Population mini-boom provides opportunities for SMEs

Australian businesses, particularly in the retail and construction industries, should take advantage of the country’s booming population by identifying key growth areas and offering services for immigrants setting up new homes, a new report states.

According to the latest PKF Business and Population Monitor, Australia’s growth rate was 1.9% in 2009, with 253,000 new residents – six times that of Britain, and double that of the United States.

“More people equal more customers. Part of the reason why Australians are spending 7% more at the shops than they were when this crisis first hit, is that there are now 2% more Australians than when the crisis hit,” the report states.

“While the rate of housing construction in Australia fell away as the current crisis hit home, the matching impact on builders and building suppliers in Australia was again much less than that seen elsewhere. In part that was because – unlike nations such as the United States – Australia has too few homes rather than too many homes.”

Matthew Field, director of enterprise advisers at PKF, says SMEs must investigate these trends and discover key areas of immigration, such as Sydney and the inner suburbs of Melbourne, where the population increased by an above-average 102,400 during the last 12 months.

“What SMEs need to do is recognise that popular growth impacts on their business. They need a smart business operation that will take advantage of the enormous opportunities to them and make smart decisions.”

“For example, the retail sector can make a big gain from these immigration trends, as these people will need to set up homes and buy products for the house. You will also have niche areas, particularly in inner cities, where some ethnic groups band together and businesses could find opportunities there. Identify where the spikes are happening and what goods and services you can provide.”

Field says unlike the resource-boom driven population growth seen in the 1990s, many industries are taking part in the growth with the biggest winners retailers and construction companies, as the demand for new housing struggles to keep up with the boom.

But other industries, particularly transport and education providers, should recognise opportunities for those moving and adopting new cultures and provide new services as a result.

“Any industry can take advantage of these trends. Astute businesses need to keep an eye on this, because the way immigration effects demographics will have a big impact on how they structure employment, where to source staff, etc, and that is a significant impact.”

But the report also warns that as the number of skilled migrants fall, SMEs in affected areas must pay attention to ways they can generate new business.

“The Federal Government has trimmed the skilled migration intake twice since the GFC hit. It will be most important for businesses in South Australia, given that seven out of every eight people who are added to South Australia’s population every year are migrants.”

“The implications of slowing migration will be important for New South Wales (three out of every four), Victoria (two out of every three) and Western Australia (three out of every five) as well. The news is less troublesome for Queensland (half of the population increase is attributable to migrants) and Tasmania (where it is a third).”

Field also says one of the key findings of the report is that Australians’ life expectancy rates are growing, which employers should keep in mind.

“We’re seeing the population retire later, and work longer. The effect of the downturn on retirement incomes means people retire later, and they are hanging around in the workforce. They can benefit from having an aged workforce hanging around a lot longer.”

“The overall message from this population growth is that it is good for companies. More population means more people, more spending, more jobs and more opportunities, and a lot more business activities than we otherwise would have had.”

PKF’s winners and losers, state by state:

New South Wales:

• Population growth rate highest since 1990
• Retail sales now growing faster than five year average
• Small business confidence well below national average
• Housing affordability worst in nation
• Three out of four arrivals are international migrants

Victoria:

• Retail sales highest in nation and outstrip longer-term average growth
• Population growth well up on five year average but natural growth is down
• Housing construction growth keeping pace with population growth
• Two out of three arrivals are international migrants

Queensland:

• Population and labour force growth still relatively strong
• Early rebound in China means slowdown has been relatively modest
• Retail sales outpacing average growth
• Falls in job vacancies are particularly marked
• Interstate migration waning as mining and tourism jobs are lost

Western Australia:

• Highest population growth in Australia – close to 40-year highs
• Highest wage growth in the nation
• Highest levels of business investment
• Retail spending growth weakest in nation
• Pick-up in interstate migration, possibly at Queensland’s expense

South Australia:

• Seven out of eight arrivals are international migrants – most at risk from Federal cutbacks to international migration intake
• Business investment particularly strong
• Export earnings shrinking

Tasmania:

• Lowest wages in nation
• Relatively cushioned during economic slowdown
• Population growth up from five-year average
• High levels of natural increase and interstate migration

Australian Capital Territory:

• Highest wage levels in Australia
• Housing affordability best in nation
• Nearly one out of two arrivals are international migrants – a surprising proportion, given most government jobs require Australian citizenship
• Participation rates particularly high among women

Northern Territory:

• Population growth is strong but declining due to drop in migrant numbers
• Participation rates are strongest in nation
• Small business confidence well above national average
• High levels of business investment
• High levels of retail, housing investment and new build growth