The latest Intergenerational Report has predicted drops in population growth in the long term, with Australia not likely to reach 40 million people for another forty years. This slower growth is likely to contribute to economic challenges, as the population ages and housing does not become more accessible.
The Australian Federal Government produces Intergenerational Reports (IGR) to consider the outlook for the economy and the Australian Government budget over the next forty years. The 2021 report is the fifth to be created, with the project beginning in 2002. The report examines the long-term sustainability of current policies and how demographic, technological and other structural trends may affect the economy and the budget.
In handing down the latest report, Treasurer Josh Frydenberg described it as an ‘early warning sign’ for what is to come. As Australia’s population ages and less young people migrate or are born in the country, this will put further stress on welfare and healthcare services.
Some may think that lower population growth is a good sign to improve housing affordability. However, the IGR has predicted slower economic growth for Australia in the coming decades. This does not help the housing market, as building and construction businesses suffer and less houses are able to be built. Developers spend less investing during economically uncertain times. All of this results in less homes being available, and typically no decreases in the average cost of housing.
Additionally, an ageing population needs adequate housing and for their homes to remain affordable when they are no longer earning an income. Most seniors prefer to ‘age in place’, or stay in their own homes rather than entering care. This also increases economic growth, as older people keep working and being active in their communities.
The 2021 Report has predicted that Australia’s long-term population growth is likely to be smaller than originally thought. In 2015, the IGR projected Australia's population would hit 40 million by 2054-55. But the 2021 report predicts it will reach 38.8 million by 2060-61 instead.
This means our population of older people is going to grow, putting a larger burden on younger working people. Australia’s life expectancy is also growing, meaning people will be retired for longer. By 2060, men are expected to live to 86 years old on average, and woman to 89.
Migration will be our main source of population growth in the future, as more Australians have less kids or choose not to start a family at all.
The Property Council of Australia has met the latest Intergenerational Report with trepidation. Chief executive Ken Morrison noted that the predictions of falling population growth ‘should be the cause of great concern for all governments as it will quickly become a handbrake on our national and state economies.’
The Property Council has also called for government action to improve planning processes across Australia to increase efficiency and help generate much-needed economic activity. ‘As a country we need to find more effective ways to make planning systems more efficient and we encourage National Cabinet to consider National Competition Policy style incentives to help make it happen,’ Mr. Morrison said.