Thursday, November 05, 2009

The Future of Australia

The federal Treasury Secretary, Dr. Ken Henry, recently gave a speech to the QUT Business Leaders' Forum entitled "The Shape of Things to Come: Long Run Forces Affecting the Australian Economy in Coming Decades." In his speech he outlines four long term trends (through the lens of sustainability) that will likely have a profound impact on the Australian economy and society for several decades to come.

1) Population ageing
Population ageing will have an even more pronounced impact on GDP per capita growth over the coming decades. By 2049 it is estimated that 22% or a little over one in every five Australians will be aged 65 or over (current rate is 13%). Australia's population is also increasing faster than predicted due to migration and higher birth rates. Today’s population of about 22 million is now projected to rise to over 35 million in 2049, an increase of 13 million people or around 60% over the next 40 years.

2) Climate change
Climate change adaptation and the response to mitigation strategies will have profound implications for the pattern of human settlement on the driest inhabited continent on earth. Taken together, these forces could produce the largest structural adjustment in Australia's economic history.

3) ICT revolution
The ICT revolution is changing the shape of the Australian economy. It holds out the prospect of a significant revolution in the way government services are provided to a rapidly growing aged population and for government service provision in general.

4) The re-emergence of China & India and Australia’s Terms of Trade
The re-emergence of China and India which, because of its implications for global commodities demand, has conferred on Australia a large boost to its real wealth; but, at the same time, set up a set of structural adjustments that will challenge policy makers for decades.

With the population increase, Treasury predicts that Melbourne's population could grow from around 4 million now to almost 7 million in 40 years- a 74% increase. So where will all these new arrivals live? Urban planning in Melbourne has been interesting to watch. Currently most people commute into the city centre for work, and public transport is arranged to accommodate this in and out travel pattern (which makes it difficult to get from east to west without having to travel into the city first).

The state government has produced many documents to manage Melbourne's growth including the Melbourne 2030 Strategy released in October 2002 and the Melbourne @ 5 million update to the strategy released in December 2008. They realize that they need to build up multiple major centers that will distribute jobs and activities so people can work and play closer to where they live. However, the problem seems to be that the government doesn't follow its own policies. The urban growth boundary keeps getting expanded further and further out and they seem more focused on building roads instead of more sustainable public transport for these outer suburbs. In addition, the new Central Activity Districts are in areas that are still relatively close to the city. The focus should be on regional Victoria where major employment should be encouraged and there is space for growth to occur.

A few recent articles in The Age have highlighted many of the issues raised by Dr. Henry and what it means for Melbourne:
- Paul Austin "Perils of a bigger footprint"
- Ross Gittens "Four big bugs threaten our comfort zone"
- Brian Buckley "City's population explosion threatens urban devastation"
- Mary-Anne Toy "The big leap"

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