The population boom caught the Howard government by surprise

Instead, population data released in December showed there were 25.7 million Australians in the country. While the original projections for the number of over-65s were accurate, they underestimated the number of younger Australians by 2.5 million.

Tasmania’s population was projected to decline from 2001, while South Australia and Victoria would have fewer residents from 2030 and the ACT of 2040.

Instead, Tasmania’s population has grown by 7 per cent, South Australia has added almost 300,000 residents, while Victoria is home to 2 million more people.

The main reason for the huge underestimation of Australia’s population was the assumption that net overseas migration would average 100,000 over the next 40 years.

But migration has increased. In 2019, net overseas migration for the year had reached 260,000.

The 2008/09 global financial crisis also caused a surge in the number of Australians returning home due to the poor economic outlook in countries like the United States and Britain.

The labor force participation rate, which has reached a record high over the past six months, was expected to fall, while there were concerns older Australians would not continue to work due to ongoing health problems. But the number of people over 65 in employment has continued to rise.

The assumptions surrounding the workforce and stagnant population prompted a raft of proposals from Treasury and other departments on how to boost overall economic growth.

These included labor relations reform, health programs aimed at keeping people in work longer, cuts in marginal effective tax rates for lower-income Australians and an overhaul of pension schemes, including the age at which people can access their pension plans.

The Industry Department, in comments on the Treasury Department’s document, noted that “gradual changes to the old-age pension system and tax breaks for self-funded retirees have reduced projected savings for the budget and the introduction of the pension guarantee and proposed tax breaks on pensions.”

These changes included one-time bonuses to retirees that became permanent parts of the welfare system, and a series of retirement benefit perks that Costello introduced between 2002 and 2007.

Break through the noise of federal politics with news, perspective and expert analysis from Jacqueline Maley. Subscribers can sign up for our weekly Inside Politics newsletter here. The population boom caught the Howard government by surprise

Callan Tansill

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