Late last week, Immigration Minister Alan Tudge released the first annual Population Statement, which projects reduced population growth through to 2031.
Specifically, the Statement projects average population growth of 1.1% over the coming decade, compared to the 1.6% (more than 400,000 per year) in the past decade:
The Statement shows population growth in 2020-21 will be the slowest since World War I. Negative net migration is also forecast for the first time in 75 years this year and next.
Australia’s population growth is projected to rebound strongly by 2023-24, but not return to previously expected levels of growth until 2027-28.
Australia’s population is expected to reach 28 million in 2028-29, three years later than would have been reached in the absence of COVID-19.
Melbourne is forecast to overtake Sydney as Australia’s largest capital city in 2026-27. This is primarily due to Sydney’s continuing slowing population growth, with negative growth now forecast for the first time since 1952-53.
This follows evidence that more people will leave Victoria, and Melbourne in particular, relative to other jurisdictions in the short term due to the second wave of COVID-19 and intense extended lockdown.
The impact of COVID-19 and the associated migration restrictions have the smallest impact on Queensland’s population growth, with strong interstate migration into Queensland expected. South Australia’s population growth will be zero this year before recovering in subsequent years.
The Statement finds that whilst Sydney and Melbourne will have the sharpest fall in population growth in the short term due to the slowing of overseas migration, population growth will pick up again…
The median age in Australia is now projected to be 40 in 2031. The pre-COVID-19 estimate was 39.
The slower population growth and faster ageing will directly impact our economic growth.
As expected, the population propaganda machine at KPMG went into overdrive, warning of a $117 billion hit to the economy and demanding policy makers ease migration requirements to reboot immigration levels quicker:
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KPMG chief economist Brendan Rynne — who has projected a $117bn hit to the economy if the population growth estimates fall by a million people in 2030 — said the government’s projections could be turned around if it offered incentives to foreign students to stay.
“As our population ages, we need to refresh the workforce and get a new product pool of labour, enhance tax receipts and pay for the services we want as Australians,” Mr Rynne said.
“In a crisis, people are more wary of adding more babies to their family so it will come down to migration.
“A proactive policy would be to immediately bundle our international higher education services with a pathway to citizenship, so that students stay in Australia and contribute.”
The Demographics Group managing director Bernard Salt said the retention of current foreign students and working migrants could get Australia through the post-COVID population crunch.
“There is a short, sharp, medical incision in population growth between 2020 and 2022, it’s almost like a giant crevasse,” Mr Salt said on Friday.
“If we keep the momentum of foreign students and migrants already here, we can get across to the other side.
Only a charlatan like KPMG would only count the ‘benefits’ of immigration while completely ignoring the costs. You know, fundamental things like:
Upward pressure on housing costs;
Increased congestion in the big cities;
Increased pressure on state and federal budgets, as well as households, to provide economic and social infrastructure to keep up with demands caused by high population growth;
Increased greenhouse gas emissions;
Loss of Australia’s natural habitat due to development and increased resource use;
Reduced productivity from infrastructure crush-loading and employers using cheap migrant slave labour over automation.
Shock, horror, Australia’s population would be 1.1 million less by 2029-30 because of the reduction in immigration caused by Covid. That would be a “$117 billion” hit to the economy over the decade by dragging down economic growth, KPMG calculates. That would leave every Australian $2850 worse off each year, KPMG says.
So, KPMG and its big-business clients hope that the masses will be lulled into supporting a return to higher immigration. Well, let’s hope a bit of counter-propaganda will prevent that.
Even on KPMG’s figures, this hit to the Australian economy and therefore living standards of Australians is suspect.
KPMG’s says GDP would be $117 billion lower each year by 2029-30 if we do not have these 1.1 million extra people, and that would leave every one of the 28 million Australians by then $2850 worse off each year – that is a total of $79.8 billion, let’s say $80 billion.
Bear with me with the figures.
But if instead we have the extra immigrants, that $80 billion will not be “lost” because of the extra $117 billion in GDP the immigrants would provide. Take that $80 billion for the existing population away from KPMG’s $117 billion, it leaves $37 billion a year for the 1.1 million immigrants themselves, which comes to just $33,636 each immigrant per year, well below the Australian average income. So they are dragging their heels. They are a cost to the Australian community not an asset.
There is clearly something wrong with these “plucked-from-the-air” figures.
KPMG’s study looks at what would happen if there was no vaccine – and therefore no immigration – after one year and after two years.
It quite reasonably says if there is no vaccine “real GDP would be 5.5 per cent lower in every year from 2029-30 and beyond” compared to no “COVID-19 triggering a slowdown in immigration”. It says “a 5.5 per cent reduction in real GDP in 2029-30 alone is equivalent to $117 billion”.
But there is the huge logical problem here. KPMG says that in a no-immigration environment caused by no vaccine, GDP would be 5.5% cent less. Yes, of course. But the 5.5% drop is not down to no immigration. Rather, it is down to all the other economically horrible things caused by a no-vaccine environment: closed businesses, closed borders, lack of confidence etc etc. But KPMG, to suit its own purposes, puts all of the lower GDP ($117 billion) down to no immigration and says the absence of immigration will cost every Australian $2850.
It ignores the following possibility: that a no-vaccine environment causes a 5.5% fall in GDP which is a lower fall than you would expect if Australia had also had to deal with costly high immigration and that if we had continued destructive high immigration in addition to Covid, we would have a 6% or 7% fall in GDP.
KPMG suggests that if we suddenly get a vaccine all we would have to do is allow 1.1 million immigrants in and the 5.5% GDP drop would disappear. This is delusional. In the post-Covid environment most of them would join the end of the dole queue in a profoundly shattered economy, just making things worse.
Covid aside, there are good grounds for concluding that the John Howard-inspired high-immigration policies since the late 1990s have cost Australians dearly, not just in economic terms but also in environmental and lifestyle costs.
It is all very well bringing in immigrants with their immediate incomes which add to overall GDP in the short-term. But GDP per head in the long term is cruelled by that. Schools, hospitals and transport infrastructure have to be built to accommodate them. That might be good for KPMG’s big-business clients just as their immediate consumption needs might similarly benefit them.
But it is not so good for existing residents. Increased congestion and agricultural and wilderness land being consumed by housing are just some of the costs.
High immigration has become a self-perpetuating myth. It was a great thing for Australia from 1945 to about 1970, but thereafter it should have been questioned, but was not.
The KPMG report is just another example of the myth. The KPMG report like so many other business-driven reports conclude that Australia should have higher immigration. If they were honest, they should say that higher immigration was the conclusion upon which they had based their assumptions, facts and arguments.
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All I will add is that the Nordic countries – Sweden, Denmark, Finland and Norway – are renowned as being among the wealthiest, happiest, best functioning nations in the world. They also have the highest living standards. And they got there without mass immigration-driven population growth:
Australia should seek to emulate these Nordic nations – one of which is also a commodity economy – by focusing on improving productivity and living standards instead of perpetual, low quality, quantity-based growth.
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.
