Fantasy of 2019 Budget forecast of population growth confirmed

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Population estimates forecast in the 2019 Budget have proven to be wildly inaccurate (Image by Dan Jensen)

The Government predicted unattainable levels of population growth in the last Budget, with true figures revealing how weak our economy is, writes Abul Rizvi.

I WROTE IN APRIL last year that the 2019 Budget forecasts of population growth were seriously dodgy.

They were designed to support the Budget’s forecast of strong economic growth rather than any genuine assessment of the outcome of immigration policy settings.

The ABS population data released on 18 June 2020 confirm just how dodgy these were.

(Source: ABS 3101 and Budget Paper No.3)

Chart 1 shows that the 2019 Budget had forecast Australia would experience the largest sustained population growth in Australia’s history with natural increase rising from 146,800 in 2018 to 167,300 in 2019 and then continuing to increase to 192,200 in 2022.

The actual outcome for 2019 reported by the ABS is 139,200, the lowest level of natural increase since 2005 when Australia had a much smaller population. The proposition that natural increase will rise to 192,200 by 2022 is just fanciful given our rate of population ageing leading to a rising number of deaths and the likelihood we will see a further decline in the fertility rate.

The Government also forecast that net overseas migration would rise from the actual outcome in 2018 of 248,400 to 271,700 in 2019 and then remain at around that level.

Given the weak economy and changes to immigration policy settings prior to the COVID-19 crisis, that forecast was not even remotely plausible.

It now just looks plain silly.

The actual outcome for net overseas migration in 2019 was 201,600 — some 60,000 less than forecast. The COVID-19 crisis will ensure the outcome for 2020 may be close to zero. It will start to gradually recover after that but is highly unlikely to get to the levels forecast in the 2019 Budget.

An estimate of long-term net overseas migration once international travel resumes and based on current policy settings shows this is unlikely to reach much above 175,000 per annum. In other words, almost 100,000 less than forecast.

(Source: ABS Cat 3101)

The most striking feature of the 2019 outcome for net overseas migration is the volume of departures at 322,900 (see Chart 2).

This is almost 50,000 higher than the previous record level of net overseas migration departures set in 2015.

While this figure may be revised downwards, it is indicative of a very weak economy and limited pathways to extend stay or secure permanent residence — note that the 2019 outcome was unaffected by COVID-19.

The most important point to note, however, is that the prime minister is now talking about needing to achieve real economic growth of 3.75 per cent per annum. That is 0.75 percentage points higher than forecast in the 2019 Budget but with population growth over 100,000 per annum lower and with an accelerating rate of population ageing with all its consequences (see here and here).

That is moving from the bizarre to the ridiculous.

Abul Rizvi is an Independent Australia columnist and a former Deputy Secretary of the Department of Immigration, currently undertaking a PhD on Australia’s immigration policies. You can follow Abul on Twitter @RizviAbul

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