a chance on a new product, a new investment or a new worker. in the case of households, according to surveys sentiment is neither particularly weak nor particularly strong at present. it is reasonable to expect that households will play a role in driving demand over the years ahead – and in due course that will help to lift business confidence. but in thinking about that role we need to understand the ways in which household behaviour has changed. the credit boom the title of this talk, “ economic policy after the booms ”, uses the plural quite deliberately. there were two “ booms ”. before the mining boom, or at least before its full flowering from about the middle of last decade, there was an earlier boom. it was global, but australians took part in it. i am referring of course to a boom in credit, which saw a very significant increase in borrowing by households in particular, and a rise in asset values, especially dwellings. this was associated with a lengthy period of unusually strong growth in consumption. bis central bankers ’ speeches this boom did not end in australia as painfully as it did in some other places, but end it did. consider two charts i showed at the anika foundation lunch two years ago in july 2011. these have been updated, and use revised data. 5 graph 1 graph 2 the level of household financial assets from june 2002 has been revised almost 15 per cent higher on average, predominantly reflecting upward revisions to estimates of households'holdings of unlisted equity. as a result, the debt - to - assets ratio has been revised lower by 0. 8 percentage points on average. trend growth in household assets was also revised slightly lower. in contrast, growth in household disposable income was revised slightly higher, leading to a small upward revision in the saving ratio in the 2000s. bis central bankers ’ speeches it is even clearer now than it was two years ago that the behaviour of households has changed in a very important way. real consumption per person had risen faster than real income per person for 30 years, from the mid 1970s until about 2005. ( only the last third of that period is shown here. ) that changed some years ago now, and after a noticeable fall in consumption in late 2008 and early 2009, spending and income have grown roughly on parallel tracks. since 2009, trend growth in per capita consumption has been about 1. 4 per cent per annum, half what it had been from 1995 to 2005. one contributing factor is seen in the second of the

it is useful to put this change in an international context. to do this, the rba's staff has examined demographic trends and projections over the next quarter of a century for 37 advanced economies using un data. [ 2 ] this next graph shows four key demographic variables for australia and the range of outcomes across these countries ( graph 7 ). australia stands out in a number of dimensions : first, our median age of 37 makes australia one of the youngest countries among the advanced economies. we are also ageing more slowly than most other countries, which means that we are projected to stay relatively young. this is different from the earlier projections, under which we were expected to move to the middle of the pack. second, we have a higher fertility rate than most advanced economies. australians tend to have larger families than those in many other countries. third, our average life expectancy is at the higher end of the range, and is expected to continue to rise. fourth, the old - age dependency ratio is rising, but less quickly than in most other countries. our relative youth and higher fertility rates mean that the dependency ratio is expected to remain lower than elsewhere over the next generation. beyond that, on current projections, it is then expected to increase quite significantly. https : / / www. rba. gov. au / speeches / 2018 / sp - gov - 2018 - 08 - 08. html 7 / 18 8 / 8 / 2018 demographic change and recent monetary policy | speeches | rba graph 7 so, in summary, we are better placed than many other countries. the movement to australia of large numbers of young people over the past decade has changed our demographic profile in a positive way. this has implications for future economic growth and the pressures on government budgets. this immigration has also boosted the nation's human capital. ageing and labour force participation i would now like to turn to some of the implications for labour force participation of our changing demographics. while we remain a relatively young country, we are still ageing. even with the large increase in relatively young migrants, the share of the australian population aged 15 – 64 is declining, after increasing for many years ( graph 8 ). this decline is projected to continue for at least a generation, reflecting a combination of the ongoing transition of baby boomers into retirement ages, lower fertility rates and increased life expectancy. by 2040, around 20 per cent of the population is expected to be over 65, compared with 15 per cent currently. https