I've had this sweater for well over a decade, and it was old then - my host family in Australia gave it to me because they were giving it away. I liked the color and the fact that it was 100% Australian wool, but it was shapeless.
I realized the knitted band at the hip would make a good waistband. First I took it in under the arms and the upper part of the sides. Then I cut off the bottom band, cut the sweater across the middle, and sewed the band in. I finished off the bottom edge with a piece of velvet-like fabric. At first I made a ruffle but that looked awful so I just did some bias strips and added some to the edge of the collar to tie it together.