Australia’s Population Dilemma
By Grant Wyeth
Last week the Australian government’s Center for Population released its forecast for the next decade. From its current population of 25.7 million people, the country is expected to reach just short of 30 million by 2032. This projection is 1.2 million people lower than was forecast prior to the COVID-19 pandemic – with the pandemic disrupting regular migration flows to Australia, producing an irregular number of deaths, and leading to outward flows of migration due to Australia’s strict public health measures.
Australia is advantaged by its ability to grow its population through migration – and won’t suffer the perils of population decline – but the question remains whether this growth is sufficient for the challenges the country will face in the coming decade. Due to the advancement of other countries in the Indo-Pacific, Australia is a country in relative decline – inhibiting its ability to be influential within a region that is becoming increasingly complex, and potentially less stable.
Australia has a small population both relative to its landmass and in comparison to countries in its region. Its isolated geography is advantageous for its security, but disadvantageous for its access to markets. It has wealth, but this is mostly built on an abundance of natural resources few countries can compete with, making the cost of transportation a price trading partners unavoidably pay. Yet its small domestic market combined with its isolated geography resulted in Australia having the weakest manufacturing capability in the OECD.
As the pandemic exposed, this presents a problem for Australia’s overall resilience, with an inability to produce locally what it needs in times of crisis. This leaves the country reliant on its purchasing power or on the goodwill of its friends. It also means that Australia is almost wholly dependent on other countries for its defense procurement. As the current AUKUS deal for a new fleet of nuclear-powered submarines is revealing, this is going to stretch the capacity of the United States to deliver on Australia’s timeframe – and Washington will undoubtedly prioritize its own needs first.
Rather than enhancing its domestic capabilities, Australia has built resilience through its solid network of partnerships. It has strong bonds with traditional allies like the United States and the United Kingdom, while becoming far more intimate with Japan, and beginning to develop close and important relationships with South Korea and India. Although relations with Indonesia are good, no two neighbors are as culturally distinct as Australia and Indonesia, which makes the effort needed to build cooperation and trust pronounced. Yet this effort is a whole-of-society project that the country is still reluctant to invest in.
While these partnerships are important, Australia should recognize that its population policy is effectively foreign policy. Partnerships can augment national capabilities, but they are no substitute for them. And Australia faces two glaring problems that its small population has contributed to.
First, as the AUKUS agreement looks set to make Australia more reliant on the U.S., there is the blunt realization that the continued radicalism and chaos of the Republican Party makes Washington a less reliable partner. And second, if Australia cannot diversify its economic structure – that is, not just its markets, but what it actually produces – it will remain bound to the dilemma of its biggest market in China also being the country Australia considers its biggest threat.
The Center of Population’s forecasts therefore should be considered a warning. Having identified the current trajectory Australia is on, leaders now need to consider whether in a decade’s time an additional 4 million people will be sufficient to address the country’s needs. Unlike Canada, which has set an annual immigration target of half a million people, at present Australia does not share the same confidence and ambition. Its current annual intake of 195,000 is a figure that keeps Australia’s head above the water but does little else.
With the current review of the migration system being conducted by the Department of Home Affairs, there is recognition that how Australia approaches migration is one of the central pillars of its overall national strategy. What is lacking, however, is an effective way to communicate Australia’s needs to the public. While Australian politicians have begun to highlight the country’s “skills shortages,” they struggle to explain the problem beyond this vague, repeated phrase. There is little public promotion of what specific capabilities the country needs, why the country requires greater supply chain resilience and new industries, why Australia needs a greater diplomatic reach, and how a larger population provides Australia with greater independence.
The tactic of successive Australian governments has been to talk as little as possible about migration due to a fear that doing so might upset the public. Yet Australians have proved more than capable of adjusting to significant demographic changes over the past few decades. The public has a maturity that the government doesn’t give it credit for. An adult conversation about the problems the country faces and the best ways to address them is one capability that Australia does possess.