One of the most common arguments used to support mass immigration and a “Big Australia” is the claim that it keeps the population young and productive, and without constant immigration, the population would grow old and the economy would stagnate.
Prime Minister Malcolm Turnbull said as much in 2012 when he called for a “more open” Australia and outlandishly stated that “anyone who thinks it’s smart to cut immigration is sentencing Australia to poverty”.
And earlier this week, Jessica Irvine repeated the myth when she warned of a “demographic timebomb that is ageing populations” and then advocated for ongoing mass immigration because “migrants, tending to be younger, are like a fresh inflow of water into a stagnant tributary”.
I have noted many times how Australia’s Productivity Commission (PC) has comprehensively debunked the view that immigration can ‘solve’ population aging, noting the following over more than a decade:
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PC (2005): “Despite popular thinking to the contrary, immigration policy is also not a feasible countermeasure [to an ageing population]. It affects population numbers more than the age structure”.
PC (2010): “Realistic changes in migration levels also make little difference to the age structure of the population in the future, with any effect being temporary“…
PC (2011): “…substantial increases in the level of net overseas migration would have only modest effects on population ageing and the impacts would be temporary, since immigrants themselves age… It follows that, rather than seeking to mitigate the ageing of the population, policy should seek to influence the potential economic and other impacts”…
PC (2016): “[Immigration] delays rather than eliminates population ageing. In the long term, underlying trends in life expectancy mean that permanent immigrants (as they age) will themselves add to the proportion of the population aged 65 and over”.
In short, trying to overcome an aging population through higher immigration is a Ponzi scheme. It requires ever more immigration, with the associated negative impacts on economic and social infrastructure, congestion, housing affordability, and the environment.
The PC’s Migrant Intake into Australia report also showed that immigrants overall have experienced lower median income, lower labour force participation, and higher unemployment than the Australian born population, which has since been supported by data from the ABS.
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Further demolishing this myth, economists at MIT published a paper in January which found that there is absolutely no relationship between population ageing and economic decline. To the contrary, population ageing seems to have been associated with improvements in GDP per capita, thanks to increased automation:
If anything, countries experiencing more rapid aging have grown more in recent decades… we show that since the early 1990s or 2000s, the periods commonly viewed as the beginning of the adverse effects of aging in much of the advanced world, there is no negative association between aging and lower GDP per capita… on the contrary, the relationship is significantly positive in many specifications.
Yesterday, a reader sent me a link to a 1999 federal parliamentary research paper, entitled “Population Futures for Australia: the Policy Alternatives”, which looked at the claim that immigration could offset an ageing population. Much like the PC, it too concluded that it is “demographic nonsense to believe that immigration can help to keep our population young”, while also recommending “a population of 24-25 million within 50 years” as well as “annual net migration… in the order of 80 000 if fertility falls to a level of about 1.65 births per woman”:
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There is no question that immigration, at least the first 80 000 immigrants, provides a worthwhile reduction in the extent of ageing of the population. However, immigration cannot ‘solve our ageing problem’. Substantial ageing of the Australian population over the coming decades is absolutely inevitable. To illustrate the lack of power that immigration has in relation to our age structure, we investigate the levels of immigration that would be required to maintain the proportion of the population aged 65 and over at its present level of 12.2 per cent. In doing this, we maintain the fertility and mortality assumptions of the standard but allow annual net migration to change.
To achieve our aim, enormous numbers of immigrants would be required, starting in 1998 at 200 000 per annum, rising to 4 million per annum by 2048 and to 30 million per annum by 2098 (Table 6). By the end of next century with these levels of immigration, our population would have reached almost one billion… The problem is that immigrants, like the rest of the population, get older and as they do, to keep the population young, we would need an increasingly higher number of immigrants…
It is demographic nonsense to believe that immigration can help to keep our population young. No reasonable population policy can keep our population young.
…we should be aiming at zero population growth. On the basis of our criteria, we agree that this should be the lower end of any acceptable range of future population outcomes for Australia. The standard projection scenario described above takes us to a population of 24-25 million within 50 years, after which the rate of population growth would be close to zero…
Indeed, to avoid long-term population decline, annual net migration would need to be in the order of 80 000 if fertility falls to a level of about 1.65 births per woman, as we suggest is likely. If fertility were to fall below this level, higher levels of net migration would be required to achieve zero growth, and the resulting population size would be larger than the 24-25 million that results from the standard projection scenario…
As we have argued, annual net migration of 150 000 per annum seems to be beyond our present absorptive capacities but, if fertility were to fall to 1.4 births per woman, a net migration level of 150 000 would merely lead to zero population growth, the lower end of our acceptable range. Thus, those who wish to maintain population growth would do well to note the course of fertility. While it is impossible to be precise, an annual net migration level of 120 000 seems about as high as we should extend under present conditions…
A bipartisan approach to immigration policy has served Australia well in the past and we see little reason why this should not be the aim of the major parties today.
Fast forward to 2017, and Australia’s population has already reached the “24-25 million” limit courtesy of a mass immigration program that is roughly 2.5 times that recommended by the parliamentary research paper:
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As well as a total fertility rate (1.81) that is currently well above the “1.65 births per woman” projected by the paper:
Sadly, the “bipartisan approach to immigration policy” is also for mass immigration and a Big Australia of 40 million mid-century.
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Clearly, anyone that continues to use the excuse of economic calamity, due to an aging population, to justify high immigration is simply wrong or intellectually bankrupt – both logic and the empirical evidence does not support it. Importing loads of people is more likely to import higher unemployment in the future as automation eats jobs.
It’s time to bury the ‘immigration stops aging’ myth once and for all. Moreover, given the significant qualitative costs of population growth – for example, worsening congestion, reduced housing affordability, the degradation of the environment, the depreciation of natural resources, and the overall decline in individuals’ quality of life – there is significant cause to dial Australia’s immigration program right back.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
