A population growth spurt that will take Australia’s population to 35 million by 2049, will create opportunities for smart businesses, leading demographers said today.
Treasurer Wayne Swan, who unveiled the new research this morning, says the growth will be led by a rising birthrate and an increase in migration, which together will see the population grow by 62.8% in the next 40 years.
But the growth will overwhelmingly be concentrated on older demographics, Swan says.
“Over the next 40 years it is projected that the number of young people and the number of people of traditional working age will both increase by about 45%. But here’s the thing: over the same 40 year period, the number of older people aged 65 84 years will more than double and the number of very old people aged 85 and over will increase by more than four and a half times.”
Swan says net overseas migration will be a key to population growth, with migrants tending to be younger than average resident population. A migrant influx is expected to be a central strategy in maintaining workforce numbers.
“A decade ago 54% of population growth was from natural increase, but by 2008, which is the latest data, that flipped and only one third was from births, the rest from migration,” says social demographer Mark McCrindle.
The new population prediction for 2049 is much greater than the figure of 28.5 million that Treasury released just two years ago.
The changing demographics raises issues about the ability of government and businesses to maintain growth and manage the new face of Australia.
As the proportion of workers to old age pensioners increases, governments will face their biggest challenge in maintaining budgets, demographer Bernard Salt says.
Swan agrees, and says future budgets will “need to have the courage to adapt to changing demographic trends”.
“The Government delivered on its commitment in the budget to increase the age pension. But in order to make the pension system sustainable in the long run, we also made the hard decision to raise the qualifying age for the age pension. There is a lesson in that decision.”
New cities
Another challenge is infrastructure. This may even lead to the creation of new cities in areas now considered to be regional.
“The past 50 years has seen cities built in the Gold Coast and Canberra. We may well see another two big cities in the next 50 years,” Salt says.
“Broome, with the Gorgon gas deal, could grow from a current population of 12,000 to 100,000. We’ll also see huge growth in places like Harvey Bay, Cairns, Port Douglas, Port Macquarie and Coffs Harbor. Places that people will want to retire to.”
Infrastructure will also be a key challenge in existing cities, McCrindle says. “Right now, one in six Australians is living in Melbourne and one in five in Sydney. If we have a doubling of these major cities, it will cause enormous strain on cities especially in transport and roads. Bottlenecks in roads will be terrible.”
Business challenges
As the baby boomer generation ages, we will see “the first interested, engaged, articulate and educated generation with time on their hands,” says Salt.
He says this means corporate entities will need to be increasingly aware of their relationships with this age group, especially in areas such as financial services and other service industries which will be increasingly utilised by this group.
“Navigating expectations will be tricky,” says Salt. “The art of complaint will be elevated to an Olympic sport.”
Businesses will also face challenges in finding and maintaining employees, with the balance of power set to shift to employees as supply of workers drops below demand.
“The big challenge is to grow the economy through improved labour productivity and participation,” Swan says.
In the next year Australia is expected to pass peak employment, with more people leaving the workforce than entering it, McCrindle says.
“Generation X, which will make up the workforce, will either have to be more productive, have better skills, or we’ll need better technology or even more migrants,” says Salt. “I expect we’ll see all three.”
With migrant employees increasing, businesses will need to understand cultural diversity, McCrindle says.
“You need to understand those people who will actually make up your workforce, and also have enough employee diversity to be able to connect with the range of potential customers.”
Business opportunities
Demographer Mark McCrindle says this is very positive for business growth.
“There are excellent opportunities, it’s great news for businesses. Population growth is the strongest indicator of economic activity.”
Sectors set at an advantage by the changes will include service infrastructure industries, with the sectors “quite stark”, Salt says.
“Anyone in healthcare, medicine, financial planning will benefit. And of course, to manage the infrastructure, town planning, water, schools and education. People-type industries will be the skills of the future.”
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