By MILLIE MUROI, Economics Writer
For most of human history, it’s been a miracle for us to survive long enough, or reproduce vigorously enough to rapidly grow in numbers. But as we’ve gotten better at dodging tigers, killing germs and containing pandemics, we’ve also become increasingly intrigued and hungry to know how many of us there are, how many of us there will be and how it will affect our lives.
Just before Christmas, the federal Centre for Population released its annual population statement, saying the number of people living in Australia reached about 27 million last March – and is expected to reach just over 31 million within the next 10 years.
How did it calculate this? The centre uses data from the Australian Bureau of Statistics as a starting point to determine things such as current population level. It then makes assumptions, analyses data and models the effect of long-term trends on population growth.
Of course, looking into the crystal ball, even when it’s bolstered by lots of data and analysis, is never perfect. But the centre’s work feeds into government policies and debate because population changes can have a huge impact on the direction of our economy and our day-to-day lives.
Population growth is a combination of what we call the “natural” increase – think babies born in Australia minus the number of people who die here over the same period – and net overseas migration: people coming into the country minus all those who decide to move overseas.
To keep our population at the same level “naturally”, we need an average of 2.1 births for every woman. This is called the “replacement rate”: the rate of childbirth needed to make sure there’s someone to replace both parents when mortality catches up to them.
Of course, making 10 per cent of a child is not really viable and would require a great deal of scientific development, focus and time to piece together. But we need a birth rate of more than two children for every woman on average as a buffer because some of us inevitably – and rather annoyingly for those hoping for population growth – bite the dust early.
In 2023, fertility in our country slipped to a record low of 1.5 babies for every woman, or about 291,000 births, compared to 1.6 babies per woman the year before. Like many of our advanced economy siblings, Australia’s fertility rate has been sliding since the early 1960s.
There are both long and shorter-term factors which can dump cold water onto baby fever.
A household might, for example, put off having children when experiencing more financial pain – as we’ve seen during the recent high-inflation period. After all, having a child is one of the most expensive decisions, costing hundreds of thousands of dollars until adulthood.
Kids will always be a dear investment (in multiple senses of the word), but factors tied to the cost of living can reverse as circumstances improve, allowing people to catch up on their ambitions to have kids.
Longer-term factors, however, such as changing cultural norms and better access to employment and education opportunities, can have a more lasting effect on the number of kids we want. Generally, the better educated are less likely to have as many children because they start their families later. Taking various factors into account, the centre expects the fertility rate to settle at about 1.6 births per woman by 2032.
That doesn’t mean Australia’s population will shrink. Why? Partly because we have “population momentum”: a large enough share of women at – or approaching – reproductive age that the potential for growth isn’t falling off a cliff anytime soon.
We have also pursued a long-standing policy of encouraging net overseas migration, which has added to our population and tended to keep it young. Not many grandmas and grandpas decide to uproot their life to move overseas, and governments target younger migrants.
Under its current mortality and migration assumptions, the centre reckons Australia’s fertility rate needs to be only about 1.2 children per woman to keep the population from sliding backwards.
Although fewer people are dying now than when COVID was spreading widely, the number of deaths in 2023-24 was still 13 per cent higher than before the pandemic. Given the ongoing dent in our population from the pandemic, and our low fertility rate, the level of net overseas migration we need (if we want to keep the population growing) is a bit higher compared to pre-pandemic.
Overall, the centre thinks population growth in Australia will continue, driven by migration and rising life expectancy, plus a higher fertility rate than many other advanced economies. But the centre also notes net overseas migration peaked in 2022-23, and that it will probably continue to fall before stabilising over the next few years.
Declining fertility globally is the reason the United Nations gave last year for its forecast of the world’s population peaking at 10.3 billion people in 2084. That is, of course, assuming we don’t encounter aliens keen to settle here in the next few decades.
Population growth isn’t necessarily all a good thing. More people often means worse pressures on the environment as we build more things (and therefore clear more land), release more emissions and suck up more natural resources.
It can also intensify the fight over scarce resources – which we have seen perhaps most acutely in our housing debate. When we allow strong demand from population growth, but fail to plan for increased supply (of, for example, houses) we tend to ignite price pressures and face shortages in things we want and need.
But there’s also no doubt that we’re in for a rough ride if we want to curb population growth. Within the next 40 years, for example, nearly one-quarter of the population is expected to be aged 65 and over. Ushering in more working-age people to look after an ageing population isn’t the only solution, but the pressure’s on for policymakers and innovators to find other ways to look after them in time.
Australians benefit in many ways from population growth. Migrants tend to help us become more productive by sharing their knowledge and skills, more people usually means faster economic growth and innovation, and catering to higher demand can help us achieve more cost-efficiencies by producing things at a bigger scale.
There’s no easy answer on the right level of population growth, but having an idea of the direction and an understanding of what we can expect is a good starting point.
