Australia needs migration to boost income growth. Migration to Australia has been projected to fall from 154,000 people in 2019-20 to around 34,000 in 2020-21. Unsurprisingly, given events, migration will now be booked as an outflow in both financial years. It needs to be between 160,000 and 220,000 to maintain GDP per capita growth.
Migration accounts for about 60% of Australia’s population growth. The fertility rate has also been hit in the crisis. Fewer migrants and fewer babies will have a negative impact on economic growth, prolonging the downturn.
Less migrants impacts workforce participation because the median age of a migrant is less than the population more generally. Australia is an ageing economy, but “one way we stay as young as we do is we have a migration program which is targeted to skills and that tends to attract younger people,” UNSW Business School’s Scientia Professor of Economics John Piggott, Director of The ARC Centre of Excellence in Population Ageing Research (CEPAR), pointed out.
Treasurer Josh Frydenberg indicated that the October 6 budget will now predict a negative net overseas migration. “Australia’s future population will be smaller, and older than we previously assumed because of the sharp drop we are seeing in net overseas migration,” he explained.
"With the decline in immigration, it's going to be an acute strain on growth in important sectors of the economy and the recovery," AlphaBeta founder Andrew Charlton said.
The government has indicated that it will announce new measures in the Budget next week to encourage young Australians and overseas backpackers to stay in the country longer and take up farming jobs to fill rural and regional job shortages.
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