Should a vaccine be available within the next 12 months, KPMG estimated migration would recover and the population would fall only 420,000 short of the Australian Bureau of Statistics’ 2030 projection. This would leave GDP $45.3 billion below what it would have been if there had not been a pandemic and household disposable income down by $31.1 billion.
If the vaccine did not become available within the next 24 months and migration continued to be restricted, $117 billion would be sliced off GDP by 2029-30. Australians faced their household disposable income dropping by $80 billion over the same period compared with pre-virus estimates, or $2856 for every man, woman and child, the analysts found.
Treasury is forecasting population growth to almost halve from 2019 levels to 0.6 per cent in 2021 – the slowest rate since 1917.
Dr Rynne said the government should be looking at how to attract international students and skilled workers with policies such as making post-study work rights last longer and giving extra permanent residency points for those who worked in areas where there were skills shortages.
He said this cohort would bring money into the economy, not immediately add to the large group of Australians looking for work and, for those who stayed after university, would add to the talent pool.
“Skilled migration is an investment in the future,” Dr Rynne said. “What skilled migration does is lift per capita income. It lifts productivity – you raise living standards by increasing skills.
“This isn’t the solution in and of itself, this is part of a suite of options the government needs to look at to help reverse the effects of COVID-19.”
In the scenario without a vaccine, $100 billion of the lower real GDP forecast for 2029-30 is based on the overall loss of workers from immigration. An extra $17 billion is due to the younger age group and higher skills of the incoming cohort.
Lowy Institute senior fellow John Edwards said on Thursday mass foreign travel without quarantine required the discovery, approval and distribution of millions of doses of a vaccine.
“How … quickly [the economy] then continues to grow depends on the skill and boldness of government and Reserve Bank actions, on the return of confidence to investment, on the pace with which the world economy picks up, and on the discovery and distribution of a vaccine or treatment that will permit unimpeded global travel,” Dr Edwards said.
The Reserve Bank’s latest statement on monetary policy expected international borders would remain closed until at least late 2021.
“The main upside risk relates to the swift development of effective and widely available vaccine and medical treatments,” the RBA said, though added it was unlikely a vaccine could be developed and distributed quickly enough to allow international borders to open any faster.
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.