Population boom and China could set Australia up for “unprecedented prosperity”: Ken Henry

Australia’s population growth will create several business opportunities but will wreak havoc on the property industry unless the supply of new housing can keep up with demand, an industry expert has said.

The comments come in response to figures released by treasury secretary Ken Henry yesterday, which reveal Australia’s population is set to reach 35 million people by 2050.

In a speech at the Brisbane University of Technology, Henry said Australia’s population will grow as the mining boom, fuelled by demand from China and India, will continue to bring in immigrant workers. Handled correctly, he said, this could provide a “period of unprecedented prosperity”.

Henry pointed to growth in several Asian countries, which he said will give a boost to the mining boom that will see it last for several more decades into 2050.

As a result, the Australian population will grow to over 35 million people by 2050, with Sydney, Melbourne and Brisbane to record the most growth.

While Sydney’s and Melbourne’s populations are set to grow by 54% and 74% respectively leading to populations of over seven million, Brisbane’s will grow by a massive 106% to four million.

Henry emphasised the population growth will mean business opportunities for the exporting, manufacturing, natural resource and technology sectors, with the financial industry also set to grow.

“With the right decisions one can envisage a period of unprecedented prosperity,” he said, saying cities will cope with the growth by innovating and creating new services. But he also warned the country will struggle to cope if new infrastructure is not developed.

He warned greater investment is needed to supply new infrastructure, and said a major problem will be the need for new accommodation to house the growing population.

“With a population of 22 million, we haven’t managed to find accommodation with the environment,” he said. “Our record has been poor, and in my view, we are not well placed to deal effectively with the environmental challenges posed by a population of 35 million.”

“With less judicious decision… we could experience an extended period of extreme volatility, with no growth path proving sustainable.”

Housing Industry of Australia chief economist Harley Dale says while population growth will deliver new opportunities for business, housing prices will continue to grow if supply does not meet demand.

“The impact this growth will have will very much demand on the success, or lack thereof, we have in boosting supply to meet demand. The longer we fail to create new dwelling stock as we need to each year, the greater the risk that this increased population will cause us a number of more physical and social infrastructure problems.”

“At the end of the day, everybody needs somewhere to live. A fundamental social tenant is putting roofs over people’s heads. If we’re not keeping up with that rate, then that is a fundamental problem… and will affect everything else.”