00:00Australia's fertility rate has fallen to a record low. The Australian Bureau of Statistics
00:04reporting 1.48 births per woman in 2024. That's down 25% from the 2008 peak. That's well below
00:12the 2.1% needed for population replacement without migration. Prime Minister Anthony Albanese has
00:18dismissed the idea of reducing the migrant intake even as the anti-immigration One Nation Party
00:22gains in opinion polls. Let's get more on the outlook for Australia's shrinking and aging
00:27population the economic impact on the labour market. Joining us now is Roger Wilkins who's
00:31a Professoral Fellow at the Melbourne Institute of Applied Economic and Social Research at the
00:36University of Melbourne. He's also the co-director for the Household Income and Labour Dynamics in
00:41Australia survey. Roger really great to have you with us. So you kind of need one if you don't have
00:47the other right. We know the replacement rate has been below target for decades now. Are there options
00:53other than migration given it continues to be a political flashpoint?
01:00Not a lot of options. I mean it's declining fertility is not unique to Australia but it does
01:09pose a very difficult policy problem. I think it's going to be something that's very hard to turn
01:13around. I mean policy can have some impact in reversing it but I think Australia's longer term
01:20economic interests are in maintaining a healthy immigration program.
01:25You're completely correct of course to point out this is not a problem that's unique to Australia.
01:30You only have to look to the likes of Japan to see what that aging population future might look like
01:34but I do wonder have there been any successful policies when it comes to encouraging and getting
01:40the birth rate back up because we know that things like you know baby bonus haven't exactly been
01:46effective in the longer term. No although of course that was a short-lived policy particularly when
01:54so in the early 2000s when Australia had quite large cash payments made to new parents you know
02:02it reached a peak of around $7,000 Australian per child but that only lasted for a very short period
02:11and we did see a bump up in fertility rates at the time. So I think there is some merit
02:16in programs
02:18like that where large cash payments at around the time of birth they have a salience that perhaps
02:25works better than things like child care subsidies which can be somewhat difficult for people to
02:32understand and really fully appreciate in in terms of fact factoring in whether to have a child or not.
02:41The trifecta of a falling birth rate of potential limitations on migration of an aging population
02:47what's the overall impact on the labor market?
02:53Well I mean it's certainly you know in the broader context Australia is an aging population not aging as
03:02fast as many other OECD countries but nonetheless aging and so you have a smaller proportion of your
03:09population of prime working age and and and so that so that certainly raises challenges for you know
03:16longer term living standards and it also that that changing structure of the population also has
03:23implications for the structure of the labor market we will see increased demand for things like health care
03:30and aged care and and the like and and so that and so employment will very much you know follow
03:35that as well
03:37so so it will certainly have profound implications for the broader economy.
03:44In Japan there's been some success in utilizing harnessing technology and robotics in terms of how that serves the older
03:52and aging population
03:54there's been much talk about the impact of technology and AI on productivity in Australia.
03:59Do you see strategies there that could be meaningful?
04:04Well that's certainly something that's uh possible but well out of my uh domain of expertise uh being a
04:11an economist rather than a someone who uh is uh intimately connected to uh AI and technological uh change
04:22and and uh and uh and so it's not something that I would want to speculate too much on other
04:26than uh you know as you
04:28say the promising developments in Japan. I would certainly see in in the context of uh uh labor scarcity uh
04:37uh that uh that those sorts of technological solutions would would would become more attractive and so
04:42we are probably going to see uh more developments in that space but I wouldn't want to speculate on how
04:48successful they would be.
04:50The shape of the broader economic demand picture changes though with an aging demographic right does
04:57that then of course change what what employment demand and labor market demand also looks like?
05:05Well yes absolutely uh yeah the the the the the structure of consumer demand uh you know is very much
05:12shaped by uh the the demographic structure of the population so as I was mentioning as with an aged with
05:20an aging population uh we we would see uh demand shifting towards uh those uh items that are more heavily
05:30consumed by older people as I mentioned health care aged care um but uh but potentially other areas as well.
05:39How does this impact living standards?
05:45Well certainly uh uh if if if we are to have an aging population which uh immigration can certainly um
05:53moderate uh uh that that trend but you know absent a significant immigration program you know what we'll
06:01see is a decline in the share of the population that is in those prime working ages and uh and
06:06and
06:07and ultimately that's where uh uh economic output and economic growth comes from is from the working
06:13age uh population so as that declines as a share of the population uh the outlook for uh living standards
06:19and and and economic growth more generally uh is uh uh is uh is uh is uh is poorer
06:29roger really great to have you with us roger wilkins who's a professor or fellow at the melbourne
06:34institute of applied economic and social research at the university of melbourne we have more on
06:39australia ahead every tuesday at 10 40 a.m if you're watching in sydney 8 40 a.m in hong
06:44kong plus you can
06:45tune into the bloomberg australia podcast delving into the biggest stories shaping the country's role in
06:49global business you can find that on apple spotify or bloomberg.com more ahead here on the asiatrade this
06:56is bloomberg
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