This is a really useful explanation of the latest economic data including the projected growth in the Australian population over the next 90 years. Craig James is the Chief Economist at CommSec and this is his interpretation of recent announcements.
Economic and financial market developments
New population projections: The Bureau of Statistics believes Australia’s population could reach 70 million people in 2101. Five years ago, the ABS estimated that the population could hit 62.2 million in 2101. Melbourne could have a larger population than Sydney in 2030. And Perth could have a larger population than Brisbane in 15 years.
Productivity challenge: Reserve Bank Deputy Governor Philip Lowe delivered a speech: “Productivity and Infrastructure”.
Imports fall, prices rise: Imports of goods fell by 2.4 per cent in real terms in the September quarter. Imports prices (implicit price deflators) rose by 6.3 per cent.
What does it mean?
In the space of five years, the Bureau of Statistics has found an extra 8 million people. In 2008, the ABS reckoned Australia’s population could hit 62.2 million in 2101. Now it estimates a figure of 70 million.
In the next 90 odd years could Australia have a population of over 70 million? The Bureau of Statistics reckons there is a chance, but it would require high fertility levels of around 2 babies per woman and annual migration levels near 280,000 a year. The latest projections are important for policymakers, especially planners, as well as businesses to do some scenario or ‘what if’ work.
Could Melbourne take over as Australia’s most populous city? Using the high population assumptions (series A) and medium (series B) assumptions, “Melbourne is projected to become the most populous, exceeding Sydney’s population in 2030 and 2053, respectively.”
Using series B, the ABS finds “The population of Perth is projected to overtake that of Brisbane in around 15 years’ time, when they both reach 3 million people in 2028.”
No matter which of the three assumptions is chosen by the ABS, Australia’s population is projected to increase. And that is notable as the ABS observes: “In contrast to the 2004-based set of ABS population projections released in November 2005, no series shows population decline for Australia before the end of the century.”
Reserve Bank Deputy Governor Philip Lowe has provided a reality check for the ‘doom and gloom’ school: “the past two decades have been very good ones for the Australian economy.” Lowe says that “While not everybody in the community has benefited equally, there has been a very substantial improvement in our average standard of living since the early 1990s.”
But Lowe has provided a reality check for the ‘blue skies’ school as well: “Looking forward, it is unlikely that these favourable developments will be repeated.” In short a lot has gone right over the past decade, but there are now challenges in maintaining the good times.
Still, Lowe is not downbeat. The aim in coming years should be to boost productivity and Lowe believes there is some basis for optimism. Inflation is under control and productivity has indeed lifted recently.
What are the details?
Productivity speech: Reserve Bank Deputy Governor Philip Lowe has delivered a speech entitled “Productivity & Infrastructure”.
Lowe summed up the talk as follows: “In conclusion, Australia faces a significant challenge over the coming years. While our exports are set to grow strongly, we will need to lift our rate of productivity growth substantially if we are to continue to enjoy the type of increases in our living standards that we have become used to. Meeting this challenge will require innovation by both the private and public sectors. Infrastructure is just one of the many areas that can play a role here. But if we are to maximise the benefits of our investment in infrastructure, that investment needs to be surrounded by strong governance, sound financing and pricing arrangements and due regard to the capacity constraints in the economy.”
Population projections: The ABS notes: “Australia’s population at 30 June 2012 of 22.7 million is projected to increase to between 36.8 million and 48.3 million in 2061, and reach between 42.4 million and 70.1 million in 2101.”
There are three projections: In Series A, Australia experiences strong and consistent growth, reaching 48.3 million in 2061 and 70.1 million in 2101. In Series B, the population will reach 41.5 million in 2061 and 53.6 million in 2101. In Series C, growth is projected to be lower, with the population reaching 36.8 million in 2061 and 42.4 million in 2101.
Imports: The ABS report that imports of goods fell by 2.4 per cent in real terms (volume of goods imported fell) in response to a 6.3 per cent lift in prices.
What are the implications?
The latest population projections are important for long-term planning, especially by government but also private businesses, utilities, housing agencies, health and emergency services.
The game has changed, and it is a case of everyone now updating their figures and debating the new circumstances. What sort of Australia do we want over the next 90 years?
Just like the population data, the productivity and infrastructure challenges for Australia exist in the medium-term rather than short-run.
At Success in Property we see this growing population as a strong positive for property as an investment, and a way for people to secure their lifestyle in retirement. All of these people will need some form of housing in which to live.
If you would like to have an Initial discussion about your Property Investment requirements give us a call on 0409228554.