Population changes and forecasts
Today’s ABS population data release confirms that Australia’s population continues to grow rapidly. In the year ending 31st March 2023, Australia’s population increased by 563,200, with year-to growth at 2.2% and quarterly growth at 0.7%.
This is the highest national quarterly population increase on record, and the second highest annual population increase. By state, Western Australia continues to see the largest population gains with annual growth at a high of 2.8%, followed by Victoria (2.4%) and Queensland (2.3%).
Unsurprisingly, net overseas migration (NOM) remains the biggest driver of population growth, accounting for 81% of total growth over the year to March 2023. NOM remains at record highs – in the March quarter alone, there were 152,200 net arrivals, driven largely by the return of international students for Semester 1 and a low level of departures.
The volume of interstate migration however, has fallen from the peak seen during late 2021. New South Wales continues to see the largest net outflows (-7,800 persons in the quarter and -30,200 over the year), while Queensland continues to receive the largest net inflows (+7,000 in the quarter and +31,000 over the year). Since the end of pandemic restrictions, outflows from Victoria have reduced significantly though net interstate migration has remained negative – a far cry from the Victoria’s regular pre-pandemic positive interstate migration.
While the latest ABS population data provides a snapshot of current population trends, the recently released 2023 Intergenerational Report provides longer-term projections of Australia’s population and other major changes the country will face over the coming decades.
Three key trends the Intergenerational Report looks at are population, participation and productivity. As has been recognised for decades, Australia's population is ageing, impacted by Australians living longer and having fewer children. Australia’s population growth is expected to slow over the next 40 years, growing at 1.1% a year, compared to 1.4% a year over the previous 40 years. By 2062-63, life expectancy is projected to be 87 years for men and 89.5 years for women. With an ageing population, Australia's labour force participation rate is also forecast to decrease from the current record high of 66.6% to 63.8% by 2062-63.
Mirroring the lower forecasts of other advanced economies, such as New Zealand, the United States, and the United Kingdom, Australia’s productivity is expected to grow at 1.2% per year, which is down from 1.5% in the previous Intergenerational Report.
Significantly, this year’s Intergenerational Report is the first to focus on the global transition to net zero, which the report states ‘may be the most profound driver of change in the economy’.
The report outlines two ways climate change will impact the labour market and Australia’s productivity: the creation of new job opportunities and decline of labour productivity due to rising temperatures.
Firstly, the transition to net zero will create job opportunities. This is particularly likely in the mining and manufacturing sectors, as Australia has some of the largest reserves globally of critical minerals needed to produce clean energy technologies, such as lithium and cobalt. By 2040, growing exports of critical minerals and energy-transition minerals have the potential to create over 115,000 new jobs while contributing $71.2 billion to GDP, according to recent independent modelling for the Department of Industry, Science and Resources.
Secondly, labour productivity in certain sectors is at risk of decline due to rising temperatures. The greatest impact will be seen in labour-intensive roles, such as labourers, technical and trades workers, and machinery operators, due to exposure to outdoor temperatures and the physical efforts of the role. Industries will need to adapt to increasing temperatures in innovative ways to sustain the size and productivity of their workforces.
This newsletter was distributed on 14th September 2023. For any questions/comments on this week's newsletter, please contact our authors:
This blog was co-authored by Sara Agostino, Senior Analyst at Deloitte Access Economics.
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