Shifting demographics: Australia's altered population landscape

Posted January 11, 2024

SGS Economics and Planning ABSARTICLE2

In recent years, Australia has experienced a significant slowdown and, in some cases, a decline in population growth due to the closure of international borders amid the global pandemic. New data from the Australian Bureau of Statistics, tracked by SGS Economics and Planning, highlights this transformative period and its impact on the country's population trends.

The findings reveal a noteworthy surge in overseas migration, particularly in New South Wales and Victoria, attributed to the return of international students. However, a deeper analysis of the numbers tells a more nuanced story. Despite the apparent spike in migration, the average yearly net overseas migration from 2020 to 2023 remains lower than the pre-pandemic years of 2015-2019, suggesting a potential release of pent-up demand rather than a long-term shift.

This data prompts critical questions about the recovery of Australia's population growth. Has the speculated lost growth been recovered, or does the recent surge indicate a sustained trend beyond 2023? The Australian Government's adjustments to the Migration Strategy add complexity to this narrative, potentially steering migration levels back to historical norms.

Additionally, as Queensland and Western Australia witness an influx of people moving within the country sparked by COVID-19 lockdowns. The upcoming detailed data releases in 2024 will provide crucial insights into regional population dynamics.

Understanding these shifts is crucial. Pertinent questions include how New South Wales adapts to its reliance on overseas migration for growth and how Queensland leverages the upcoming 2032 Olympics for potential population increases. This urgency underscores the need to align infrastructure, services, and planning with evolving population dynamics.

As we await the forthcoming data releases and monitor unfolding trends, it's essential to decipher the implications. This goes beyond mere observation; it's about preparation and strategic planning to ensure that growing populations receive the necessary support and infrastructure for a sustainable future.

Overseas migration

The Australian Bureau of Statistics (ABS) latest population data for the financial year 2022-2023, illustrates the short-term impacts of the pandemic on population growth and settlement patterns across Australia and the impact of the reopening of international borders.

Figure 1: National net overseas migration

The financial year 2022-2023 has record numbers of new migrants entering Australia from overseas, with approximately 520,000 people settling in Australia; this is more than double the previous highs seen in 2016/2017.

Almost two-thirds (64%) of these people settled in New South Wales and Victoria with a further 16 per cent in Queensland, representing 80 per cent across the mainland eastern seaboard states.

This surge is offset by reduced net overseas migration during the previous three years across 2020/2021/2022, with negative net migration in 2021.

Taking a longer-term view of this data shows that the spike in 2023 can be seen as the release of suppressed demand from the closure of international borders during the pandemic.

The average yearly net migration intake in the seven years before COVID-19 (2012-2019) was approximately 222,000 people per year, higher than the average intake from 2020-2023 at 207,000 per year. Therefore, the long-term trend of net overseas migration from the early 2010s appears to be sustained.

Internal migration

Figure 2: Net internal migration by states

The most recent data shows a continued trend in people's movements between states in Australia, with increasingly more people moving to Queensland and Western Australia, and New South Wales continuing to be a net exporter of people to other states. Internal migration to Queensland has averaged approximately 40,000 people annually since 2021 almost double the level consistently seen pre-COVID.

Traditionally, pre-COVID, Western Australia was a net exporter of people out of the state, but this trend has reversed since 2017, towards more people heading west to settle.

In the most recent financial year of 2022-2023, the level of migration out of New South Wales was higher than the natural increase from the difference in births and deaths, meaning population growth in New South Wales was solely due to migration from overseas.

Victoria, during pre-COVID, saw a net increase of people moving to the state, which reversed during extended COVID lockdowns to people leaving Victoria. This has trended back to a neutral position in 2023, and the future direction of this trend as to whether Victoria can attract more people to move to the state will be significant to the long-term growth trends.

Figure 3: Annual population growth by states

The chart above illustrates the annual population growth for each state and territory which shows the sharp decline in growth during 2020 and 2021 due to international border closures. This was most felt in the larger states of New South Wales and Victoria, with Vicotria experiencing a decline in population in 2021 due to ongoing lockdowns. Conversely, Queensland still experienced strong population growth during 2021 and 2022, driven by the movement of people between states noted above, with Queensland recording the highest level of growth of all states in 2022.

Western Australia is also seeing strong growth driven by the movement of internal migration.

These new residents in Queensland and Western Australia will require significant investment in infrastructure and services to support their continued settlement in these states.

In 2022, all states saw a return to pre-pandemic levels of population growth. The reopening of international borders before 2023 saw a sharp increase in growth, particularly in New South Wales and Victoria, driven by the return of international migration.

Figure 4: New South Wales Projections Comparison

Current projections using Centre for Population (CFP) growth from the Federal Budget with the latest Estimated Resident Population (ERP) show New South Wales population growth is projected to be higher in 2026 than the most recent Common Planning Assumptions (CPA) due to the net overseas migration recovery in 2023. The 2026 population level is projected to be 208,000 higher than the Common Planning Assumptions 2022 projections.

Despite this recovery, the projected level still falls short of the 2016 and 2019 projections. Both earlier projections foresaw a substantially higher growth rate between 2016 and 2021, pre-COVID impacts, with the 2026 population expected to be 174,000 and 340,000 below the CPA 2016 and 2019 projections, respectively.

Therefore, this recent spike in net overseas migration needs to be understood regarding the long-term trend for population growth in New South Wales. As noted, it is almost solely dependent on net overseas migration, with New South Wales being a net exporter of residents to other states and territories in Australia.

What next?

This data release reflects population and migration patterns until June 2023. It will be critical to continue to monitor how these shifts evolve over the coming months and see if this current overseas migration spike will return to trend or if these extremely high levels are sustained. Additionally, assessing the impacts of the Federal Government's new Migration Strategy will be crucial in understanding the broader implications.

Observing current trends will provide insight into whether internal migration persists and whether New South Wales remains predominantly dependent on overseas migration for its population growth. The ABS will release this data at a capital city and region level in early 2024. It will be vital to understand how spatially within each state these patterns manifest and what that means for metropolitan, regional and local area planning to ensure that the growing populations in these areas have the appropriate level of service and infrastructure provision.

This more granular data will be key for understanding the growth in Queensland and Western Australia and the associated need for local infrastructure. Queensland has a real opportunity to provide significant infrastructure to the people of Southeast Queensland with the upcoming Olympics in 2032. The economic opportunities this will provide may spur further population growth shifts with people moving to the state for employment opportunities.

New South Wales, specifically, should focus on tracking the settlement patterns of its incoming overseas migrants. Greater Sydney has traditionally received the majority, with newcomers often settling in established suburbs within the Central River City around Greater Parramatta and in growth areas.

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SGS Economics Planning Ben Taylor
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