International Students

A couple of weeks ago I touched on how the fertility rate in Australia (and globally) is in decline.

The long and short of it is that the number of births compared with the number of deaths (‘natural population increase’) peaked in 2012. Now, though, we’re headed for more deaths than births as early as the year 2041 (‘natural population decline’).

To balance out the natural population decline trend, the Government is working on bringing more employable migrants and international students into the country.

This makes sense given that as a population ages the government bears the brunt of fewer taxpayers versus the number of older Australians requiring health and welfare services.

Solution … bring in more taxpayers!

In the past week or so, the Government agreed to introduce caps on overseas student intakes. For those who missed it, it will be capping the foreign student intake to 270,000 in 2025.

For all the news headlines and outrage from those in the Australian education sector, it’s not that big of a deal.

While it is a drop of 53,000 from last year’s intake, it will be just 7,000 lower than pre-pandemic levels – in line with the approach taken on migration more broadly.

Before the COVID-19 pandemic, Australia’s population was growing by 250,000 overseas migrants per annum.

During the pandemic that number dropped to minus 83,000, so more left than came, before it rebounded to a whopping 524,000 in 2023, and 400,000 in 2024.

The problem with that is that it put too much pressure on the country’s housing infrastructure, something most of us are dealing with.

When you consider that our population was set to grow naturally by approximately 100,000 – more births than deaths – it increased by a combined 630,000 and 500,000 respectively – totalling 1.1 million in a two-year period.

The problem with that is that to house 1.1 million people we need to build 550,000 houses.

We only built 340,000 – that’s a 200,000 shortfall, this is why we are in a housing crisis.

The Government is forecasting that overseas migration will normalise in the next few years, reverting to pre-pandemic levels:

If they’re right, it looks like we may be heading back to normal after a couple of years of ‘Covid catch up’.

When you consider we need to be building one house per every two people, this is more manageable at 175,000 per annum – that’s in line with the 10-year average and what we seem capable of building.

Having said that, there is no room for catching up on the 200,000-house shortfall resulting from the accelerated migration of the past couple of years.

What is for certain is that we can’t afford not to grow our population via migration to offset reduced rates of fertility and natural population growth.

NOTE: Australian Treasurer Jim Chalmers and Reserve Bank Governor Michelle Bullock have been at it this week, blaming each other for the woes of our economy. My take on the GDP per capita recession HERE.