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Population takes centre stage

Weekly Economic Briefing

Population growth remains a critical economic and social issue for Australia. City busting growth is being experienced in Sydney and Melbourne, while smaller centres such as Adelaide and Darwin are struggling to find workers, and some regional areas are beginning to experience de-population. 

In the year to March 2019, the national growth rate was 1.6% - still a relatively fast rate by OECD standards, but down from the peak of 2.1% a decade ago. The key source of growth – international migration, and in particular international students – means that the rates of increase being experienced across the country are skewed particularly towards the larger cities. 

Across the states and territories, annual population growth ranged from 2.1% in Victoria down to -0.4% in the Northern Territory. The NT is not alone in experiencing population decline, with towns such as Orange, Scone and Tumut in NSW, Mackay and Longreach in Queensland and Smithton and Waratah in Tasmania recording population losses over the past year. 

Understanding demographics and population growth has long been considered central to planning decisions. But in a constantly shifting environment, the previous practice by the Statistician of updating the national population outlook only once every five years is no longer providing the level of insight and accuracy required for informed decision-making. 

In response, the Australian government has announced a number of new initiatives, including the recent launch of the Centre for Population within the Department of the Treasury. According to the government, among the key priorities for the Centre will be undertaking “better forecasting”. 

We know that inaccurate projections can have wide ranging implications (and we use the term “inaccurate” loosely – any policy, planning or investment decision made in response to a population forecast will likely change the actual outcome). From schools built in the wrong suburb or town, or an undersupply of appropriate health services, to a lack of aged care places, and congestion driving cities to a standstill. 

Given the critical nature of understanding the size and structure of a future population for informed decision-making, a more regular program of population forecast updates is an important step forward.