Opinion The Stats Guy: In a shrinking world, Australia may soon compete for migrants
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The Stats Guy: In a shrinking world, Australia may soon compete for migrants

Simon migrants
As the world reachs its peak population, competition for skilled migrants will heat up. Photo: TND/Getty
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Ten months ago I introduced you to the concept of peak humanity using data from the Wittgenstein Centre for Demography and Global Human Capital at the University of Vienna.

Their data suggested that the human headcount will peak in 2070. That’s a good 30 years before the UN Population Division predicted to see humanity peak.

Two weeks ago, the United Nations updated its forecasts and suggests that 2086 will be the global population peak.

Today we will be diving deeply into these updated (and more bearish) forecasts. This is not simply a fun little bit of demographic trivia. The future prosperity of Australia is closely linked to this data. But I am getting ahead of myself.

First, let’s understand the basics of these population forecasts.

The UN publishes three main scenarios. We will be looking at the median variant. That’s the gold standard of global population forecasts and virtually the only dataset about the topic that you will see quoted in the media.

In Australia we care about the total global population as a market. As I wrote a few months ago, a growing global population makes it easier for Australia to sell stuff to the world.

Even in a world of population decline, our national business model of selling stuff that we dig out of the ground and stuff we grow in the ground to the world will work. The demand for energy and food will not decline as population declines. The reason for that is the continued push of the global poor into the middle class.

As Australians we are also interested in the global population of working age (roughly 18-64). These people shape the world in the most direct way, fill jobs, keep the economy running, create wealth, create tax, aren’t shying away from riskier investments (unlike their retired counterparts who favour low risk investments).

The global working-age population will peak 13 years before the total population (2073 vs 2086). In an ageing planet, more capital seeks safe and stable investments. That should work in Australia’s favour.

A stable democracy producing surplus food and energy? Yes, please. Where can I sign up?

As a migration nation, Australia balances the aging of the population by importing younger people from overseas. These are either international students (18 to 24) or skilled migrants (25 to 39). This narrow age band (18-39) covers about three quarters of our migration intake.

We got used to plenty of migrants queuing up for the privilege of moving to Australia. We are making things unnecessarily complicated, slow, and expensive for migrants. Considering the demographic state of the world, we can’t afford to become complacent. As soon as 2048 the global population of people of migration age (18-39) will decline.

Come to think of it, Australia doesn’t even worry too much about the total population of migrant age. We take in migrants from high-income nations and middle-income nations. Low-income nations only feed into our migration system through the humanitarian visa stream as asylum seekers.

It’s low-income nations that will continue to see their migrant age populations grow (albeit at slowing rates) until the end of the century.

In high-income nations, the population of migration age is already declining. Growth turned negative in 1996, saw a short respite in the early 2000s, and will reach new lows in the coming decades.

In about 10 years, when all members of the large Baby Boomer generation will have reached retirement age, the rich nations of the world will take serious measure to stop the brain drain of their young workers.

Will this be done with sticks or carrots? It remains to be seen how European nations in particular deal with the issue.

Will Europeans see an end to free migration? Will there be free movement within the EU but no migration to overseas? This is an issue for the Europeans to resolve.

From an Australian perspective it is important to maintain cordial diplomatic relations. After all, young Aussies will continue to want to work abroad temporarily. In any case, migration to Australia will not come from Europe anymore.

In middle-income nations, the migration age cohort starts shrinking in 2040. Combine middle- and high-income countries and the relevant migrant age pool starts to run dry as of 2039. It won’t take until then for more migration nations to understand the severity of a shrinking migrant pool. Competition for migrants will intensify well before that.

Paying for migrants

Without wanting to sound too dramatic, the 2020s might well be the last decade when Australia can attract migrants for free. Global competition for skilled labour will be huge. We will have to pay migrants to come to the country.

Big tax cuts in the range of a few tens of thousands to hundreds of thousands of dollars over a decade for individual migrants are plausible scenarios.

Australia would be well advised to hand out citizenships to international students in a very transparent, quick, and cheap way. An international student coming to Australia at age 18 had their schooling, healthcare, and other social services paid for by some other country.

Now in Australia, that student pays an arm and a leg for a degree and is, by definition, educated to the level that we need. If they remain in the country, our international student then becomes a taxpayer right away.

Thanks to our superannuation system they will even pay for their own retirement. This deal is too good to be true. It’s an absolute steal for Australia.

Yet, we are discouraging international students by providing a non-transparent, bureaucratic and expensive path to permanent residency or citizenship.

Considering the global demographic environment, that is an inexcusable mistake. We must encourage young and skilled people to settle in Australia. Canada is miles ahead; they offer a transparent and cheap pathway to citizenship.

Indian students are now favouring Canada over Australia. The whole concept of operating as a migration nation will only get more challenging in the coming decades. It is paramount that we seriously position ourselves as a destination of choice for international students and skilled migrants. We will be a demographically stronger nation for it.