Australia is battling the COVID 19 pandemic better than most countries through the closing of our borders and strict domestic lockdown strategies.

While we can have control within our borders the future concern will be how other countries are managing the virus to give Australia the confidence to open our borders to the rest of the world. Certainly 2020 will see virtually no new arrivals and 2021 could see a very reduced inflow. The big question will be about Australia’s migration program which currently represents around two thirds of the population growth for the country and is a critical driver of the economies of our major cities. With an ageing population the country desperately needs younger tax paying workers to balance the rising health costs for older people.

A recent article in the Sydney Morning Herald by George Megalogenis raises major concerns about the negative impact on our major cities if migration stops for a year or more. Megalogenis says the migrant intake to Australia from 2016 to 2019 was 741,000 with 73 per cent of these people settling in Australia’s 3 largest cities including  Sydney (243,000), Melbourne (241,000) and Brisbane (55,000). He lists Melbourne’s population growth in 2019 at 2.4 per cent, Brisbane’s at 2.1 per cent and Sydney’s at 1.7 per cent.

Megalogenis sees Sydney as the most vulnerable city to a reduction in migration. He estimates that without overseas migrants Brisbane’s growth would drop to 1.4 per cent, Melbourne would drop to 0.7 per cent and Sydney to just 0.3 per cent. The different rates are explained by the differing Net Interstate Migration numbers where Sydney has an outflow of around 20,000 people a year generally looking for cheaper housing in Brisbane. So without overseas migration Sydney’s growth is minimal and the housing targets of around 37,000 new homes a year would be slashed.

Some may argue that building less new homes may be a good thing as it will reduce over development and traffic congestion. But a reading of the NSW Government’s Intergenerational Report issued in 2018 outlines a worrying fiscal gap into the future unless growth continues. The report looks back 40 years and forward 40 years from the 2016 -17 financial year. In 1976 there were 7 income producing workers for each retiree, 40 years later this has dropped to 4 workers who contribute taxes but by 2056 this could drop to only 2.4 workers contributing taxes for a large number of retirees. What is influencing this outcome is the Baby Boomer population who are moving into retirement. But they are now living longer than previous generations and generating greater health costs. To offset the rising health costs of the Baby Boomers as they move into retirement Australia needs skilled young workers through its migration program.

The NSW Government’s Intergenerational Report reinforces the importance of migration with the following statements: “Greater migration therefore tends to reduce the aged dependency ratio. ….increases in migration also tend to a boost revenue through a larger traditional working age population share.”

So it is clear from the Intergenerational Report that migration is a critical part of reducing any future fiscal gap in the state’s economy and George Megalogenis’s article indicates that Sydney’s population growth could drop from last year’s 1.7 per cent to a lowly 0.3 per cent as a result of restrictions on migration related to the global coronavirus pandemic.

While there have been encouraging articles in the media about government support for fast tracking approvals for new construction projects in Sydney the worry will be whether there will be enough new people to need new houses or places to work. Clearly Australian cities will need to get jobs going once we emerge from the coronavirus and the construction of new homes, apartments and work places will be part of this. The development industry can create many jobs as it is a major job multiplier through consultants, trades, suppliers and internal fitout  companies.

The delicate balance for the growth of our cities will be on how much Australia opens its borders and when. Hopefully there are people in government at state and federal levels who are working out how to get migration going again. The difficulty is that this relies on other countries resolving their coronavirus issues. Two of the countries that are large contributors of migrants to Australia  are India and Indonesia and the Australian Border Force will want some confidence that they have their part of the  pandemic under control.

Chris Johnson is the former NSW Government Architect and former CEO Urban Taskforce Australia