The key to understanding the future of structural change in Australia lies in identifying the underlying demographic shifts that are occurring alongside it. Australia has and will continue to be dominated by the south-eastern states (see Figure 1), with almost 40% of national population growth expected to occur in Melbourne and Sydney; although chiefly in Melbourne. In fact, Melbourne is expected to be the most populous city in the country circa 2030. Figure 1: Population Growth, Big 5 States, 2002–2012
Source: ABS Cat. 3101.0
Ageing is occurring nationally. The baby boomer ‘bubble’ rose to the 54–64 age cohort between 2001 and 2011, and has begun reaching the 65+ age group as of 2012. The growth rate in the 65+ age group is expected to keep increasing in the medium term and remain high in the long term.
As a result of this structural population shift, the dependency ratio will shift dramatically. It will move from two working age persons per dependent to 1.5 working age persons per dependent. Based on current labour force participation rates this would mean a shift from 1.3 workers per dependent to 0.98 workers per dependent, which in turn means that there will be more dependents than working persons.
Source: ABS Cat. 3101.0, 3222.0 * Average annual growth rate
Population size is another long-discussed issue and concern. Most analysts quote the ABS Census Cat. 3222.0 (see Figure 3 above), specifically the B series of that publication, which states an outcome of 35.9 million people in Australia by 2050. It is very likely these numbers are very conservative.
The ABS primarily bases its forecasts on three major variables: net overseas migration (NOM), babies per woman (fertility), and life expectancy (average years of life remaining at birth). The B series is based on NOM of 180,000, fertility of 1.8, and an increase in life expectancy at birth of only 2–3 years by 2056. In contrast, the A series is based on a NOM of 220,000 per year, fertility rate of 2.0 (by 2021), and a life expectancy increase of 10–11 years by 2056.
Both of these series are lower than current estimates, where NOM is 234,000 (expected to further increase to 262,000 by 2016), the fertility rate is already 1.9 (having increased consistently in five-year average terms since 1979), and life expectancy has increased by 3–4 years in the past decade. These current figures suggest that the Australian population will almost certainly reach 40 million by 2050.
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