. but it does underline the importance of adding to supply, not just to demand, over the medium term, and of maximising the productivity of the factors of production that we have, if we are to have the sort of growth that genuinely brings prosperity. second, and following on the theme of potential supply, others have noted that the rate of population growth at present is the highest since the 1960s. on one hand, this may help alleviate capacity constraints, insofar as certain types of labour are concerned. on the other hand, immigrants need to house themselves and need access to various goods and services as well. that is, they add to demand as well as to supply. it follows that the demand for additional dwellings, among other things, is likely to remain strong. corresponding effects will flow on to urban infrastructure requirements and so on. so the question of whether enough is being done to make the supply side of the housing sector more responsive to these demands will remain on the agenda. adequate financial resources will of course also be needed. in that regard, the current issue is not the cost of borrowing for end buyers, which remains low, but the availability and terms of credit for developers. perceptions by lenders of the riskiness of development in some cases are probably overdone just at the moment, given the strength of the underlying fundamentals on the demand side for accommodation. that will probably not be a permanent problem though ; the more persistent difficulties look like they may be in the areas of land supply, zoning and approval. third, the likely build - up in resources sector investment over the years ahead carries significant implications for the medium - term performance and structure of the economy. even if a number of the proposed projects do not go ahead, the ratio of mining investment to gdp for australia, which is already very high, will probably go higher still over the next several years. a sizeable share of the physical input will be sourced from abroad ( through imported equipment ) but the domestic spend will still be significant. so, other things equal, the investments will be expansionary for the economy. the financial capital to fund this build - up will mostly come from abroad. that is to say, absent some offsetting changes elsewhere, australia ’ s current account deficit could be considerably larger for some years than the 4 to 5 per cent of gdp we have seen on average for the past generation, which itself was a good deal bigger than seen in the generation before that. now of course the current account

government does not own, and has not had to give direct support to, any financial institution. australia, therefore, will be relatively free of the difficult governance and exit strategy challenges that such support is raising in some countries. public finances remain in good shape, with a medium - term path for the budget back towards balance, and without the large debt burdens that will inevitably narrow the options available to governments in other countries. sensible policy frameworks – both macroeconomic and microeconomic – remain in place, and they have worked. the financial regulatory system is strong and tested. we remain open for trade and investment, with an exposure to asia, which still has the most dynamic growth potential in the world over the next several decades. these advantages are already paying dividends. properly exploited, they will pay many more. but there is no such thing as effortless, or riskless, prosperity. there is still a business cycle, and we do well to remember that even if we have been spared the worst of the recent downturn. we will need to continue investing in all the things that helped us get through the recent episode. and we will need to accept and manage various changes that will probably confront us over the years ahead. the road to prosperity will have some bumps, twists and turns. but it is the road to the right destination.