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Covid rewrites Australia’s future with huge drop in population signalling challenges ahead

Amy Remeikis
·3-min read
<span>Photograph: Bianca de Marchi/AAP</span>
Photograph: Bianca de Marchi/AAP

The pandemic has created Australia’s “sliding doors” moment with the nation now facing a smaller and older population shift, forever altering the future that may have been.

The decision to shut Australia’s borders, made out of necessity to prevent Covid-19 spreading, has pulled the country into a new reality where lower rates of population growth will affect everything from the number of schools states build to the rate of infrastructure investment, economic consultancy Deloitte Access Economics has found.

“The arc of our nation’s history is bending before our very eyes – a smaller and older Australia awaits us,” Deloitte latest quarterly business outlook has reported.

“That isn’t necessarily bad, but it’s definitely big. It will reshape the nation’s future in a bunch of ways.”

The international border closure has meant Australia’s population growth statistics, which are used to plan future infrastructure, communities and spending have been thrown completely off-course, with Deloitte forecasting the nation’s population will grow by at least 600,000 fewer people, than had previously been estimated for 2022.

Related: The fruit pickers: inside Australia's seasonal worker program – a photo essay

Australia has relied on population growth – mostly through migration – to shore up economic growth for the past three decades. Deloitte is not alone in its predictions – the Treasury, based on an assumption the international border would reopen by late 2021, predicted Australia would have 1 million fewer people than anticipated in two years time.

That not only means changes to infrastructure and growth plans – it also cuts down on the amount of revenue governments all across the country had anticipated on receiving, putting increased pressure on already stressed red-line budgets.

“If demographics is destiny, then our destiny just got a lot more challenging,” Deloitte says.

“That loss of migrants will have impacts for many years; it weighs on the pace of recovery, slowing everything from housing construction to the utilities. And, combined with a slumping birthrate, it will change the outlook for school numbers.”

And it’s not just spending. Australia’s existing population includes about 5 million baby boomers. Younger migrants of working age have traditionally been used to boost the workforce as the older generation, one of Australia’s largest age cohorts, retires. Deloitte is forecasting the absence of migrants from the labour force will “cut into longer term growth relatively more than just the overall slowing in growth might suggest”. Deloitte predicts Australia’s net migration arrivals will shrink by 20,000 in the 2020-21 financial year, and only increase by 20,000 the next.

And that, the analysts say, is the best-case scenario, based on predictions the rest of the world, not just Australia, will have a handle on the coronavirus sometime in the next year.

“While the risk that countries around the world will shut their borders for an extended period of time seems to have eased somewhat, we can’t ignore the risk that further waves of the pandemic here or overseas will slow that process, and that net migration rates could remain suppressed for more than the two or three years that we currently expect,” Deloitte says.

Combined with a slump in the domestic fertility rate, a downward trend Treasury predicts will continue for the next decade, Australia is looking at a substantially older population than was forecast just a year ago. The substantial drop in migration will further compound Australia’s birthrate – fewer migrants also means fewer mothers giving birth.

“That’s two-thirds of a million missing Australians,” the analysts say.

“The coronavirus will leave behind a huge hangover – we see an Australian economy permanently be more than 3% smaller than our pre-Covid forecasts, mostly as closed borders mean our population will be similarly smaller.”

The Australian Bureau of Statistics reported Australia’s population was 25,649,985 people as at the end of March, with 61.8% of the annual growth rate (357,000 people) due to net overseas migration.

Australia had previously been forecast to hit 30 million people by 2029.