Key takeaways from the IGR
This week, Treasury released the 2023 Intergenerational Report.
A lot has been said about it, so I'll keep it short here.
It's interesting to note how dramatically population growth has overshot projections from the earlier reports.
Up until the mining boom it had been expected that population growth would taper off over time.
Since then, we're looking at annual population growth of around 400,000 per annum on an ongoing basis.
There was a massive disruption through the COVID border closures, but we're making up for that right now (and then some)...
Source: Treasury
Part of the reason countries such as Canada, the UK, New Zealand, and Australia are going so hard on immigration is to increase the participation rate by bringing in young migrants, to slow the ageing of the population and reduce the dependency ratio (at least in the short term), and to boost headline GDP and innovation.
By 2063 the population of Australia will - in all likelihood - be around 43 million, if population growth continues at around 400,000 each year.
Source: Treasury
Of course as the population ages and as life expectancy increases, there will be a huge increase in healthcare employment and services.
It's been one of the best sectors to invest in, and medical centres have tended to be a good commercial real estate investment too.
Source: Treasury
A significant portion of the report was devoted to changes in the capacity of the various components of the national electricity market, with a big push for solar and wind generation now projected.
Source: Treasury
How we will raise taxes may need to change over time.
At present income taxes are high, but very little is raised from other potential sources of revenue, such as inheritances taxes.
Overall, the future for Australia remains bright, despite a range of challenges, including for infrastructure, housing, water, and energy.
It's a hugely popular destination for international students, graduates, and skilled migrants, and as long as government can keep the appropriate frameworks in place for investment and growth then Australia can continue to thrive for decades to come.
