Work hard, spend more and pray to whichever God you believe in
That’s how Budget 2015 was summed up in most major newspapers. Dubbed ‘Tony’s Tradies’ Budget’, it was aimed at small business owners with tax concessions and other incentives to encourage them to spend, in order to help stimulate the economy. With the easing of the mining boom, the question for the Australian economy is, where will the next growth in the gross domestic product come from?
From the 1870s to 1960, Australia’s economy famously rode to prosperity ‘on the sheep’s back’. Then, as stock piles built up and new synthetics were invented, the economy had to move on. Interestingly, this coincided with a major influx of new migrants.
In the past ten years, the mining sector has contributed most substantially to the economy, largely from the four major resource exports of gas, coal, iron ore and copper. These however, have stalled somewhat over the past few months, with prices falling sharply in some instances. It seems that the mining boom is almost finished and, as with any structural changes, there will be a period of uncertainty.
Hence the reason for the government to take proactive steps to allow for more growth in the economy. And hence, the love-in between Tony’s tradies and Treasurer Joe Hockey. With interest rates at historical lows – and any changes to these stimulating the property rather than investment markets – the time has come to throw money at the situation. But herein lies the risk: while money-spend is good, there has also got to be a larger consumer base to spread the monies in. Monies and investments get a boost when there is strong activity, and one area where Australia falls short is the lack of people.
Just short of 24 million, Australia has an ageing population. According to the ABS, in a 20-year period between 1994 and 2014, the proportion of the population aged 65 years and over increased from 11.8% to 14.7%. This group is projected to increase more rapidly over the next decade; in fact, in the 12 months to 30 June 2014, the number of people aged 65 years and over increased by 118,700 people, representing a 3.6% increase.
To counter this effect and to sustain growth in the economy through active work place participation, the government needs to focus on increasing population intake. Yes, it is a political live wire for both sides of politics, but it is a necessary discussion to be had, to allow Australia to grow over the next 20-30 years. For the Liberals, it could be a natural addition to their desire to stimulate the economy. For Labor, it may be a chance to get their message out about social inclusiveness to new Australians and allow for more growth in the party. For both sides of politics, there is enough internal justification to push for greater reform in this area.
Perhaps the next boom will come from internal restructuring of the economy, as a greater population base will allow for more services to be consumed internally, rather than to be dependent on either what walks on four legs or what can be dug up from the ground.