2018 Australian budget has planned surplus for higher immigration and this has come as no surprise. It has been relying on one of the highest growth rates for population amongst the developed nations for maintaining the growth of the economy.
Australian budget for 2018 forecasts an economic growth of 3% for the next 4 years. While this looks plausible, it relies on a growth of population at almost 1.5% annually, as quoted by the ABC NET AU.
The change in population is a crucial factor for the finances of a nation. However, Stephen Anthony Industry Super Chief Economist calculated this from other statistics in the budget.
The mathematics of the 2018 Australian budget is relatively simple. The growth of productivity is anticipated to be around 1.6% that is 30 years average. This in itself is a long stretch as the current annual growth is well below half of it.
The rate of participation of labor force is anticipated to be stable on the current year’s level. Thus, a growing population will be needed to cater to the gap and achieve the 3% annual growth forecast.
The current birth rates in Australia indicate that majority of the projected growth will have to come from continued current high immigration takes of Australia. The revenue and GDP growth being banked upon by the Government also assumes that almost all of the freshly arrived immigrants will quickly find a job too. This is reflected in the budget forecast of a gradual decline in the rate of unemployment.
The Government has also effectively assimilated high immigration in its budget forecast while also attempting to contain actual spending growth to 1.6% annually.
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