We’ve all wondered what the future will look like, but how will we get there? One demographics expert says the way different generations live gives us a clear indication of where Australia is headed in the next decade, offering benefits and challenges for the water sector and the world.
The Demographics Group provides specialist advice on demographic, consumer and social trends for business, and co-founder and Director Simon Kuestenmacher told Ozwater’20 delegates that one of the major shifts facing the sector is generational.
“With 25 million people on the continent consuming water, it’s important to be able to develop a really good and precise view of the future when we plan for resource management,” he said.
“The Australian Bureau of Statistics gave us a population projection for 2030, from 2018. Every year of age is expected to see growth in Australia. That is extraordinary. There are no other developed industrialised economies with such massive growth across all ages of the life cycle.
“Whatever business you are in, you are most likely going to experience more demand. That’s good news for most businesses, but it creates a lot of pressure for resource management.”
While the water sector has been clued in on population increases as a key challenge for some time now, Kuestenmacher said there will likely be some unexpected bumps in the road resulting from the COVID-19 pandemic; shocks that will reach further than most people yet know.
“With COVID-19 we must adjust these population forecasts. We cannot pretend that the pandemic will not have an impact on the Australian population,” he said.
“We know that in 2020 we are not going to see net positive migration to Australia. We actually saw an exodus of temporary skilled workers. We have seen an exodus of up to about half a million people.
“Birth rates after the pandemic are actually forecast to go down. People are uncertain of the economic future that they hold, so we do need to adjust the birth rate for a couple of years.
“Australians are doing an extraordinary job in managing COVID-19, so we don’t need to adjust the death rate, which is excellent. [But] we need to take into account a lower than usual migration intake for a few years.”
Kuestenmacher said all these assumptions combined allowed the Demographics Group to adjust the population forecast for 2030, and the results offer water utilities a clear indication of where and how to focus current efforts.
“For the water sector, all of this essentially means that you have a bit of a breather. We are expecting about one million less people by 2030 now than we were expecting half a year ago, before the pandemic”, he said.
“That’s potentially a good thing. It’s time to play catch up a little bit with infrastructure that needs to be put in place.
“We live in the most highly concentrated country on the planet. Two thirds of the population live in our five largest cities. Get those five cities right, and you’ve got most of Australia right, from a business perspective.”
What’s also relevant to the water sector is how jobs will be created and managed, and how consumers will be charged for this essential resource, Kuestenmacher said.
“The majority of the new jobs we created in Australia since the last census required university level education … That means we couldn’t have possibly filled all the jobs in Australia with all the people currently living [here],” he said.
“In Australia, we still think of ourselves as a workforce that looks like a bell curve, with some rich, some poor, but essentially all working class. That’s not true anymore. The workforce has hollowed out. We have more rich folks, more poor folks, and a stagnating middle class.”
This ‘hollowed out’ Australia will create a pricing challenge for utilities, as customers have growing and competing needs, expectations and demands.
“It’s very difficult to maintain social cohesion in a country like this. There are winners and losers and nothing in between. Contemporary examples of this playing out right now exist in the US, Brazil and South Africa,” Kuestenmacher said.
“What is a fair way to charge for water? In reality, there are more people struggling to pay, and more and more people who expect more from their service and are willing to pay. This is a big challenge facing the water sector.”
Despite the growing pains expected, it’s not all bad news; Kuestenmacher said the changing generational demography of Australia’s cities will provide some key opportunities for the water sector.
“Baby boomers, those born from 1946 to 1963, will all be of retirement age by 2030. The influence of baby boomers on the workforce, and the political directions of our country, will be on the way out by the 2030s. The hierarchical mindset of baby boomers is on the way out, too,” he said.
“Gen X, born ‘64 to ‘81, are a small generation sandwiched between big ones … But Gen X values will be driving Australian businesses in 2030. This is the generation that invented work-life balance and earmarked gender equality issues in the workplace.”
The biggest generational influence set to impact the water sector will undoubtedly come from millennials, Kuestenmacher said, as they are a much larger cohort thanks to a birth-rate spike in the ‘80s.
“Gen Y, the millennial generation, born ‘82 to ‘99, are a generation obsessed with the environment and obsessed with purpose. By 2030, they will make up half of the Australian workforce. We really do need to get this generation right,” he said.
“Gen Ys are obsessed with purpose because they lack other ways of finding meaning. They are the most atheistic generation. Many people in this generation also haven’t yet established a family to attach the meaning of life to, so they over emphasise the importance of work.
“For millennials, particularly young people before they have a family, the job becomes an important part of extracting meaning from life. It’s important for businesses to take this seriously.”
Also, despite being a generation that votes for environmental parties, Kuestenmacher said millennials lives’ are the furthest removed from the environment; it’s a generation that favours inner city living. This is quite a paradox, but is a consideration that should be addressed.
“You need to get your messaging right when you talk to millennials,” he said.
Kuestenmacher said it will also be important for water businesses to be careful about how they communicate their value to Gen Z, due to this generation’s unique, global outlook.
“Gen Z, that’s the next generation, the Greta Thunberg generation. This is a very practical generation, and the first that grew up with constant access to smartphones. The world is constantly at their fingertips,” he said.
“If you want to reach this generation, you need to link whatever it is you are talking about to global issues. Show the direct link between local action and global contexts. That’s the way to reach Gen Z.”