Demographic trends to watch out for in 2015

My analysis of net long term migration has shown a slowing in recent months has shown that net long term migration into Australia has been slowing for the past couple of years, having peaked in early 2013 on a rolling annual basis.

As a result, total annualised population growth has slowed fairly considerably from a peak of well above 400,000 per annum, and should continue to do through the next couple of quarters of data.

On the other hand, the Department of Immigration has printed forecasts as at Q3 2014 which showed net overseas migration beginning to accelerate over the next few years.

Here are four demographic trends to watch out for:

1 – Population growth rebounding?

Will net permanent and long-term migration rebound?

Looking at the “actuals” it is still rather too early to say for sure.

Net immigration into Australia is always weak in December, but the data for January and February have certainly revealed stronger results.

This is one to put on the watchlist.

As noted here previously, analysis of prior years’ data from the Australian Bureau of Statistics (ABS) revealed that while ostensibly more than 380,000 Australians left the country on a long term or “permanent” basis over the past 12 months, more than 80 per cent of them are likely return home within just one year!

“Analysis shows that the majority of those with an intention of permanently departing, return to Australia within the following year. For example, in the calendar year 2011, out of the 84,240 Australian residents who stated they were departing permanently, only 15,890 spent 12 months or more overseas.”

If sustained, this trend identified by the ABS could potentially keep greater upwards pressure on total population growth.

2 – Record inbounds

As I detailed here, over the past year we have seen record short-term arrivals into Australia at 7 million, with the rate of growth in inbound arrivals exceptionally strong in recent months.

These are trends which you can see with your own eyes when travelling around the capital cities in particular.

Interestingly more than 400,000 of those arrivals came to Australia for education as I shall explore in more detail below.

No prizes for guessing which country is driving the overwhelming bulk of the growth in tourism services – it’s an explosion of visitors from China, although we have seen record American visitors over the past year too.

3 – A miniature baby boom

I’ve seen the articles about everyone stopping having babies due to cost of living pressures and lifestyle choices, just as you have.

And about a decade ago, I might have agreed, since few of my friends seemed to have bothered with having children.

Yet now I’m in the second half of my thirties the majority of my peer group actually did end up having kids, we just did so later than our parents.

Indeed, as I discussed here, we are going through something of a miniature baby boom, with the rolling annual total number of births over the past 24 months tracking at more than 300,000 per annum.

Naturally enough, over the past six years of available data, the greatest number of births have taken place in the states with the greatest headcount: New South Wales (591,000 births), Victoria (442,000) and Queensland (379,000).

The greatest number of settlers in Australia now hail from Asia, by a truly enormous margin.

It is worth considering too whether the record high number of Chinese and Indian settlers now adopting Australia as their home will have a different outlook on family sizes.

4 – Australia’s newest export boom…education

It is fairly well known that Australia’s most valuable exports of recent years have been iron ore and coal respectively.

However, despite a rampaging increase in export volumes, spot prices for these commodities have crashed sharply of late, impacting monthly FOB values adversely.

The good news is that a new boom industry is set to fill a big part of the gap – foreign students!

In Q1 2015 a massive 147,000 foreign students commenced courses in Australia, smashing all previous records by a huge margin – even the sky-high numbers seen at the stimulatory peak of 2009.

Australia played host to some 590,000 foreign students in 2014, more than a 12 per cent increase on the prior year.

Moreover, 2015 is going to shatter all previously held records by a big margin.

One of the main drivers has clearly been the lower Australian dollar, which helped education exports to explode 14 per cent higher in 2014 to $17.5 billion.

Education is consequently now a significantly larger export industry than even tourism.

That said, the tourism sector has also rebounded nicely in tandem with the lower dollar, as evidenced in the record number of short-term arrivals charted above, as well as the most recently available international trade data.

Unsurprisingly, a greater proportion of tourism and education services are now accounted for by China, a “mega-trend” which is set to continue throughout the years ahead.

The wrap

If you are wondering what Australia will look like in 2061, you can play around with this nifty tool here to get an approximate idea.

Over the next few decades there will be more older people, more part time workers and – in all likelihood – more people working beyond the traditional retirement date.

Despite these potentially “negative” trends (in economic terms, at least), internationally high levels of immigration will ensure than Australia does not become as “top heavy” as some other developed economies have done and will continue to do.

Instead, Australia’s population pyramid in 2061 is expected to look something like this, with a population soaring from 24 million today to more than 41.5 million.

Source: ABS

Want more of this type of information?

Pete Wargent


Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog

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