AUSTRALIANS must prepare for a fundamental shift in the way we live because the country cannot afford to cope with 36 million people.
Economic modelling produced for the Herald by PricewaterhouseCoopers shows the task of building the new roads, houses, schools, supermarkets and recreation facilities needed by 2050 will be so great that the nation's current pool of savings will struggle to cover it, even with the help of foreign capital.
As a consequence Australians will have to make major lifestyle changes.
These range from dramatic increases in housing density and an end to our reliance on the car, to the creation of self-sustaining urban communities capable of generating their own energy to avoid the need for new power stations.
Planning experts say we must also consider whether population increases will be accommodated in larger regional centres rather than allowing cities such as Sydney to grow.
''The bottom line is 'prepare for change','' the PWC economics and policy team leader, Jeremy Thorpe, said.
''The task of providing this infrastructure is a very significant one and at the moment we don't have the savings to cover it. Governments have to make a decision about what trade-offs they want to make to maintain a standard of living.''
''The task of providing this infrastructure is a very significant one and at the moment we don't have the savings to cover it. Governments have to make a decision about what trade-offs they want to make to maintain a standard of living.''
Using figures from the government's intergenerational report, Mr Thorpe and his colleagues have calculated Australia will need 6.9 million more homes to cope with a population of 36 million by 2050. This represents 82 per cent of our existing housing stock.
Should Australians continue to rely on the car, the country will need 173,348 kilometres of new roads - a 51 per cent rise equivalent to the entire road network of Thailand.
We would need 3254 new schools, 1370 new supermarkets and 1370 cinema screens.
In dollar terms, the amount spent by both government and the private sector on infrastructure would need to increase by approximately $2.5 billion every year until 2050.
In dollar terms, the amount spent by both government and the private sector on infrastructure would need to increase by approximately $2.5 billion every year until 2050.
The PWC economists say that while the government talks about increasing productivity, it makes no mention of the crucial role the national pool of savings plays in funding infrastructure.
''The banks rely quite heavily on the savings of individual people to provide capital for investment in infrastructure. Because as a nation our savings are currently quite low, there is a real risk that there will be a significant shortage of credit.''
As a result, both the private sector and government have come to rely heavily on foreign capital. But the global credit crunch has dramatically lifted the costs of overseas borrowing, requiring government and companies to take on extra debt.
The ageing population exacerbates this situation as older people contribute less to the savings pool, and tend to draw more from government coffers in the form of social security and healthcare.
But a spokesman for the Treasurer, Wayne Swan, dismissed the analysis.
''Australia's reputation as one of the most attractive investment destinations in the world allows it to access large savings pools of foreign investors … to fund high levels of investment in our own economy,'' he said.
''We are able to be a net importer of capital because foreign investors are confident we use their capital so well.''
