A Younger Australia?

Abstract

Australia’s population is likely to undergo dramatic change in the second and third decades of next century. Instead of being a young country by OECD standards, significant population ageing is now predicted for Australia. This will reduce labour force participation and flexibility, reduce savings and investment, and raise social expenditure while reducing public revenues. Intergenerational politics will sharpen severely. Immigration has helped keep Australia younger in the past. But some demographers assert it cannot do so in the future, a view accepted by Government and used as a justification for lower immigration. This paper argues that the Government view and its demographic underpinnings are wrong. Once deficiencies in conventional demographic methodology are allowed for, a much more significant impact of immigration is describable. These corrections involve migrant composition, projecting migration rates not levels, properly calculating dependency ratios and incorporating budget costs. The result is to show the potential to halve the public costs of population ageing. This makes immigration an important complement to other policies for addressing demographic change.