Ruqayyah Snyder
Australia's population has increased from 3.8 million in 1901 to 25.4 million in 2021, with a current annual growth rate of 1.4%. This growth is driven by net overseas migration and natural increase, with more than half attributed to immigration. Population growth has economic benefits, stimulating demand for goods and services and contributing to economic growth. However, it also presents challenges, such as increased pressure on infrastructure and services, and potential inflationary pressure, particularly in the housing market. With many Australians concerned about population growth, the question arises: should Australia maintain or increase its population? This complex issue involves considering economic, social, and environmental factors, as well as the impact on ageing and labour force dynamics.
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What You'll Learn
Population growth and economic growth
Australia's population has increased from 3.8 million in 1901 to 25.4 million in 2021, with an annual growth rate of 1.4%. This growth has been driven primarily by net overseas migration (NOM) and, to a lesser extent, by natural increase (the surplus of births over deaths). While some Australians are concerned about the country's ongoing population growth, others recognize the economic benefits it brings about.
Population growth also impacts the labour market. In the absence of migration, the number of employed people under 35 in Australia would have decreased between 2016 and 2026. However, with net overseas migration, this number increased by 425,000. Immigration also helps to address strategic skills shortages and slow down the ageing of the population. Government modelling suggests that with 180,000 migrants per year, GDP per capita would be 12% higher in 2053 than if migration was zero.
However, there are potential drawbacks to relying on population growth for economic growth. Rapid population growth can reduce the incentive for firms to invest in productivity-enhancing measures, as they can instead focus on profit distributions to owners and shareholders. This can negatively impact the country's global competitiveness and productivity growth. Additionally, communities may bear the cost of population growth through stretched services and infrastructure, even as they benefit from higher house values and bigger dividends.
In conclusion, population growth has been a significant driver of economic growth in Australia, but it is a double-edged sword. While it can stimulate demand and provide labour market benefits, it also presents challenges related to supply constraints, inflation, and community costs. To optimize economic growth, Australia needs to balance the positive impacts of population growth with effective city planning, infrastructure development, and measures to encourage investment in productivity.
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Population policy and immigration
Australia's population has increased from 3.8 million in 1901 to 25.4 million in 2021, with an annual growth rate of 1.4%. The population is projected to reach between 34.3 and 45.9 million by 2071. This growth has been driven primarily by net overseas migration, which has added around 60% to the total population increase. The remaining 40% is due to a 'natural increase', i.e. more births than deaths, although much of this is also due to births to immigrants.
Public opinion polls show that more than two-thirds of Australians do not want any more population growth and would like to see lower immigration. However, population growth is one of the big three economic levers, alongside monetary and fiscal policy. Increasing population growth through immigration has a positive impact on the economy by stimulating demand for goods and services, bolstering aggregate demand, and providing an effective way to fill labour shortages. This has helped Australia achieve nearly three decades of uninterrupted economic growth.
On the other hand, rapid population growth can lead to inflationary pressure, especially in the housing and rental markets. It can also strain community resources and infrastructure, with the costs being externalised onto Australian communities. Furthermore, population growth through immigration may not be sustainable in the long term. Once population growth ends, migration can be increased gradually to maintain a stable population, or it can be reduced to allow the population to decline to a more sustainable level.
Australia's current population policy does not specify a target population level or growth rate, but it manages factors such as births, deaths, and net overseas migration. The permanent residence programme, which includes skilled and family immigrants, stands at 190,000 people per year. This figure is considered optimal for the impact of migration on the growth rate of GDP per capita. Net overseas migration is expected to slow down in the coming years, leading to an overall slowdown in population growth.
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Population ageing and immigration
Australia's population has increased from 3.8 million in 1901 to 25.4 million in 2021. The median age of the population has also increased from 35 years in 2000 to 38 years in 2020, with the proportion of children decreasing from 20.7% to 18.6% in the same period. The population is projected to reach between 34.3 and 45.9 million people by 2071, with the median age projected to increase to between 43.8 and 47.6 years. This suggests that Australia is experiencing population ageing, with an increase in the median age and a decrease in the proportion of children.
One of the factors contributing to population ageing in Australia is the low birth rate. The fertility rate in Australia has decreased from 3.1 births per woman in 1921 to 1.5 births per woman in 2023. This is below the replacement rate of 2.1 births per woman, which is the average number of children a woman would need to have to keep the population size stable. The low birth rate means that there will be a smaller younger population to support the growing older population.
Another factor contributing to population ageing in Australia is increased life expectancy. In 2021-2023, life expectancy at birth was 81.1 years for males and 85.1 years for females, with the highest life expectancy in the Australian Capital Territory for both sexes. The increasing life expectancy means that people are living longer, which contributes to the growth of the older population.
Immigration has also played a role in population ageing in Australia. Since the end of the Second World War, Australia has experienced waves of migration from different countries, including the British Isles, New Zealand, Western and Eastern Europe, and more recently, Asian countries such as India and China. While many immigrants arrive at a relatively young age, they may bring older relatives with them or may themselves contribute to the older population as they age. Additionally, older migrants, particularly those from non-English speaking backgrounds, may face barriers in accessing aged care and health-related services, further contributing to the challenges of an ageing population.
To address the challenges of population ageing, Australia may need to consider policies and planning related to aged care, health care, language services, and the aged care workforce. Additionally, maintaining or increasing the population through immigration could help support the ageing population and stimulate economic growth. However, it is important to consider the potential costs and impacts on communities, such as stretched services and infrastructure, as well as the preferences of Australians, many of whom do not want further population growth.
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Population distribution and urbanisation
Australia's population has grown from 3.8 million in 1901 to 25.4 million in 2021, with an annual growth rate of 1.4%. The population is projected to reach between 34.3 and 45.9 million by 2071. This growth is driven by net overseas migration and natural increase, with more than half attributed to immigration. The urban population has increased significantly over time, growing from 58% in 1911 to 90% in 2021.
Population distribution in Australia is uneven, with a significant concentration in urban areas, particularly in capital cities like Sydney and Melbourne. This trend is expected to continue, with the number of households projected to increase to between 13.3 and 13.9 million by 2046. However, there are concerns about the impact of population growth on infrastructure and services in these cities, as well as the cost of living, especially in the housing market.
To address these concerns, the Australian government has proposed reducing international migration to large cities. However, this may have unintended consequences, making it harder for regions like Adelaide and Hobart to maintain their populations as their young people are drawn to the larger cities. It also underscores the importance of better urban planning and transport infrastructure to accommodate the growing urban population.
Population ageing is another significant factor influencing distribution and urbanisation in Australia. The proportion of the population aged 65 and over is projected to increase substantially in the coming decades, with immigration playing a crucial role in mitigating this trend. Net migration has a direct impact on ageing, and without it, the ageing population would increase significantly. Immigration also positively affects GDP, with higher migration rates leading to a higher GDP per capita.
In conclusion, population distribution and urbanisation in Australia are characterised by a growing urban population, uneven distribution between regions, and the impact of ageing demographics. While immigration has been a key driver of population growth and urbanisation, it also presents challenges and opportunities for better city planning and infrastructure development. The future of Australia's population distribution and urbanisation will depend on a careful balance between managing growth, addressing regional disparities, and accommodating the needs of an ageing population.
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Population health and life expectancy
Australia's population has increased from 3.8 million in 1901 to 25.4 million in 2021, with an average annual growth rate of 1.4%. This growth has been driven primarily by net overseas migration and, to a lesser extent, natural increase (the surplus of births over deaths).
However, many Australians are concerned about this ongoing population growth, with polls showing that more than two-thirds of Australians do not want further population growth and would like to see a reduction in immigration. This concern is partly due to the recognition that population growth puts pressure on communities, with costs such as stretched services and infrastructure.
The health of a population is an important consideration when discussing population size and growth. Life expectancy is a key indicator of population health and is used to inform health policy and initiatives. In 2021, Australia's life expectancy at birth was 81.1 years for males and 85.1 years for females, a decrease of 0.1 years for males and 0.2 years for females from the previous year. The COVID-19 pandemic has impacted life expectancy, with the number of deaths increasing by almost 20,000 in 2022, nearly half of which were due to COVID-19. Despite this decrease, life expectancy in Australia is still higher than it was before the pandemic and has generally increased over time. For instance, life expectancy at birth has increased by 26 years since the early 1900s.
There are disparities in life expectancy within Australia's population. For instance, life expectancy differs across states and territories, with the Australian Capital Territory having the highest life expectancy for males (81.7 years) and the Northern Territory having the lowest (76.4 years). A gap also exists between Aboriginal and Torres Strait Islander people and non-Indigenous people. In 2020-22, the life expectancy for Aboriginal and Torres Strait Islander males was 71.9 years, 8.8 years less than for non-Indigenous males. Similarly, the life expectancy for Aboriginal and Torres Strait Islander females was 75.6 years, 8.1 years less than for non-Indigenous females.
While population growth can have some positive effects, such as stimulating demand and economic growth, it is important to consider the potential impacts on population health and life expectancy. With Australia's population projected to continue growing, reaching between 34.3 and 45.9 million people by 2071, it is crucial to address the concerns of Australians regarding the pressures this growth may place on communities and the potential impact on health outcomes and life expectancy.
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Frequently asked questions
As of 2021, Australia's population is 25.7 million.
Australia's population growth is driven by 'net overseas migration' (NOM) and 'natural increase' (the surplus of births over deaths).
A larger population can contribute to economic growth by increasing aggregate demand and providing a larger workforce to fill labour shortages. Immigration also helps to reduce the proportion of the population that is aged 65 and over.
A larger population can put pressure on infrastructure and services, leading to increased costs for communities and contributing to inflation. It can also make it difficult for supply to keep up with demand, particularly in the housing market.
Polls show that more than two-thirds of Australians do not want population growth and would like to see a lower rate of immigration. However, the government can set population growth targets as it deems appropriate, and Australia's high standard of living makes it an attractive migration target.
