The fifth Intergenerational Report, released on Monday, reveals the long-term consequences of idling population growth and reminds us why productivity matters.
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Three key takeaways
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“Intergenerational reports always deliver sobering news, that is their role,” Treasurer Josh Frydenberg said on launching the report. “The economic impact of COVID-19 is not short lived.”
Among the long-term impacts are a smaller and older population – with about 23 per cent of the population over 65 in 2061, up from 16 per cent currently and 13 per cent in 2002.
Real gross domestic product per person – a measure of living standards – is expected to grow at an annual average of 1.5 per cent, down from an earlier-projected 1.6 per cent.
“Australia has enjoyed a long period of strong population growth which has underpinned our economic prosperity,” says Ken Morrison.
He says the Property Council has been calling on governments to upscale quarantine and border processing capacity to avoid the long-term economic consequences of idling population growth.
“If safe immigration is not resumed until well into 2022, Australia risks losing ground to our competitors as students and high value workers take other opportunities, and labour constraints become more acute in the economy,” Morrison adds.
“We need a coordinated National Cabinet roadmap to safely upsize border processing and quarantining arrangements so that we can sustain our remarkable recovery.”
Morrison emphasises that this doesn’t mean “throwing open the borders next week”. Instead, it requires “a plan to steadily increase international arrivals in a COVID-safe way and a plan for transition once vaccination has become widespread”.
The report also underscores the importance of productivity performance, as productivity has contributed more than 80 per cent of growth in real gross national income per person over the past 30 years.
Morrison points to the “huge urban dimension” to productivity, which “is the responsibility of all levels of government”.
The Productivity Commission’s 2017 Shifting the Dial report found that better functioning cities and towns was one of the big five productivity opportunities for the nation.
“Reform of our poor state and territory planning processes would represent low hanging fruit to boost our long-term economic growth – a point called out in the report,” Morrison says.
“We need to be investing in the right infrastructure, fixing housing affordability, reforming archaic planning systems, phasing out stamp duty, and getting zoning right.
“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.”
The Property Council’s Planning to Prosper report, developed in collaboration with Urbis in 2020, uncovered a $5.7 billion a year economic boost was possible if state and territory governments implemented just one of the five ‘quick win’ planning reforms.
“With the right nationally-coordinated approach we could see Australia benefit from increased housing supply, enhanced liveability and improved long-term economic performance,” Morrison concludes.