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Avoiding Us-Style Demographic Stagnation: the Role of Immigration and Population Growth in Australia's Post-Pandemic Recovery

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Avoiding Us-Style Demographic Stagnation: the Role of Immigration and Population Growth in Australia's Post-Pandemic Recovery AVOIDING US-STYLE DEMOGRAPHIC STAGNATION: THE ROLE OF IMMIGRATION AND POPULATION GROWTH IN AUSTRALIA’S POST-PANDEMIC RECOVERY STEPHEN KIRCHNER | NOVEMBER 2020 The United States Studies Centre at the University of Sydney is dedicated to the rigorous analysis of American foreign policy, economics, politics and culture. The Centre is a national resource, that builds Australia’s awareness of the dynamics shaping America — and critically — their implications for Australia. The Centre’s Trade and Investment Program examines trends, challenges and opportunities in the trade and investment relationship between Australia and the United States. It places the Australia-US economic relationship in the broader context of Australia’s relations with the rest of the world and promotes public policy recommendations conducive to the growth and integration of the Australian, US and world economies. UNITED STATES STUDIES CENTRE Institute Building (H03), City Rd The University of Sydney NSW 2006 Australia +61 2 9351 7249 [email protected] USSC.EDU.AU Research conclusions are derived independently and authors represent their own view, not those of the United States Studies Centre. Reports published by the United States Studies Centre are anonymously peer-reviewed by both internal and external experts. TABLE OF CONTENTS Executive summary 02 Introduction 03 Demographic stagnation in the United States 06 The effect of the pandemic on Australia’s net overseas migration 11 and population growth Scaling up managed isolation and quarantine 12 Reconnecting with COVID-free jurisdictions 13 Post-COVID migration and population policy 14 Capturing human capital flight from Hong Kong Special Administrative Region 20 CANZUK free migration area 20 Pro-natalist policies 21 Immigration and national security 21 Conclusion 22 Endnotes 24 About the author 29 This publication may be cited as: Stephen Kirchner, “Avoiding US-style demographic stagnation: The role of immigration and population growth in Australia’s post-pandemic recovery,” United States Studies Centre at the University of Sydney, November 2020. Cover photo: Getty EXECUTIVE SUMMARY › Even before the COVID-19 pandemic, the › Australia will experience a permanent loss United States was experiencing its weakest of population and productive potential population growth in a century, a product because the government assumes no of record-low fertility and a more restrictive future make-up of lost NOM, but this is a approach to immigration. US annual policy choice that could be offset with a population growth was running at an annual more liberal approach to immigration in the rate of just 0.5 per cent. future. › Australia’s pre-pandemic population growth › Restoring and then exceeding rate was running around three times faster pre-pandemic levels of NOM will be than the United States at 1.4 per cent. essential to economic recovery. › Immigration and population growth have › In the short term, Australia needs to scale historically been a key source of US national up its managed isolation and quarantine power and dynamism and major drivers of capacity to be able to safely process more innovation and entrepreneurship. But the international arrivals, which are currently Trump Administration has embarked on capped at 5,575 per week. one of the most significant tightenings in › immigration policy in US history and used While largely the responsibility of state the COVID-19 pandemic to opportunistically health authorities, there is a strong case for accelerate this anti-immigration agenda. the federal government to fund a significant scaling up of existing capacity to facilitate › Yet US public opinion on immigration has a progressive, risk-based reopening of the become more favourable, not less, over the international borders, while recovering last 25 years. In the latest polling, for the first some costs from users. time, more Americans want an increase in › immigration than a decrease. The pandemic affords an opportunity to rethink the immigration policy and › Under a zero net migration scenario, the US planning framework. The government’s population could be expected to peak at pre-pandemic reduction in the planning 333 million as soon as 2035 and then enter cap on permanent migration from 190,000 a period of absolute decline to a low of 320 per annum to 160,000 should be set aside million by 2060. indefinitely as non-binding in the short run and too restrictive in the long run. › In Australia, the October Budget assumes net overseas migration (NOM) is only › The National Population and Planning 154,000 in 2019-20 and -72,000 in 2020- Framework the government released 21, and -22,000 in 2021-22, well below the in February contains useful inter- previous peak of nearly 316,000 in the year governmental coordination and to December 2008 and the first negative transparency mechanisms. However, it is a NOM since 1946. process that risks state government capture of federal immigration policy. › As a consequence, Australia’s population growth is expected to decrease to 1.2 per › The government should link immigration cent on an annual basis in 2019-20 and just and population growth to both pandemic 0.2 per cent in 2020-21 and 0.4 per cent in recovery and national security imperatives 2021-22, the slowest growth since 1916-17. to increase public support against a backdrop of elevated unemployment. UNITED STATES STUDIES CENTRE | TRADE AND INVESTMENT PROGRAM 2 THE ROLE OF IMMIGRATION AND POPULATION GROWTH IN AUSTRALIA’S POST-PANDEMIC RECOVERY INTRODUCTION “We lead the world because, unique among nations, we draw our people — our strength — from every country and every corner of the world. And by doing so we continuously renew and enrich our nation. While other countries cling to the stale past, here in America we breathe life into dreams. We create the future, and the world follows us into tomorrow. Thanks to each wave of new arrivals to this land of opportunity, we’re a nation forever young, forever bursting with energy and new ideas, and always on the cutting edge, always leading the world to the next frontier. This quality is vital to our future as a nation. If we ever closed the door to new Americans, our leadership in the world would soon be lost.” President Ronald Reagan Final speech as President of the United States, 19 January 19891 “Why are we having all these people from shithole countries come here?” President Donald Trump White House meeting with Congressional lawmakers, 13 January 20182 Even before the COVID-19 pandemic, the United little evidence for a populist groundswell against States was experiencing its weakest popula- immigration, although there is a deep partisan tion growth in a century, a product of a record- divide between Republican and Democrat voters low fertility rate and a much more restrictive on the issue. approach to immigration. US annual population In Australia, there is also little evidence from growth was running at an annual rate of just 0.5 opinion polls to suggest that the electorate views per cent in 2019. By contrast, Australia’s popula- immigration per se as a growing problem. Polls tion growth rate was running around three times by the Scanlon Foundation going back to 2007 faster at 1.4 per cent for the year ended March consistently find a majority in favour of the prop- 2020. osition that immigration is ‘too low’ or ‘about Immigration and population growth have histori- right,’ with the exception of 2010.4 The lack of a cally been a key source of US national power and clear trend in the response to this question does dynamism, as well as major drivers of innovation not suggest immigration is seen as a growing and entrepreneurship. But the Trump Adminis- problem. tration has launched one of the most significant Among developed countries, Australia scores tightenings in immigration policy in US history just below Canada, Iceland and New Zealand and used the COVID-19 pandemic to opportun- on Gallup’s Global Migrant Acceptance Index.5 istically accelerate its anti-immigration agenda. An overwhelming 88 per cent of Australians say Yet, ironically, US public opinion on immigration that their city or area is a good place for migrants has become more favourable, not less, over the to live. Only Canada, New Zealand and Norway last 25 years. In the latest polling, for the first time, report a stronger positive response to this ques- more Americans want an increase in immigra- tion.6 The response to this question is unchanged tion than a decrease. Seventy-seven per cent of since 2010, which is yet again inconsistent with Americans say immigration is ‘a good thing for the notion that the electorate perceive immigra- this country.’3 As with public opinion on inter- tion per se as a growing problem. Politicians have national trade in goods and services, there is UNITED STATES STUDIES CENTRE | TRADE AND INVESTMENT PROGRAM THE ROLE OF IMMIGRATION AND POPULATION GROWTH IN AUSTRALIA’S POST-PANDEMIC RECOVERY 3 likely underestimated the electorate’s tolerance is a strong case for the federal government to for immigration. The public are able to distinguish fund a significant scaling up of managed isolation between immigration as such and the problems capacity and quarantine to facilitate a reopen- caused by an inadequate public policy response ing of the international borders while recover- to population growth. That said, anti-immigra- ing some of these costs from international arriv- tion sentiment is historically correlated with the als. Managed isolation and quarantine capacity unemployment rate, so the pandemic downturn should be demand-driven, eliminating the need can be expected to weigh on pro-immigration to ration entry into Australia. Australia should also sentiment in the short term.7 Historically, nega- reopen its border to COVID-free jurisdictions tive economic shocks in the such as Taiwan and the Pacific islands, as it has United States and Australia have with New Zealand, regardless of whether these TO AVOID US-STYLE been triggers for major policy jurisdictions reciprocate.
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