According to the Australian Bureau of Statistics, Australia’s population growth rate has slowed to a rate last seen nearly 10 years ago, below the 20-year average growth rate.
Australia’s population grew by 316,000 people (1.4 per cent) to reach 23.7 million by the end of March 2015. Net overseas migration contributed 173,100 people to the population (16 per cent lower than the previous year), and accounted for 55 per cent of Australia’s total population growth.
Is low population growth bad?
While low or no population growth might be great for road congestion and might help to keep a lid on property prices, an ageing population combined with low population growth can have significant economic consequences.
“Lower population growth has important implications for the economy. It lowers the growth in demand for goods and services, as well as the economy’s capacity to supply those goods and services. On the demand side, lower population growth would, all else being equal, be associated with less growth in consumption. Over time, it may also reduce the need to expand the capital stock through investment in residential housing, non-residential buildings, machinery & equipment and so forth. At the same time, lower population growth implies that there are fewer individuals available to be employed in producing goods and providing services.” RBA August 2015
On the positive side, low population growth helps to keep the unemployment rate low, however it also reduces consumption growth, which in turn can reduce growth in GDP. A lack of growth would be felt by all investors, including workers with superannuation funds.
In a low growth environment, investment fees are increasingly important. Canstar’s annual Superannuation Star Ratings report has collated the data on the minimum, maximum and average fees across the 67 superannuation products included in its 2015 Star Ratings and has calculated the annual cost of those fees across various account balance scenarios; you can download the report here.
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