1 F Graeme Hugo


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Prior to the GFC, Australia was experiencing its most rapid population growth since 1972. This presentation suggests that the GFC will lead to a reduction in population growth in Australia due to a fall in both fertility and international migration. However, it also argues that regardless of global and Australian economic trends there are fundamental demographic factors which necessitate the maintenance of significant population growth into the future. Some of the implications of these trends for business are explored.

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1 F Graeme Hugo

  1. 1. SOME DEMOGRAPHIC IMPLICATIONS OF THE GLOBAL ECONOMIC CRISIS: A CHALLENGE FOR AUSTRALIA <ul><li>by </li></ul><ul><li>Graeme Hugo </li></ul><ul><li>University Professorial Research Fellow </li></ul><ul><li>Professor of Geography and Director of the National Centre </li></ul><ul><li>for Social Applications of GIS, </li></ul><ul><li>The University of Adelaide </li></ul><ul><li>Presentation to Marketing Week, Holiday Inn, Adelaide </li></ul><ul><li>25 August 2009 </li></ul>
  2. 2. Outline of Presentation <ul><li>Introduction </li></ul><ul><li>The Economy and Population: A Complex Relationship </li></ul><ul><li>Recent Developments in Australia’s Population </li></ul><ul><li>Population Growth </li></ul><ul><li>- Mortality </li></ul><ul><li>- Fertility </li></ul><ul><li>- Migration </li></ul><ul><li>Population Composition </li></ul><ul><li>Population Distribution </li></ul><ul><li>Impacts of the GFC </li></ul><ul><li>- Fertility </li></ul><ul><li>- Immigration </li></ul><ul><li>- Effects on Baby Boomers </li></ul><ul><li>Challenges and Opportunities </li></ul><ul><li>Conclusion </li></ul>
  3. 3. Population and Marketing <ul><li>Marketing is for people. Usually it is targeted at particular groups of people </li></ul><ul><li>Demand for goods and services is a function of… </li></ul><ul><li>- need or perceived need, influenced by stage of lifecycle, ethnicity, socioeconomic status etc </li></ul><ul><li>- availability </li></ul><ul><li>- ability to purchase or affordability </li></ul><ul><li>Population information is important because it tells us about the numbers, characteristics and locations of population </li></ul>
  4. 4. Population and the Economy <ul><li>Complex two way relationship </li></ul><ul><li>Over simplified in the Australian context because periods of rapid growth have coincided with periods of economic growth – eg post war baby boom </li></ul><ul><li>Rapid population growth is not always good for the economy </li></ul><ul><li>Population growth is not just a function of the economy </li></ul>
  5. 5. “ Over the next couple of decades nothing will impact OECD economies more profoundly than demographic trends and, chief among them, ageing” Jean-Philippe Cotis Chief Economist, OECD March 2005
  6. 6. The Treasury Has Discovered Population <ul><li>Intergenerational Report 2002 </li></ul><ul><li>Intergenerational Report II 2007 </li></ul><ul><li>Productivity Commission Report on Ageing 2005 </li></ul>
  7. 7. Migration and the Economy <ul><li>Also a complex relationship </li></ul><ul><li>Much discussion </li></ul><ul><li>In Australia most studies concluded that economic impact of migration positive or at worst benign </li></ul><ul><li>No evidence that locals are displaced from jobs by migrants </li></ul><ul><li>Myths about economic impacts of migration </li></ul>
  8. 8. Contribution of Migrants to the Economy <ul><li>Supply particular skills, contribute to increasing productivity </li></ul><ul><li>Also fill low skilled jobs eschewed by Australians (e.g. agriculture) </li></ul><ul><li>Important part of risk taking, entrepreneurial groups </li></ul><ul><li>Crucial in developing economic linkages with origin countries </li></ul>
  9. 9. The Selectivity of Migration <ul><li>Migrant populations are never representative of the populations in origin or destination </li></ul><ul><li>Migration is generally selective of the more educated, more skilled, risk takers and entrepreneurs </li></ul><ul><li>Migration selectivity policy also can exacerbate these tendencies by setting particular criteria – eg Australian points system </li></ul><ul><li>Hence migrants to Australia disproportionately represented in BRW 100 most wealthy Australian </li></ul>
  10. 10. Higher Degree Qualification by Australia- and Overseas-Born, 1981-2006 Source: 1981 to 2001 Census One Percent files, ABS 2006 Census
  11. 11. Migration and Entrepreneurialism <ul><li>Entrepreneurs well represented among migrants in early post war decades </li></ul><ul><li>Australian migration had become more concentrated on skill as defined by formal qualifications </li></ul>
  12. 12. Australia: Migration Program Outcomes by Stream, 1989-90 to 2008-09 Source: DIAC Population Flows: Immigration Aspects , various issues
  13. 13. How Do Entrepreneurs Migrate to Australia? <ul><li>Business Migration Categories – established entrepreneurs with large capital assets </li></ul><ul><li>Refugee – Humanitarian Categories </li></ul><ul><li>Examples of Vietnamese, recent African migrants </li></ul>
  14. 14. Pre Crisis Population Trends in Australia <ul><li>Rate of growth of population (2008) – 1.91% </li></ul><ul><li>Highest since 1971 </li></ul><ul><li>High level of immigration (2007-8) – 149,365. </li></ul><ul><li>Highest since 1969-70 </li></ul>
  15. 15. Projections of the Population of Australia Source: ABS Estimated Resident Population data and Projections 2008
  16. 16. Contemporary Population Growth Rates (% pa) Source: ESCAP 2008; Population Reference Bureau 2007 and 2008; ABS 2008
  17. 17. Population Growth <ul><li>Natural Increase – Births-Deaths </li></ul><ul><li>Net Migration – Inmigration-Outmigration </li></ul>
  18. 18. Australia: Total Population Growth Showing the Natural Increase and Net Migration Components, 1901-2008 Source: ABS 1986 and ABS Australian Demographic Statistics , various issues
  19. 19. Australia: Expectation of Life at Birth, 1870-2007 Source: Hugo 1986 and ABS Deaths Bulletins <ul><li>Expectation of Life at Birth </li></ul><ul><li>Males Females </li></ul><ul><li>1947 66.1 70.6 </li></ul><ul><li>2007 79.0 83.7 </li></ul>
  20. 20. Australia: Expectation of Life at Age 50, 1901-1910, 1970-1972 and 2007 Source: ABS Year Males Females 1901-1910 21.2 23.7 1970-1972 23.0 28.3 2007 31.4 35.2
  21. 21. Persons Aged 65 Years and Over with Disabilities Source: ABS 2005
  22. 22. Percent of Australians Overweight or Obese by Age and Sex, 2004 Source: ABS 2008
  23. 23. Fertility Australia: Total Fertility Rate, 1901 to 2007 Source: CBCS Demography and ABS Births Australia , various issues
  24. 24. International Total Fertility Rates, 2005-10 Source: ABS 2008 and United Nations 2009
  25. 25. Total Fertility Rate (a) Source: ABS 2007, Australian Social Trends
  26. 26. Australia: A Country of Immigration <ul><li>24 percent born overseas </li></ul><ul><li>26 percent Australia-born with an overseas-born parent(s) </li></ul><ul><li>809,628 persons temporarily present at 30/6/08 </li></ul><ul><li>206,135 incoming permanent settlers in 2007-08 </li></ul><ul><li>56,575 “onshore” settlers in 2007-08 </li></ul>
  27. 27. Australian Immigration Policy <ul><li>1947-1971 – Permanent Settlement, Worker Recruitment </li></ul><ul><li>1971-1995 – Permanent Settlement – Skill, Family and Humanitarian </li></ul><ul><li>1995 – Report of the Committee of Inquiry Into the Temporary Entry of Business People and Highly Skilled Specialists </li></ul>
  28. 28. Permanent Additions Source: ABS 2007, Australian Social Trends ; DIAC 2008
  29. 29. Permanent Additions by Eligibility Category Source: ABS 2007, Australian Social Trends ; DIAC 2008
  30. 30. 2007-08 <ul><li>206,135 Incoming Permanent Settlers (including Refugee, Humanitarian and New Zealand permanent migrants) </li></ul><ul><li>420,045 Granted Temporary </li></ul><ul><li> Residence </li></ul>
  31. 31. Australia: Permanent Arrivals and Departures, 1959-60 to 2007-08 Source: DIMIA Australian Immigration: Consolidated Statistics and DIAC Immigration Update , various issues
  32. 32. Australia: 457s Present, Asia-born and Other, 1998 to 2008 Source: Khoo et al 2009 and DIAC Immigration Update, various issues
  33. 33. Overseas Students in Australian Universities, 1983-2007 Source: DEST, Students: Selected Higher Education Statistics, various issues
  34. 34. South Australia: Age-Sex Structure, 2001 and 2006 Source: ABS 2006 Census Time Series Profile
  35. 35. Population Composition <ul><li>Key to marketing </li></ul><ul><li>Particular Significance of life cycle stage/age </li></ul><ul><li>Other things also important </li></ul><ul><li>- ethnicity </li></ul><ul><li>- socio economic status </li></ul><ul><li>- education </li></ul><ul><li>Composition is always changing, can be tracked and anticipated </li></ul>
  36. 36. Australia: Age-Sex Structure of the Population, June 2006 Source: ABS Estimated Resident Population data Baby Boomers
  37. 37. Wittert, 2006
  38. 38. Baby Boomers 2006 Source: ABS
  39. 39. <ul><li>In Australia, without migration, the population would begin to decline from around 2030 and workforce ages would begin to decline in between 5 and 10 years from now </li></ul><ul><li>Currently migration contributes 40 percent of workforce growth but this proportion will gradually start to increase so that during the 2010s it will start to contribute all growth of the workforce </li></ul>
  40. 40. Structural Ageing: Australia: Change by Age: 2006 – 2011; 2031 (Series B) Source: ABS 2008 Projections
  41. 41. Labour Force Age Groups and Dependency Rates Source: World Bank, 2006
  42. 42. Changing Population Distribution <ul><li>One of the world’s most urbanised populations 87 percent living in urban areas </li></ul><ul><li>81.1 percent living within 50km of coast </li></ul><ul><li>Most mobile population in the world </li></ul>
  43. 43. Changing Population Distribution Shifts in the Australian Proportion Centroid, 1911-2006 Source: Australian Censuses, ABS 2003, 2004 and 2007
  44. 44. <ul><li>Every five years 42.3 percent of the population move house. Every year 17.0 percent move. </li></ul>
  45. 45. Australia: Distribution of Population Between States and Territories, Actual 1881-2006 and Projected 2051 Source: Rowland 1982, 25; ABS 2005 and 2007
  46. 46. Australia: Changing Distribution of the Population Between Urban and Rural Sectors, 1921 to 2006 Source: Australian Censuses, 1921-2006
  47. 47. Australia: Population Change in Country Towns, 2001-2006 Source: Australian Censuses of 2001 and 2006
  48. 48. Impacts of the GFC <ul><li>Fertility </li></ul><ul><li>Immigration </li></ul><ul><li>Emigration </li></ul><ul><li>Effects on the Baby Boomers </li></ul>
  49. 49. Fertility <ul><li>The TFR in Australia increased from 1.748 in 2003 to 1.931 in 2007 </li></ul><ul><li>Most of the increase in fertility was in the middle to higher socioeconomic areas </li></ul><ul><li>The GFC could produce a reduction </li></ul><ul><ul><li>Increased job insecurity </li></ul></ul><ul><ul><li>Confidence </li></ul></ul><ul><ul><li>Housing concerns </li></ul></ul><ul><ul><li>Debt concerns </li></ul></ul><ul><li>It could also produce stability </li></ul><ul><li>- women using a downturn in the economy to spend time out of the workforce </li></ul>
  50. 50. Impacts of the Global Financial Crisis in Australia <ul><li>Decrease of 14 percent in skilled migration intake in 2009-10 </li></ul><ul><li>Increased return migration of Australian expatriates </li></ul><ul><li>Reduction in immigration intake </li></ul><ul><li>Increased global pressure for migration </li></ul><ul><li>Changes in Talent Wars Scenarios </li></ul><ul><li>Problem of scapegoating of migrants </li></ul>
  51. 51. At times of economic downturn there is a tendency for countries to adopt protectionist policies both with respect to trade and migration. While the response is understandable, the global experience has not been that making substantial reductions in migration has not had the desired consequences for improving the economic prospects for local workers.
  52. 52. Why are Migrants Needed Even During the GFC? <ul><li>Skill shortages </li></ul><ul><li>Labour market segmentation </li></ul><ul><li>The value added effect of diversity in a globalising world </li></ul><ul><li>The fact that they will be needed once economic growth is restored and the ability to turn the migration tap on and off is limited </li></ul>
  53. 53. Need to Recognise Long Term Structural Causes of Migration – Increasing global differentials in economy and demography and the forces of globalisation
  54. 54. Advantages of Migration in a Globalising Economy <ul><li>Premium on skill in global economy </li></ul><ul><li>Migration communities ‘hard wire’ Australia into the global economy </li></ul><ul><li>All high income countries will be competing for migrants. Australia’s experience of multiculturalism gives it a significant advantage </li></ul>
  55. 55. Average Household Net Worth by Age of the Household reference Person, 1994-2007, Australia Source: Australian Bureau of Statistics, Newsletters - Age Matters - Issue Number 1, December 2002 and ABS 2007, p.37
  56. 56. Australia: Changes in Participation Rates of the Older Population in the Workforce, 1970-2009 Source: ABS Labour Force Surveys Percent Participation May 1970 June 1999 May 2009 Age Group Males Females Males Females Males Females 55-59 91.5 28.7 72.9 44.1 77.7 63.2 60-64 79.2 14.9 46.9 17.6 58.7 42.7 65+ 23.2 3.6 9.7 3.2 14.7 5.6
  57. 57. Australia: Persons with No Superannuation Coverage, 2007 Source: ABS 2009, 18
  58. 58. Australia: Persons with Superannuation in the Accumulation Phase, Total Superannuation Balance, 2007 Source: ABS 2009a, 19
  59. 59. The Australian Population Dilemma <ul><li>In the short to medium term population growth is necessary to replace baby boomers in the workforce </li></ul><ul><li>In the long term we must recognise the environmental constraints of Australia and their exacerbation by climate change </li></ul><ul><li>In the short term also need to adapt to the global financial crisis </li></ul>
  60. 60. Conclusion <ul><li>Australia is better placed demographically than other OECD nations to deal with the recession </li></ul><ul><li>However policy with be crucial </li></ul><ul><li>We need to have a national discourse on the future of Australia’s population in order to develop short term, medium term and long term goals </li></ul>