Monday, October 20, 2008

New NSW Population Projections 2006-2036 - what do they mean?

The NSW Department of Planning has released new population projections for NSW. While I have still to complete my analysis of the latest ABS population data for NSW, I thought I should pause and look at the latest projections.

Sydney vs the Rest

The table below shows projections for the Sydney region and the rest of the state. Note:

  1. All numbers are projections, not forecasts, based on assumptions linked to past patterns.
  2. The Sydney region is a significantly larger area than greater Sydney as traditionally defined.
  3. The historical data, and this applies generally, contains some approximations because of boundary shifts, something that I have complained about before.
  4. All numbers are in 'ooo.
NSW1976198619962006201620262036Change 2006 -36
Rest of NSW1,8162,0602,3242,5342,7382,9283,084550
Sydney %63.3968.5462.5362.8363.7864.8265.9875.6

Assuming that I am not misinterpreting numbers because of, for example, errors introduced by boundary changes, a number of interesting features emerge:

  1. You can see how Sydney gained compared to the rest of the state during the boom of the 1980s, only to fall away in the subsequent downturn. On these numbers, Sydney will still be below its 1986 share of the state population in 2036.
  2. You can see why I was so cautious about the previous projections as well, because Sydney's aggregate growth was quite slow over the recent period.
  3. Sydney is now projected to pick up growth, with the population in the rest of the state actually falling between 2006 and 2016, before increasing again.
  4. Nearly all the state's population growth - 76 per cent - is projected to take place in Sydney. This makes the validity of the Sydney estimates critical.

Projected Sources of Sydney's Growth

If Sydney's growth is critical to the overall projections, where are the people to come from?

The table below sets out the projected sources of Sydney's growth in terms of annual averages. Again, all the figures are '000

Start period population4,2824,5504,8225,1045,3955,689
Natural increase 353739414141
- births616467707375
- deaths262728293134
Net Migration181818181818
-net internal-28-26-26-26-26-26
-net overseas464343434343
Total increase545456585959
End period population4,5504,8225,1045,3955,6895,982

The first thing to note about this table is the way in which figures such as net migration are constant, or vary by very little. The authors recognise that annual numbers will vary - these are average estimates.

The second thing to note is that the projections imply continuing major demographic change in Sydney. Over the period of the projections, something like 360,000 predominantly locally born will leave, to be replaced by over 860,000 immigrants. This represents a 1.22 million shift in the composition Sydney's population, roughly 21 per cent of the total projected 2036 population.

Will the figures be realised? The short answer is that I do not know. The migration statistics are the critical variable, because Sydney's growth depends, as it has for many years, on the balance between overseas migration and internal emigration.

My best guess, and it is only a guess, is that for the next few years at least the gain from net migration will be lower than the projections.

Our present immigration levels are at a historic high. It would seem logical to expect the numbers to be cut back given rapidly worsening economic conditions. It would also seem logical to expect emigration to continue simply because, on current projections, economic conditions are likely to be better elsewhere in Australia.

To put some numbers to this, if the net overseas migrant gain drops to an average of 30,000, over the next five years, net internal migration increases to 32,000 per annum, then the net migration effect goes from +18,000 to - -2,000.Were this to happen, the annual population increase would drop from 54,000 to 33,000.

Could Sydney's population actually decline? This seems unlikely, although on the numbers one could mount a theoretical case.

Assume a long lasting downturn, leading to a fall in the birthrate so that the natural increase drops from the projected 35,000 in 2006-2011 to 25,000. Assume significant cut-backs in immigration so that the net gain from overseas migration gain drops to 10,000, while internal emigration increases to 40,000. In this event, Sydney's population would drop by 5,000 per annum.

As I said, this seems unlikely. However, it does illustrate the need to treat the projections with considerable caution, recognising that they are just that, projections.

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