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Is Bigger Better When It Comes to Population? South Australia’S Focus Must Be on Attracting Skilled Workers

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Is Bigger Better When It Comes to Population? South Australia’S Focus Must Be on Attracting Skilled Workers August 2018 A bulletin of economic developments Trends in South Australia Is bigger better when it comes to population? South Australia’s focus must be on attracting skilled workers banksa.com.au TRENDS AUGUST 2018 Chief Executive’s Foreword SA must welcome more skilled workers Welcome to the latest edition of BankSA’s economic bulletin, Trends, compiled in conjunction with Deloitte Access Economics. In this edition, we look at the population debate in South Australia, including the importance of attracting more skilled workers to the state and how our living standards are affected by changes in population. Population growth has long been a The sluggish result for South Australia is vital for a strong economy and that contentious topic in South Australia, immediately sparked renewed concern we should be doing all we can to attract especially over the past decade during among local business groups, while the more people to live and work in South which time the state’s population state’s new Premier Steven Marshall also Australia. But we need to be smart. growth rate has steadily declined. weighed in, labelling the low figures As highlighted in this Trends report, “completely unacceptable” and that “a This edition of Trends considers the population growth for its own sake growing population is integral to the pros and cons of increasing resident isn’t necessarily the best approach, and conversation of how we bolster the South numbers in South Australia, with a instead more targeted growth is required. Australian economy”. focus on how living standards would be That is, we need to attract and retain more impacted if we welcomed more skilled “Much more must be done to stop the skilled workers from around the country, workers from interstate and overseas. exodus of young South Australians and indeed, from around the world. This pursuing job opportunities interstate and South Australia’s rate of population also includes reversing the ‘brain drain’ overseas,” said Premier Marshall at the growth is slower than any other state in in South Australia and giving our own time. the country. We’re also ageing faster than talented young people every opportunity any mainland state. “One of the highest priorities of my to stay here to live and work. government will be addressing low In fact, latest figures from the Australian To do this, South Australian businesses population growth in Adelaide and the Bureau of Statistics released in late April must be willing – and empowered – to regions. Driving a population growth show that South Australia’s growth rate invest more in higher growth industries, agenda is integral to creating more jobs of 0.6% lags behind all other states, while as a state we need to make a more here in South Australia.” including Victoria’s 2.3% and the national concerted and sustained effort to better growth rate of 1.6%. I agree that strong population growth position Adelaide and South Australia as 2 CHIEF EXECUTIVE’S FOREWORD an appealing place for young people to coming here under the skilled migration carve out their careers. category. 1,723,548 We need to keep promoting our first- It has also been shown that migrants to South Australia’s class education system, and ensure it Australia are often more skilled than the is skilling our young people for roles of existing workforce, which again leads to current population the future. And then we must provide an greater productivity, and in turn, greater (Australian Bureau environment for our best and brightest living standards overall. of Statistics, April to viably stay and set up businesses right So as this Trends report emphasises, 2018). here. This will both grow our own and the economic arguments in favour of further attract skilled population. expanding our skilled workforce are not There is also an interesting analysis in just to generate a bigger population for this Trends report about the link between the sake of being bigger, but because population growth and living standards. It more skilled workers lead to a stronger notes that participation and productivity economy and higher living standards are key drivers of living standards, so with through increased workforce participation greater numbers of highly skilled workers and productivity. 40 – who have proven to be more productive Ultimately, more skilled people means – it stands to reason that greater living more jobs, not less. The median age in standards will follow. South Australia, which For example, skilled migrants from is two years older interstate and overseas all need homes than the median age “At the end of the to live in and places to shop, which helps generate new jobs in construction, nationally. day, we need to retail, hospitality and a range of other grow our economy industries. or risk stagnation With this in mind, it’s time that South Australia pursues a bolder migration and irrelevance program based on increasing skilled as a state. And migration. 83% while there are We should be looking to entice more young people from interstate, with our The percentage of no magic bullets, relative housing affordability compared to Victoria and New South Wales an obvious incoming migrants to as Trends points starting point, along with Adelaide’s Australia who are aged out, increasing our regular high ranking in liveability surveys under 40. comparing the world’s top cities. population through At the end of the day, we need to grow skilled migration our economy or risk stagnation and irrelevance as a state. And while there would certainly be a are no magic bullets, as Trends points out, great start.” increasing our population through skilled migration would certainly be a great start. When looking at the research and outcomes in other cities, the positive impact that skilled migrants have on local economies is difficult to dispute. For example, skilled migrants are more Nick Reade likely to be young adults ready to enter Chief Executive, BankSA the workforce, meaning governments provide relatively less to subsidise their education and health care while young. In fact, some 83% of incoming migrants to Australia are aged under 40, with more than two-thirds of the 190,000 migrants who arrived in our country as part of the Australian Migration Program in 2015-16 3 TRENDS AUGUST 2018 Is bigger better when it comes to population? “Our first requirement is additional population.” - Arthur Calwell, Minister for Immigration, 1945 “Have one for Mum, one for Dad and one for the country.” - Peter Costello, Treasurer, 2002 “I’m in favour of immigration. It’s the rate of immigration that’s the problem.” - Tony Abbott, ex-Prime Minister, 2018 Population growth – and immigration part of a decade, leaving South Australia In summary, bigger isn’t necessarily levels in particular – has emerged as a with the fastest ageing population of any better: population growth for its own sake controversial topic in both Australia and mainland state. isn’t necessarily a smart play. around the world in recent years. This edition of Trends goes behind the But there are some joys that come with And population growth is a hot topic media headlines to: being bigger. And South Australia would in South Australia too, with the state’s indeed benefit from more skilled workers, • Think about what’s best for South population growth having lagged behind whether they are coming from the rest of Australia; Australia as a whole for more than half a the nation and the world, or whether the century. In fact, local population growth • Analyse the data; and state gets better at hanging on to some of has been broadly easing for the better the young people who currently head off • Plot a path forward. 4 IS BIGGER BETTER WHEN IT COMES TO POPULATION? elsewhere to carve out their careers. CHART 1 SOUTH AUSTRALIA'S SHARE OF NATIONAL POPULATION - % SOUTH AUSTRALIA'S SHARE OF NATIONAL POPULATION - % Two obvious things stand out: Chart 1 Source: Australian Bureau of Statistics 100 • First, relative to Australia as a whole, South Australia still relies on more ‘lower growth’ industries. It will be important to see business willing to 0 invest in industries with greater growth potential – the more investment that business makes, the more 8 South Australia will be an attractive destination. 80 • Second, South Australia needs to not only rank highly on global liveability indices, it also needs to go on the front 0 foot in making the state attractive to young workers. Source: Australian Bureau of Statistics. “In summary, bigger CHART 2 POPULATION GROWTH - % CHANGE ON 12 MONTHSChart EARLIER 2 isn’t necessarily POPULATION GROWTH - % change on 12 months earlier Source: Australian Bureau of Statistics better: population 1 growth for its own 12 sake isn’t necessarily 10 a smart play.” 08 There are no magic bullets here, but 0 these two measures could provide welcome momentum to South Australia’s 0 population growth and, through that, to greater prosperity. 02 What’s the problem? 00 Many commentators assume that there’s a un00 un02 un0 un0 un08 un10 un12 un1 un1 problem here that needs fixing. Source: Australian Bureau of Statistics. After all, South Australia’s share of Australia’s population peaked in 1966. sell into the pace of growth. Australian population is also ageing, And although there have been many ups it’s projected to happen faster in South And it cements South Australia’s position and downs over time, there’s broadly Australia than it is in the nation as a as having a rapidly ageing population been a trend downswing in the pace of whole. relative to other states – along with population growth in South Australia the challenges that ageing brings to As a result, the relative shrinkage of the since a peak in 2009 (see Chart 2).
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