23 October 2009
Australian economy ‘golden age' will stretch to 2050
The Australian Treasury chief Ken Henry has outlined a golden age for the Australian economy lasting to 2050 and beyond, thanks to rapid population growth, immigration to Australia and demand for resources.
Dr Henry said years ahead would impose challenges on the government to but "with the right decisions, one can envisage a period of unprecedented prosperity" and that Australia would comfortably manage the big and sustained current account deficits that would be caused by the investment boom.
Dr Henry told a business forum at Queensland University of Technology recently that the rapid growth in the population, caused by much higher Australian migration rate and a rise in fertility, had transformed thinking about the impact of population ageing on the economy.
The Australian economy has befitted from economic ties with China, the world's third-largest economy that is due to pass Japan to grab second spot next year.
"While the global financial crisis has taken some of the heat out of our export prices, we should get used to the idea that we could have structurally higher terms of trade for some time, possibly for several decades," Dr Henry said.
The Royal Bank of Scotland China economist Ben Simpfendorfer said: "China's investment-fuelled recovery has propped up Australia's economy".
Australia would not have been able to manage the current investment boom and the challenges of population growth and climate change with the inflexible economy of the 1960s, 1970s and 1980s, Dr Henry said.
"But these forces are hitting now, at a time when we have implemented 25 years of economic reforms; when the Australian economy has just demonstrated to the rest of the world that, for some time now, it has quite possibly been the best governed, most flexible, most resilient of all industrialised economies; when there is unprecedented global interest in us; and when there is, domestically, a strong appetite for further policy change," he said