Facing up to the future

Last week’s intergenerational report contained some mind-bending numbers.

By the middle of the century there will be just 2.7 working age Australians for every person over 65 years of age, up from 4.5 today. That’s a 40 per cent decline. In the 1970s the ratio was 7.3 people.

It’s this demographic challenge that will reshape the economy and has enormous implications for government budgets. And it’s these implications that got most of the headlines.

The less talked about fact is that Australia’s future is one based on growth.

According to the report, Australia’s population is forecast to increase by two thirds to reach 39.7 million by 2054-55.

That’s a substantial amount of growth. Not Asia-levels of growth, but certainly higher than almost all other OECD countries.

So if substantial population growth is an unalterable fundamental of our future, we could expect this would be hard-wired into our nation’s policy settings, right?

Well wrong actually. Too many of our policies seem to ignore this basic fact.

A larger population will require new homes, workplaces and infrastructure to make our cities work and keep our communities strong. This has big implications for our planning regimes, infrastructure investment, tax settings, and social policy; all of which must be considered in the context of a growing Australia.

Every year we don’t adequately invest for the future is a year that we fall behind. It’s a point I made in yesterday’s AFR business roundtable.

What’s needed are better approaches to managing this growth to create prosperity, jobs and strong communities. This is the intergenerational report’s key take-out, which is staring us in the face.