Population growth, it does matter

The ABS has released its annual update of estimated resident population (ERP). The nation’s growth areas continue to grow. The growth areas are suburban local governments located outside of the major capital cities. Essentially, the capital cities need areas to accommodate the ever increasing population. Whether or not the area has been designated by the government as a growth area or not, the characteristics of a growth area are the same. Relatively affordable land, which translates to relatively affordable new housing stock that is well connected and a relatively short commute into the capital city drives the often significant increases in new population. The majority of the top twenty fastest growing LGAs in the country are in growth areas.

Figure 1 Top Twenty Fastest Growing LGAs (2016-17)

Source: Lucid Economics; ABS (2018)

Population growth is good, as it drives economic growth and spurs on the construction industry and many others. However, these growth areas often have immense challenges from the rapid growth of the local population. Congestion tends to be the biggest issue, as most of the new residents don’t work in the local area and therefore must commute for work, putting tremendous pressure on road infrastructure as these areas are not always well serviced by public transport. Beyond the congestion, these areas struggle to develop a diversified economy. Inside these LGAs, construction is usually the largest sector, quickly followed by retail, healthcare, education and other sectors driven by population growth. It is often difficult to ensure a balance of high valued jobs across a more diverse array of industries. These growth areas need to try and leverage the economic benefits of population to drive future economic diversity. Considered thought needs to be given to the specific opportunities that these areas can leverage to produce more local jobs and investment (outside of population driven industries).

The other end of the population growth ranking (i.e. the areas with shrinking populations) have much more difficult issues to manage. Population growth drives roughly a third of the economy, so if the population is declining, then a third of the economy will decline. The top twenty declining LGAs are no longer focused around mining regions, but rather tend to be small, regional communties. Population growth is critical to the economic success of small regional communities around Australia and any projects that can drive population growth locally should be pursued (relative to their cost naturally).

If you are dealing with rapid population growth or faced with the challenge of a declining population, reach out to us at 1-800-940-990 or info@lucideconomics.com.au. We’d be happy to have a chat about some ideas to better manage the economic development of your community.