared three scenarios below. These are:
The Low Growth Scenario: Post COVID slow recovery
This is the scenario coloured by the uncertainty as to when and how rapidly overseas migration would return to Australia. Net overseas migration rising slowly back to a net overseas gain of 250,000 by 2041.
Medium Growth Scenario: Reverting to long-term patterns
This scenario assumes a continuation of the brief, but very high increase in overseas migration before settling down to a net gain of 250,000 increasing to a net gain of 325,000 by 2041, consistent with historic increases. This is the most plausible current scenario.
High Growth Scenario: Sustained current high migration
This scenario assumes that net overseas migration rises from 400,000 per annum in 2024 to 470,000 by 2041.
Overall, the numbers are significantly different, with
Australia’s population forecast to increase by 6,56 million persons from 2021
to 2041 under the low scenario, 8,36 million under the medium scenario an 11,51
million under the high scenario.
However, the difference in outcomes is very heavily weighted
to ages under 50 where the bulk of overseas migration occurs. The biggest
differences are in the young and mature adult age groups (25-44 years). See
below.
Final thoughts
The recent changes to overseas migration have served as a reminder that the only constant is change. It is important to constantly review future outlooks and incorporate the latest data into our models and our thinking. The spatial component of these differences is especially interesting to Demographic Solutions, as the impact of growth is never even across regions and suburbs.