The migration debate has a big blind spot: much of regional Australia is shrinking

Migration policy is emerging as one of this year’s defining political battlegrounds. The Albanese government, Coalition and One Nation have all committed to reducing net overseas migration.

Alongside all these commitments are promises to protect regional Australia by maintaining the flow of health-care and seasonal agricultural workers.

There’s an argument to be had over whose plan to support regional workforce needs is most credible. The far more important question, though, is how major changes in migration will affect the longer-term population of rural and regional Australia.

Buried in the 2026 Intergenerational Report released last month are two pages on population trends that paint a worrying picture. For large parts of regional Australia, the report forecasts lower fertility, lower migration and faster population ageing.

Left unchecked, these trends will result in a growing demographic divide with fewer workers available to support ageing residents and regional businesses.

This hollowing out of large parts of regional Australia won’t just lead to significant disadvantage among those who remain and weaken the contribution of rural industries. It will also challenge our national story as a people that rode to prosperity on the sheep’s back.

Not a uniform picture

It’s important to note that the picture outside Australia’s capital cities isn’t uniformly bleak. Recent research by the Regional Australia Institute, a non-profit think tank, has examined these trends in detail.

Size matters. Regional cities with populations over 50,000 are expected to keep growing. Not as fast as capital cities, perhaps, but enough to maintain core services.

But this is complicated by the fact that over half the population growth in rural Australia since 2017 has come from net overseas migration. This migration has been dominated by people in their prime working and family-raising years.

How migration is doing the heavy lifting

The largest group of international migrants is 25-44 year olds, followed by 15-24 year olds. This has helped offset the net loss of 15-24 year olds, who dominate outmigration of existing residents.

Take international migrants out of the equation and towns and localities with fewer than 50,000 people are going backwards at a rate of knots. If we also take declining birthrates into account, larger regional cities could suffer the same fate.

This is why the agricultural industry and other business groups are advocating against the politicisation of migration policy.

The vicious cycle of population decline

Where population decline does take hold, it can create a self-reinforcing downward spiral. Fewer people mean fewer services and fewer jobs. All of this can result in lower incomes, less spending and a struggle for businesses to stay open.

But it also erodes social capital. The volunteer base that supports sports clubs, service organisations, natural disaster response and cultural groups begins to disappear.

In short, fewer people mean fewer reasons for those left behind to stay.

A different picture for some First Nations communities

Any discussion of the future of regional Australia would be incomplete without recognising the unique circumstances of Aboriginal and Torres Strait Islander communities.

Some Indigenous communities are actually bucking broader regional population trends. In Queensland, the Australian Capital Territory and Victoria, higher birth rates and a younger age structure are contributing to population growth.

The challenge is turning demographic strength into economic strength, and preserving opportunities for Aboriginal and Torres Strait Islander peoples to live and work on Country.

Real progress on the First Nations Economic Partnership Agreement, signed last year, will make a material difference to the retention and wellbeing of existing residents.

But we also need to better recognise the capacity Aboriginal and Torres Strait Islander Australians bring to this agenda. Recent research shows Indigenous-owned businesses accounted for 10.1% of the Northern Territory economy in 2024–25 and have the potential to contribute 30% within a decade.

That would represent an additional 17,000-plus full-time jobs in the Territory alone and fuel growth through the whole economy.

What can we do?

The Intergenerational Report notes most migrants settle in Australia’s capital cities. But this isn’t an inevitable pattern; these outcomes are shaped by government policy.

There is a clear argument for increasing overseas migration to rural and regional Australia. This is achievable through integrated workforce, housing, service and infrastructure planning alongside appropriate visa pathways.

Economic diversification is another key ingredient in growing rural and regional populations. The excitement of studying or working in the big city will always be attractive to 15-24 year olds raised in the bush. We can’t overlook the hopes of many to access education, work and leisure opportunities that aren’t available at home.

Limiting our attention to short-term workforce needs will not address long-term population decline and the disadvantage that will follow it.

Australia clearly needs a population policy that recognises the mounting pressures on rural and regional communities. As capital-city birth rates fall and labour demand draws young people away, we need frank discussion about how to sustain smaller rural and regional places. Delaying that conversation puts their long-term viability at risk.