Tuesday, October 20, 2009

"Migration, births gets Australia through GFC"

News.com.au's Drew Cratchly writes about a report by Australian film PKF claiming that Australia's success in avoiding a recession is owing mostly to the country's high rate of population growth.

Natural population growth and a steady migration rate are the unsung heroes of Australia's economic resilience through the global financial crisis, new research suggests.

Small business owners should be confident of an economic recovery and the Federal Government should maintain a steady migration rate to underpin that recovery, advisory firm PKF Australia concludes in its latest annual Business & Population Monitor.

Australia's pre-crisis resources boom saw a 'mini baby boom' and record levels of migrant intake, which has gone on to assist the job market by increasing demand for housing, goods and services, the report found.

"Arguably the unsung hero of Australia's defence against the downturn has been our magnificent population growth," PKF national chairman of enterprise advisers Chris Allen said.

"People power is part of what is driving us along relative to others. Put simply, more people equal more customers, and therefore more jobs."

The report, compiled with Access Economics, finds Australia's population grew by 1.9 per cent in the past year, helped by the highest birth rate since 1971.

Migration rates remained steady, despite several reductions by the federal government, and that should be maintained to ensure continued economic stability, Mr Allen said.

The PKF report is here, and observes that things vary from state to state.

PKF’s Business & Population Monitor highlighted a mixed bag of growth for the States and Territories in relation to housing, retail, business investment, wages and job opportunities. The Northern Territory came out the clear winner, and has powered ahead across all indicators, with small business confidence well above the national average and the nation’s highest levels of job participation. The slowdown was most severe in New South Wales, Victoria and the ACT. While New South Wales’s small business confidence is well below the national average, retail sales are growing fast. Victoria leads the way in retail spending, and housing construction is speeding up to keep pace with population growth.

The most interesting shift from 12 months ago is in the ‘sun belt’ states of Queensland, Western Australia and the Northern Territory. All three geographic areas benefitted from a strong resource sector that last year promoted compelling population growth, and resulting increase in housing and retail activity, which in turn translated into low levels of unemployment and high wage growth.

Queensland’s population remains strong, but interstate migration is waning as mining and tourism jobs are lost, and the housing sector has flagged in the last year. Western Australia has the highest population growth, highest wage growth and highest levels of business investment in the nation, however retail spending is now the weakest in Australia.


Anonymous said...

Two thirds of the population growth in Australia is from net international migration, which has been running quite high over the course of the recent economic expansion. Births have been picking up in recent years also as a consequence of those same good economic times. Times are still relatively good, unemployment is still comparatively low, both by Australian historical standards and in comparison with other developed economies. The economy though is heavily dependent on two engines of growth – debt fuelled house building and consumption economy, similar to the USA, and resource export driven development, chiefly coal and iron ore to Asian economies (coal, iron ore to Japan, Korea, iron ore to China). Both these drivers of economic expansion can be easily derailed – the debt fuelled boom by a tightening in international credit markets, of which Australia is heavily dependant given it’s small population, and of which some tightening has already been witnessed due to the GFC; and a drop in the demand from East Asian economies, some substantial drop which has already been seen from Japan.

Should these two engines of economic growth both falter concurrently, the population boom that Australia has been enjoyed in the last few years will fall off quite dramatically – births will fall as families adjust to the new economic realities, and international migration as job opportunities evaporate and the government responds to domestic political pressure.

Hence I feel forward population projects for Australia need to be carefully considered in the light of the above, as Australia is small economy heavily dependent and affected by external events

snakeoilbaron said...

Immigration has certain benefits but as a long-term solution to low fertility it fails. Whenever the economy of the host nation weakens the flow dries up and the fertilities in sending nations are falling as more regions with aging demographics compete with each other (whether knowingly or not) for the remaining migrants. Many of the sending nations are also seeing economic development which at first means there are more people with money to migrate but eventually reduces the pressure to do so.

Hopefully the claim that fertility crashes are somewhat artificial - caused by changes in reproductive patterns - is accurate. Many have professed that the recent increase in fertility levels in some regions which had been crashing is mostly due to immigrants but this does not seem to be the case. In the cited countries the number of immigrants is not high enough to have much of an impact on the fertility rate and both immigration rates and migrant fertility rates have been declining which means they would not be responsible for pushing the birth rates up. I can't say that immigrants are not responsible for Australia's fertility but I would need to see more evidence than just "common knowledge" assertions that it must be the case.