Michael Marquette of Marquette Turner writes in his Special Report: The biggest post – war crisis that Australia has faced is almost upon us. We have all heard about the aging population and the need for Superannuation to lessen the burden on taxpayers for pensions and other welfare payments. The terrifying statistic that very few people know is that close to 40% of the Australian workforce will reach retirement age in the next 3-5 years.
Unemployment levels in Australia are already extremely low so where are we going to find the people necessary to fill the positions vacated by our retirees? The Australian birth rate is still not even close to the level required to keep up with the pace that baby boomers will leave the workforce.
When put into context the ramifications are enormous. From a skills perspective Australia is struggling to keep up with current requirements and we are already looking abroad for those with the skills needed to keep our economy moving. The Sydney real estate market is very reliant on immigration to maintain demand, thus prices – but where does this leave the rest of the country? The fact is that most immigrants to Australia choose to settle in or around Sydney and as more and more skilled workers are required from overseas the general trend toward increased housing demand in Sydney should continue. Two areas of concern when looking at the effect of the massive reduction of the size of the workforce in this country:
1) How much money will be taken out of Managed Funds for Superannuation payments?
2) Have we adequately planned for infrastructure like rail and roads to attract migrants to areas outside of Sydney?
A massive reduction in the amount held in Managed Funds could have an enormous impact on the stock market as money is withdrawn by the institutional investors. This could have an enormous impact on the capacity of companies already struggling with the skills shortage to continue growing domestically. We may find that Australian companies look at basing themselves abroad to take advantage of lower costs, increased market size and increased labour force.
I have mentioned in previous Marquette Turner e-magazines that Regional cities like Newcastle and Wollongong have been largely ignored. Neither have truly International Airports, nor do they have “Bullet Trains” to connect them to Sydney. How attractive will these cities be to skilled migrants or Australian Companies looking to invest? The simple answer to this is that Regional Australia will suffer greatly due to the neglect of successive Governments.
With the credit crunch making it harder for people to obtain credit to purchase property, retirees reducing the amount in managed funds and the total size of the workforce the outlook is extremely worrying for Australia. How to maintain demand for property and thus maintain pricing in Regional areas is just one of the questions yet to answered. Local Government can only do so much – we need a unified strategy from the Federal and State Governments and we need it now before it’s too late.