Avoiding US-style demographic stagnation: the role of immigration and population growth in Australia's post-pandemic recovery

Immigration Demographics Population forecasting Population growth United States of America Australia

Even before the COVID-19 pandemic, the United States was experiencing its weakest population growth in a century, a product of record-low fertility and a more restrictive approach to immigration. US annual population growth was running at an annual rate of just 0.5 per cent.

Australia’s pre-pandemic population growth rate was running around three times faster than the United States at 1.4 per cent.

Immigration and population growth have historically been a key source of US national power and dynamism and major drivers of innovation and entrepreneurship. But the Trump administration has embarked on one of the most significant tightenings in immigration policy in US history and used the COVID-19 pandemic to opportunistically accelerate this anti-immigration agenda.

In Australia, the October Budget assumes net overseas migration (NOM) is only 154,000 in 2019-20 and -72,000 in 2020- 21, and -22,000 in 2021-22, well below the previous peak of nearly 316,000 in the year to December 2008 and the first negative NOM since 1946.

Restoring and then exceeding pre-pandemic levels of NOM will be essential to economic recovery.

In the short term, Australia needs to scale up its managed isolation and quarantine capacity to be able to safely process more international arrivals, which are currently capped at 5,575 per week.

The pandemic affords an opportunity to rethink the immigration policy and planning framework. The government’s pre-pandemic reduction in the planning cap on permanent migration from 190,000 per annum to 160,000 should be set aside indefinitely as non-binding in the short run and too restrictive in the long run.

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