The Australian population has edged past 25 million. What could this mean for the future financial wellbeing of everyday Australians?
According to McCrindle Research, the Australian population reached the 25 million mark in August. The ABS population clock estimates Australia's population is increasing by one person every 83 seconds. If you were born in 1970, you’ve seen the population of Australia double in your lifetime and McCrindle are forecasting a similar rate of growth for the next three decades. If their estimates are on target, we’ll be a country of 40 million people by 2048.
So what could that mean for jobs, retirement plans and the many other things our financial future depends on? While the jury is out on whether population growth is overall a good or bad thing, there is the potential for a bigger population to strengthen the economy and lower the personal tax burden. If a growing Australia means more jobs, then there’s a bigger tax base, leading to everyone paying less tax. That’s the theory at least. It can also be beneficial for businesses to have a bigger domestic market for goods and services.
While Aussies are joining the ranks of 65+ in greater numbers, the working population isn’t expected to keep up. By 2042, the number of people of working age is expected to flat line, with zero growth expected by this time. With only 2.5 working age people to support each person aged 65+ – half the number there were in 2002 – there could actually be a shortfall in the tax revenue it will take to pay for the income and health needs of retirees.
While population growth can be seen as a driver of economic growth, consideration around housing affordability, infrastructure, environmental pressures, as well as access to quality transport services, healthcare and education are all key elements for sustainable growth. The impact of population growth has been most felt in the major cities, particularly in Sydney and Melbourne. Unaffordable housing; overcrowded trains; gridlocked roads; waiting lists for childcare places and elective surgery; are all cumulative effects of increased population growth.
Source: Money & Life (FPA)