Australia’s coronavirus re-boot needs to consider population as well as the economy

Similar to some of the commentary in Canadian media, although Australia has had more restrictive immigration for a number of years:

We all know our coronavirus isolation has had a marked effect on our ability to produce GDP income and tax revenue, both so necessary for the proper running of our economy.

But it is also at times like this that we tend to forget that our greatest resource is not our significant mineral wealth or our world-class agricultural produce. It is our people.

And we are a migrant nation, built on the sweat and tears of many successful people, who, on the whole, maintain our exceptional standard of living with their hard work, good education and the burning aspiration of always wanting to do better.

But we are also an ageing country, with our largest demographic now approaching retirement and fewer people in the 20-60 demographic — the age group that produces the clear majority of tax revenue.

Population is on the decline

Last week Acting Minister for Immigration, Alan Tudge, confirmed what we knew to be true since the virus took hold — coronavirus is driving the biggest population decline in Australian history.

Since the beginning of the year, we have lost almost two years of population growth in just three months.

More than 300,000 tourists, students and itinerant workers have fled our shores in an exodus that is certain to deepen our consumer spending slump and put those industries who heavily rely on a migrant workforce.

Some are also predicting that a further 300,000 are set to leave before the end of the year — another blow to our GDP.

This severely impacts our country’s productive tax-generating capacity.

In times of crisis when public spending is at fever pitch, we need to be thinking about how we are going to foot the bill, to help expediate our recovery and get the economy working hard for us again.

How do we turn it around?

This is not a uniquely Australian problem, but a problem we share with many other developed economies including Japan, Britain and Germany.

So, what might be the remedies?

We could simply have more children.

In Australia, we are only averaging 1.7 children per couple, so we are not even replacing mum and dad. This is unlikely to change in the short to medium term.

We can also increase taxation on a smaller and smaller number of people, which is probably electorally unpalatable, not to mention the real possibility of reducing GDP and tax revenue as a result.

Or we can go into austerity and cut spending, also a hugely problematic solution socially and, quite possibly, financially.

Alternatively we can simply import more people in the productive cohort.

A young migrant who goes to school here for four years, then does the HSC, studies at our universities, gets a part time job, starts paying tax, then goes on to full employment some and stays in the tax base for over 40 years, is an ideal candidate.

At a time like this when our economic prosperity is so deeply threated by disease and debt, it might not be altogether intuitive, but it is indeed our best remedy to increase our intake of foreign students, agricultural, nursing and hospitality workers.

Migrants can help us rebuild

Each of these categories are vital to fill for our recovery and continued economic success.

We need the foreign students to rescue our top universities and as for the hundreds of jobs in hospitality, agriculture and nursing, well of course they should be available to our residents first.

But if 30 years of experience is anything to go by, these are not jobs that we have ever been able to fill locally.

And with the new infrastructure boom that will hopefully ensue following COVID-19, we will also need new migrant skills to assist our small but resourceful workforce in creating new economic growth, so vital in re-igniting our economy.

Australia, prior to COVID-19, had 29 years of continuous economic growth.

Perhaps with a bit of vision and new skill base, powered by local and migrant minds and hands, we can make it 30 years.

Source: Australia’s coronavirus re-boot needs to consider population as well as the economy

About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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