Buried in the Budget, between forecasts on GDP growth and the price of iron ore, is a figure that explains much of Australia’s bleak economic outlook.
The biggest number of all is actually the number of people that are due to go missing from the country— one million of them to be exact by the end of 2022.
Virus fears and closed borders aren’t going to be overcome anytime soon either, the Treasurer revealed in his post-Budget address at the National Press Club on Wednesday.
“International travel including both tourists and international students is assumed to remain largely closed off until late next year and then gradually return over time,” Josh Frydenberg said, and that’s pending one major development.
“A vaccine, to be available around the end of 2021, is one of the assumptions in the budget.”
It in part explains why a Coalition government, which has made an art form out of penny-pinching, is now looking at a national debt projected to blow out to nearly $1 trillion over the next four years.
While the government announced more than $50 billion in new money to be spent in Tuesday’s Federal Budget, there is also a serious hit to its tax base as one million taxpayers disappear.
It is also why despite the lavish spend, unemployment is still looking like hitting 8% officially — and probably higher still in real terms. Again, the cost of losing one million consumers is immense, with their dollars no longer able to be spent at Australian businesses.
To put it another way, it’s a bit like scrubbing the Gold Coast, Canberra, and Newcastle all from the map and the bottom line. What’s more is 400,000 of those people would have otherwise ended up in Victoria, which after a prolonged lockdown will miss them dearly.
Interestingly, while Victoria typically draws more Australians interstate than it loses, the trend is forecast to reverse, as a small number seek economic refuge elsewhere.
The government’s best guess at the future
While it’s largely outside of the federal government’s control that the pandemic has more or less welded borders tight, it will weigh on the economy for years to come. Those people simply aren’t coming back.
The proof, as they say, is in the budgetary pudding. According to Treasury estimates, net migration is expected to bring less than 100,000 people to Australia’s shores over the next two financial years combined. For comparison, a single year can typically draw up to a quarter of a million people.
Migration alone represents around 60% of all population growth in Australia.
The university sector meanwhile, which has largely built its business model on the tuition of international students is still grappling with how to balance the books. A $1 billion sweetener for its research arm certainly won’t be enough to stop ongoing job cuts.
Fertility rates meanwhile are expected to continue dropping for the next decade. The resulting lack of people power being a maor reason why the Australian economy will be 5% smaller in 2023 than was projected pre-coronavirus.
Australia is accordingly facing the biggest challenge to a decades-long economic strategy that has largely worked until now.
There’s simply no silver bullet in the Budget to solve that.
This article originally appeared on Business Insider Australia and is reproduced here with permission.