Why we need a smart national demographic plan
If we want a population policy that’s sustainable – and fair – we need to plan smarter, writes our resident Stats Guy.
Let’s face it – migration is a topic that sparks strong opinions. Some blame newcomers for high house prices and congested roads. Others say we need more migrants to keep the economy ticking over.
Australia is grappling with a serious and persistent skills shortage that only migration can fix. Our universities rely heavily on the money international students bring.
And yes, more people do mean more pressure on housing and infrastructure. But this isn’t a simple “more migrants = bad” equation. It’s a tangled web of interconnected policies – migration, housing, infrastructure, and workforce – that at the moment too often get managed in isolation.
That siloed approach has let our population grow faster than we can build homes or roads. We welcome more migrants to ease worker shortages and underwrite our university system, but we seemingly forget that they need homes, transport, and integration support.
If we want a population policy that’s sustainable – and fair – we need to plan smarter. That means acknowledging the ripple effects of big changes and putting guardrails in place to manage them.
We all want affordable housing, sparkling infrastructure, fair wages, and well-integrated communities. But these goals can come under pressure if migration levels climb too quickly.
That’s why I believe Australia needs a national demographic strategy – a clear set of long-term targets to align housing, migration, and infrastructure policies. Even more challengingly, I want to establish a mechanism that forces government to integrate these sets of policies by creating national targets.
Let’s talk targets
We already accept the idea of targets when it comes to inflation. The Reserve Bank of Australia uses interest rates to keep inflation within a safe range.
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Sure, nobody enjoys high interest rates, but we accept them as the price of avoiding worse outcomes like runaway inflation.
Why not apply a similar approach to housing, population, and infrastructure? Not by micromanaging every aspect of the economy, but by creating broad targets that trigger action when things drift too far off course.
Target 1: House prices
Let’s start with housing. Instead of targeting fixed dollar values, we should aim to keep house prices within a sensible income-to-price ratio – say, four to six times the median income (today no capital city in Australia comes even close to that range).
If prices rise above that range, it should trigger policy responses to cool the market.
There are plenty of levers to pull – speeding up housing approvals, boosting public and built-to-rent housing developments, tackling demand-side distortions like negative gearing or foreign investment, or reforming stamp duty.
Crucially, while the income-to-price ratio remains too high, we’d hit pause on policies that are proven to drive up prices – like first-home buyer grants or letting people raid their super to buy a house.
Once prices fall back within the target range, the interventions could be gradually rolled back. Yes, this would be a long-term project – think 20-plus years – and yes, it would be unpopular at first with home-owning voters.
But just like we tolerate temporary pain from high interest rates to keep inflation in check, we might just learn to accept modest house price declines in exchange for long-term housing affordability.
This target could also be backed by a commitment to grow public housing.
Right now, public housing makes up just 4 per cent of homes. Aiming to lift that to 10 per cent would help clear waitlists and ease pressure in the broader market.
Requiring a bigger slice of new housing to be set aside for social housing would slowly rebuild this crucial safety net.
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Target 2: Ageing population
The second target should focus on Australia’s dependency ratio – the balance between people of working age and those who aren’t.
As Baby Boomers age and demand for aged care ramps up, we’ll need a much bigger workforce to support them.
Setting a target range for the dependency ratio would let us fine-tune migration settings. We could aim for younger, permanent migrants to help slow the ageing of our population.
Right now we have lots of people in their 30s, but fewer in their 20s. Migration can help smooth out those age gaps.
This approach would also reflect the temporary nature of international student migration.
Most students (five out of six) head home after graduation, so they do little to shift long-term demographic trends. A demographic strategy would help ensure our migration mix delivers what we need – we would work towards a desired population age profile.
Why a national strategy matters
I’m not calling for a command-and-control economy. What I’m proposing is a common-sense strategy – a coordinated set of long-term goals that guide migration, housing, and infrastructure decisions.
We already use this approach with monetary policy. The RBA doesn’t run the whole economy, but it does use interest rates to keep inflation in check. Why not apply the same thinking to other parts of national policy?
To work, this strategy should be managed by an independent, non-partisan group of public servants.
These technocrats would match migration levels with workforce needs, housing supply, and infrastructure planning. That way, we could move beyond knee-jerk political responses and start making real, long-term progress.
Getting bipartisan support won’t be easy. But as our population ages and housing pressure builds, the need for a coordinated plan will only grow.
Australia can either take control of its demographic destiny – or keep lurching from one crisis to the next.
Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His podcast, Demographics Decoded, explores the world through the demographic lens. Follow Simon on Twitter (X), Facebook, or LinkedIn.
