Australia’s population growth will become increasingly reliant on overseas migration over the next 40 years but the federal government has warned the number of new migrants settling in big cities must be kept “at or below” their capacity to absorb them.
For the past decade net overseas migration has accounted for around 60 per cent of the annual increase in Australia’s population but that will rise to 74 per cent by 2060-61, the federal government’s 2021 intergenerational report (IGR) says.
High rates of migration have been blamed for worsening traffic congestion and other urban challengesCredit:Nick Moir
The report, which examines long-term economic and budget trends, is the first of five published since 2002 to downwardly revise Australia’s long-term population growth projection. The previous IGR, released in 2015, predicted a national population of 37.8 million by 2050 but that has now been scaled back to 35.3 million.
The “most significant” trend causing the lower population forecast is a slump in the fertility rate. The 2015 IGR assumed a rate of 1.9 babies per woman but that has been cut to 1.6 babies per woman. Fertility in Australia has been below the “replacement rate ” of 2.1 – the level required to keep the population size steady – since the late 1970s.
Because migrants are, on average, younger than the existing Australian population, the report says migration reduces the average age of the population and slows the rate of population ageing.
Modelling for the report found the average skilled migrant contributes more to the federal budget in taxes – and costs the federal budget less in welfare and other payments – over their lifetime than the general population. It found skilled migrants also make a significant economic contribution during their lifetime.
During the past decade strong population growth, underpinned by high rates of migration, has been blamed for exacerbating a range of urban challenges including traffic congestion and deteriorating housing affordability.
The IGR said the social pressures and capacity constraints that result from migration needs to be “managed carefully” in future.
“Migration should be kept at or below the capacity of the destination city or region to absorb new migrants, taking into account impacts on incumbent populations,” it says.
“Sustainable migration provides greater certainty for governments, businesses and individuals to plan for the future. Higher migration rates bring forward higher demand for services, natural resources, urban land and infrastructure, which may be in limited supply and vary significantly based on region.”
Migration Fellow at the Grattan Institute, Henry Sherrell, said it has proved difficult to encourage skilled migrants to settle permanently outside of Australia’s major cities.
“We know that recent immigrants are much more likely to live in large urban centres than the average Australians.” he said.
Prior to the pandemic the Morrison government reduced the number of permanent migration places from 190,000 per year to 160,000. The flow of new migrants has subsequently collapsed due to COVID-19 border closures.
The IGR forecasts net overseas migration (the gain or loss from permanently arrivals versus permanent departures) to recover to 235,000 people per year by 2024-25 and remain at that level in coming decades (which includes a return to permanent migration of 190,000 a year, a continuation of the current humanitarian migration program and net temporary migration similar to pre-pandemic levels).
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