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Population growth in the slow zone

After recording its first decline since World War I in the September quarter of 2020, Australia’s population has returned to growth. However, it’s a much lower rate of growth than had been seen historically.

The latest population estimates released by the ABS last week showed that, for the September quarter of 2021, Australia’s population grew by a meagre 0.05% to a total level of 25.75 million. Of this, natural increase was the largest contributor, adding 32,000. Net Overseas Migration (NOM) continued to detract from the population total by almost 20,000, during a period where Australia’s international borders were still largely closed.

The September results put Australia’s population 68,900 ahead of where it was a year earlier – growth of just 0.3%. NOM contracted by 67,300 over the period. 

Chart 1: Quarterly population change (‘000), Australia

Source: ABS, National, state and territory population

We are also getting a glimpse into the potential impact that easing border restrictions will have on overseas arrivals. Provisional estimates for February 2022 show that although short-term international arrivals have lifted, they are still a fraction of what they were before the pandemic hit. The month saw 272,000 short-term arrivals – only 15% of the level seen in the corresponding month in 2019.

Overall, the lack of flow of people from overseas continues to affect the domestic labour market, showing up as significant skill shortages across many sectors. Given both the lack of overseas arrivals and Australia’s ageing population, the working age population fell by almost 84,000 through 2020-21.

While international migration is doing little to support population growth, internal migration has provided a much-needed boost for some states and territories. In the year to September 2021, Queensland’s population grew by 57,500 (1.1%), where net interstate migration (NIM) contributed almost 41,000 people. This is in stark contrast to New South Wales and Victoria, with both states experiencing large population losses as people moved out.

Chart 2: Internal migration by state and territory, year-to September 2021, and 10-year pre COVID average

Source: ABS, National, state and territory population

When compared to what we’ve seen previously, this is an extraordinary result for Queensland, with NIM contributing almost three times what it had across the 10 years prior to the onset of COVID.

The result has primarily come at the expense of Victoria which, up to the beginning of the pandemic in early 2020, was experiencing a strong rate of NIM population growth. The significant decline in the state’s internal migration has been a culmination of larger than usual outflows and smaller inflows, with inflows falling from 87,000 to 66,000 and outflows rising from 68,700 to 84,000 in the 2015-16 and 2020-21 financial years respectively.  

Although a negative NIM has been the norm for New South Wales over recent history, it has jumped to a level well beyond what was seen previously. The decrease in NIM is especially problematic as, without the usual large inflows it sees from overseas to offset this, the state’s population growth is now just a trickle (up only 0.2% over the year to September 2021).