The pandemic has pretty much hijacked the headlines for the last 15 months across the planet.
Don’t worry, though; this post is not yet another article about the pandemic’s destructive effects!
Instead, it’s an objective view on the significant change the pandemic has created in Australia and how it has reshaped the whole country’s social and economic landscape.
Indeed, as the destructive virus spread onto the world, it triggered major seismic shifts initiated by governments, leaving businesses, organizations, and consumers scrambling to adapt and adjust decade-old economic and social habits.
And as the vaccine rollout continues, lockdowns ease, and borders reopen, local experts believe some of the changes will stick.
Let’s take a closer look, shall we?
COVID has slowed down Australia’s Population Growth
Migration Numbers Slide
Before the pandemic, the Australian annual population growth rate was 1.5% p.a on average. And 38.6% of the growth came from overseas migration.
Now, for the first time in one hundred years, the figures regarding net migration in Australia are negative. Indeed, the latest data revealed that between June and September 2020, 55,400 people left the country while only 20,600 entered.
Why is that?
Unfortunately, the strict border closures initiated by the Australian government since March 2020 have led to a massive drop in population. And according to Dr. Elin Charles-Edwards from the University of Queensland, ‘’by 2030, around one-million fewer people will be calling Australia home than we would have seen otherwise’’.
What’s more, a recent study revealed that Australia is no longer a key migration destination.
In fact, the survey shows that most countries are now feeling neutral about migrating Down Under. Drastic border closures and tight immigration policies have led many to consider Canada or the UK instead as a future migration destination. As a result, the competition is now fierce between countries striving to attract top talent. For instance, Canada has recently increased its migrant intake by 350,000 annually to revitalize its economy.
The Fertility Rate Falls during COVID
The slower population growth is also due in part to a lower fertility rate over the last year. Indeed, the fertility rate significantly fell in 2020 (1.58 babies per woman, down from 1.69 in 2019).
As a result, the rate of natural increase dropped by 3.8% between September 2019 and September 2020. In fact, this represents a record low in the country’s history, according to the Australian Bureau of Statistics.
And the uncertainty associated with the pandemic is largely to blame as Australians feared for their jobs. As the economic outlook became uncertain, couples decided to put their plan to have a child on hold.
The Economic Impact of Australia’s Population Decline
The issue for Australia is that its economic growth is strongly reliant on skilled migrants and students. As a result, it’s no surprise that plummeting immigration led to GDP contraction in 2020. And unfortunately, it is most likely to continue to do so in 2021. For instance, 40% of the education sector’s revenue comes from international students who have been unable to enter Australia for over a year, leading to billions of dollars in loss. What’s more, some inner areas of Sydney, Melbourne, and Brisbane, once magnets for students and working holiday makers, are now experiencing a population downturn.
Besides, a country needs a fertility rate of about 2.1 for each generation to replace itself. With such a low fertility rate, Australia is not only growing slower, but it’s also aging faster.
And a smaller and aging population leads to higher healthcare costs, lower innovation, and GDP. This then leads to a permanently shrinking economy.
So, while it’s still too early to assess the real economic impact of Australia’s population downturn, experts agree that higher migration levels and fertility rates are needed for Australia to restore its former economic growth glory.
The Pandemic Prompts a City Exodus
The pandemic has led many Australians to work from home, seizing the opportunity to move to regional areas for a quieter and more affordable lifestyle.
In fact, according to the latest figures, 104,800 people moved interstate in the last quarter of 2020. This compared to 3,900 the previous year. NSW and Victoria saw the biggest decline in net migration, while Queensland and WA primarily benefited from the exodus. Some of the most popular destinations are Gold Coast, Newcastle, Cairns, and Sunshine Coast.
The city exodus is driven by a few factors such as:
- Ability to work remotely
- Capital cities’ high real estate prices and cost of living
- Limited space in bigger cities
- Cities’ traffic congestion
- Busy and stressful city lifestyle
And according to some experts such as Urban Planner Tony Matthews from Griffith University, this is only the beginning of a future mass exodus.
We’ve listed below the implications of this population shift for regions:
Regional Real Estate Prices on the Rise
As was to be expected, the increase in population in regional areas has led to rising property prices over the last few months. Indeed, while cities’ property prices have fallen 2.3% between March and November 2020, regional property prices have gone up by 1.7% on average. And the rise is set to continue in regional coastal centers as they provide residents with commutable distance to capital cities while allowing for a regional lifestyle.
Region’s Economic Growth Boost
According to Tony Matthews, the fact that many people are now moving from capital cities to regional areas will undoubtedly provide an economic boost for regional towns. Local councils will be able to spend more money on improving livability, building infrastructure, and enhancing neighborhoods. This will, in turn, increase job opportunities and attract more people as cultural and social activities increase.
Saturated Infrastructure
While the city exodus has many positive benefits for regions, it unfortunately also comes with a major downfall. The flock of city dwellers has put considerable strain on local broadband, traffic, and power networks. So, even though many will stay in regional centers once the pandemic has passed, more support from the government will be needed regarding infrastructure capabilities for the trend to stick.
Remote Working is Here to Stay
The sudden COVID-19 pandemic has driven companies to quickly shift to a digital and remote working model to survive and continue to thrive. Indeed, in February 2021, 41% of Australians were working from home at least once a week, as opposed to 24% before March 2020. And according to a recent study, only 10% of Aussies want to return to the office full-time after the pandemic.
Working from home has become part of the new normal, reshaping the Australian employment landscape.
Australians Want to Work from Home
A recent study revealed that 78% of Aussies would like to work from home at least a few days a week. 36% of them express wanting to work in the office predominantly and occasionally work from home. On the other hand, 24% would prefer to work mainly from home and sometimes from the office. The appeal of working from home is clear; it allows for a better work-life balance and improved productivity.
Employers Open to a Hybrid Working Model
But the remote working model doesn’t only have benefits for employees. In fact, 47% of employers are open to keeping a hybrid work-from-home model after the pandemic. Indeed, a major positive for companies is the reduction in rental office space-related costs. And as a matter of fact, many top-tier Australian companies have downsized their office space in 2020. Another benefit for companies is that allowing employees to work from home for a few days a week can also give them an edge over the competition.
Therefore, what we’re most likely to see in the coming years is a hybrid working model with smaller office spaces and flexible working arrangements.
Shifting Shopping Habits
Online Shopping is Booming
The Australian e-commerce market boomed in 2020, driven by strict lockdowns and the fear of catching the virus. However, although this trend had already begun in the preceding years, it’s most likely to stick as consumers and shops have adapted. In fact, the Australian e-commerce market is expected to reach $77.7 billion in 2024, up from $52.2 billion in 2020.
The trend will continue to grow, fueled by:
- The convenience of online shopping
- The multiplication of online retailers
- New online purchasing habits
- An increase in customized digital payment solutions with the rise of BNPL players such as Zip and Afterpay
Australians are Spending More Carefully
Research has found that more Australians are shopping for private label products and sales items. What’s more, 60% of Aussies would pick the lowest-priced option among their favorite brands. And because Australians are being more careful about their spending, they pay more attention to brand attributes, prompting brands to adapt their ranges.
Australians are Embracing Ethical, Sustainable, and Local Products
Ethical and Sustainable Products
While the trend started before 2020, the pandemic has reinforced the need for most Australian consumers to shop for sustainable products. In fact, new research indicates that 87% of Australians now want to shop more ethically and sustainably. 41% of them are even willing to pay more for ethical and sustainable products. As they become more conscious about the products they choose, Aussies expect brands to be transparent and engage in sustainable practices. Plastic reduction, country of origin, growing methods are all key factors Aussies are now paying attention to when shopping.
Local Products
In 2020, Australia was hit by devastating bushfires, floods, the COVID-19 pandemic, and some strict prolonged lockdowns. As a result, Aussies are willing to support local businesses more than ever. In 2020, 83% of Australian consumers sought to support local farmers, growers, and suppliers. And this seismic shift towards buying Australian products will most likely continue driven by the safety, high-quality, lower environmental impact, and enhanced community benefits of buying local.
Renewed Interest in Domestic Travel
Due to strict border closures, Australians have been rediscovering their own country and exploring their own backyard.
Indeed, the Australian tourism industry has experienced a surge in domestic travel over the last few months. And this increase has been fueled by pent-up demand and heavy domestic promotion by Tourism Australia.
Some of the key trends this year include:
- Backyard Bucket List Travel:
In January 2021, Tourism Australia released its 2021 bucket list to encourage Australians to explore their beautiful country. Some of the top destinations on the list are Uluru, the Great Dividing Range, the Great Barrier Reef, or the Kimberley region. Yet, Intrastate travel is currently driving the recovery. Indeed, regional areas such as Port Stephens, Newcastle, or Byron Bay have greatly benefited from city dwellers exploring their own backyard instead of traveling abroad.
- Working Holiday Model:
#workfromanywhere has taken the world by storm, and Australia is no exception.
With more people able to work remotely, Aussies have spent more time on their holiday destination, combining hours of work and time off enjoying new activities and landscapes.
- Aussie Road Trip:
For international travelers, the Aussie road trip has always been a must. But renting a van and hitting the open road to explore some of Australia’s most spectacular natural wonders is no longer a touristy thing to do! Indeed, one of Tourism Australia’s latest studies shows that over 500,000 Aussies are planning to hire a van this year to embark on an Aussie road trip.
What’s in Store for Australia in the Future?
The pandemic has undoubtedly reshaped our lives whether in Australia, Africa, Europe, Asia, or America. And while Australia was lucky enough to successfully contain the virus and limit the death toll, uncertainty and the need to adapt fast have brought about seismic change that will most likely affect the country for years to come. From the way we travel, consume, and study to the way we work and plan our future, the effects of the pandemic are far-reaching. But even though the virus has had a devastating impact on human lives and mental health, it has also brought some positive change allowing people to achieve a better work-life balance, spend more quality time with their loved ones and build their dream life.
Will these positive aspects last?
Only time will tell…