Many developed countries deal with this issue. With an ageing population and fewer babies, economic activity may decline in the future. It will be a challenge to turn things around quickly when the effects are felt. Japan is an example of a nation facing this issue. Ironically, China will face this issue as a result of their old 'One Child' policy.

You are right that urban planning has not kept in step with a growing population. Australia certainly has the space. It may be possible to 'push back' the desert areas a little at a time with adequate irrigation (perhaps desalination) and reforestation.

So Australia may feel full, because the infrastructure failed to keep up with the needs of a growing population.