Population issues in economic planning: uses of demography in business.

Abstract

Economists use demography in planning and forecasting business needs. As a bank Westpac uses the information for its own internal business purposes and to assess general economic trends. Externally the bank is expected by government and the public to have some authoritative views on the state of the economy. To form these views it is necessary to understand a very wide array of statistical indicators including demographic statistics. The main population issues of concern are: size location and changes in the population of Australia as a whole and by State; labor force (including projections); age profile of Australia and by State. The major source for this information is the Australian Bureau of Statistics. More detailed patterns often emerge particularly for individual States from papers prepared by others. This information is used by Westpac in 3 main planning areas and 2 broad assessment areas: planning -- location of bank branches products/services offered and marketing of products/services; and assessment -- economic outlook (labor force housing needs demand for funds) and specific industries. Recently Westpac restructured its organization to cater to the changing needs of customers and the changing geographic patterns of population spread. The bank now has 4 major groups: retail financial services for personal and commercial markets; corporate and international; management services; and group planning (includes economic department). To offer products that fit the market the bank needs to know the characteristics of the population by age spending patterns lifestyle preferences and investment needs. Within Australia a relatively new service offered by most financial institutions which is directly related to population issues is a counseling service for retirees. Westpac has a product called Club 55 which is a package of services designed for persons who have retired or are planning to retire. Another clearly perceived community need is for superannuation schemes. The marketing of financial services clearly is in evidence. With deregulation of the financial system the pace of competition for the household dollar and corporate banking business has intensified in the last year or so and the barrage of advertising is 1 result. Such advertising is carefully aimed at potential customers grouped by age location lifestyle and spending patterns. Marketing is also conducted indirectly through industry groups and at various trade seminars. Turning to the broader aspects of economic planning the same kinds of population indicators are applied to macroeconomic issues. In particular assessments of labor force trends housing needs and demand for funds from the public and private sectors will affect financial policy of business and monetary and fiscal policy of governments. The most commonly used indicators are: population size/characteristics; location; population growth; labor force; labor force mobility including geographic mobility; migration -- both shortterm and longterm. The aging of the population holds many implications for future government economic policy. This trend holds obvious implications for government spending and the taxation burden on the work force. Australia will face significantly higher welfare expenditures for which funding will need to be obtained from a relatively stable working age population -- about 65% of total population for the next 20 years.