Recent times have seen some key demographic trends emerging in Australia. Simon Kuestenmacher, Co-Founder and Director of The Demographics Group, recently joined B.Invested founder Nathan Birch to discuss demographic shifts in Australia and where we are headed in 2023 and beyond. Here are some highlights of the meeting.
Age is all the rage
We often hear about Australia’s ageing population, but what does it actually mean? People are undoubtedly living longer thanks to modern medicine, preventative health and the availability of more knowledge. But the longer we live, the more money we will need access to post-retirement and the more looking after by younger people we are going to need too.
At the moment, the baby boomer generation is retiring in droves, which is taking a lot of people out of the workforce.
At the other end of the spectrum, there is a smaller cohort of people entering the workforce. And in between, there are more millennials taking time out of the workforce to have children, or take a break as part of the ‘great resignation’. The exodus of numbers from the workforce has created a skilled worker shortage, which Kuestenmacher believes could last for the next decade at least, until the coin flips again and there is a smaller cohort retiring than entering the workforce. The fallout in the near term is that there is going to be a serious shortage of aged care professionals looking after the large numbers of retirees who will require care in that period.
The care workforce is generally relatively low income, and staff can’t afford to live near the affluent areas where wealthy retirees need care. So most of those staff will find work closer to where they can afford to live, which presents a significant challenge for staffing in the other areas.
Kuestenmacher believes the housing and development system would need a revamp in order to begin to switch the outlook to more positive for the future of aged care. That would involve the clearing of development red tape and stopping NIMBYism so that affordable properties could be built to help house care staff.
As Sydney has become more expensive, its millennials have moved to the fringes looking to live in houses rather than apartments. During Covid, many more moved even further afield as they realised they could work remotely and didn’t have to pay a premium to live near the CBD. There was an influx to the regions because the main motivational driver was to live in a large family house.
Meanwhile, when new migrants come to Australia, they start off in Sydney, because Sydney is the one part of Australia that they know or have heard of.
They know of the Harbour Bridge, or the Opera House, so they head for the city. If they are skilled migrants or international students, they move to where their workplace or university is.
Kuestenmacher refers to these areas as launchpad suburbs; the inner city areas that had emptied out somewhat during Covid, but will now fill up as record migration numbers take hold over the next two years.
The issue there is that Australia’s migration policy is not linked to its housing policy. The government is importing more people to pay more tax and contribute to the GDP, but there aren’t enough places for them to live and this will put further upwards pressure on housing prices and rents.