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.
In 2009 banks’ gross income will continue to contract, after an estimated fall of about 5 per cent in 2008, despite the still substantial growth on the order of 8 per cent in net interest income. As in the past it is likely that the decline in economic activity and interest rates will have a negative impact on interest income.