Treasury secretary Ken Henry says the impact of the federal government’s fiscal stimulus measures is fading, but demand from China and India will help bolster Australia’s economy.

Australia will have to undergo massive structural changes to service the massive commodity demands from India and China, Dr Henry told a business leaders’ forum in Brisbane on Thursday.

The rise of China and India is one of four key forces set to shape the Australian economy in the future, along with the ageing of the population, climate change and the information and communications technology revolution.

“Over the past year, the shockwaves from the global financial crisis have obscured the intensity and scale of these forces,” Dr Henry said.

“But as growth resumes, they will re-assert themselves, and, as they do, the Australian economy will undergo a set of structural changes more profound than anything in its history.”

China and India are in the early stages of building their living standards to the same levels as those of the developed world, a process that will fuel long-running demand for resources.

”(The) implications for global commodities demand has conferred on Australia a large boost to its real wealth, but, at the same time, set up a set of structural adjustments that will challenge policy makers for decades,” he said.

Those adjustments would possibly require a substantial increase in the country’s rate of investment.

Meanwhile, China’s economy charged ahead in the third quarter, fuelled by massive governmental stimulus spending that has helped the nation spearhead a recovery from the global recession.

The world’s third-largest economy expanded by 8.9 per cent from a year earlier, speeding up from 7.9 per cent growth in the year to June, China’s National Statistics Bureau said on Thursday.

Dr Henry said the federal government’s stimulus measures would not be the main drivers of growth over the medium to long term.

He said the peak impact of the fiscal stimulus occurred in the June quarter of 2009.

“From the first quarter of 2010, fiscal policy will begin detracting from economic growth as the fiscal stimulus measures decline,” he said.

Dr Henry also said Australia’s terms of trade had been negatively affected by the global downturn, but they remained well above their longer-run average.

“Indeed, based on the budget forecasts, in 2012/13 the terms of trade are expected to be around 35 per cent above their 50-year average prior to the recent terms-of-trade boom,” he said.

“To get the full benefit of the elevated terms of trade, the share of our factors of production allocated to the resource sector will need to increase.”

Dr Henry said Australia’s response to the downturn had been a model for the rest of the world.

“The Australian economy has just demonstrated to the rest of the world that, for some time now, it has quite possibly been the best governed, most flexible, most resilient of all industrialised economies,” he said.

Despite the nation’s success in pulling through the economic downturn, Dr Henry tipped an increase in unemployment.

“I don’t think there’s anyone in Australia today that does not think this time next year the unemployment rate will not be larger than it is today, notwithstanding the fiscal stimulus packages,” he said.

The jobless rate is currently at 5.7 per cent.