Academic journal article Australian Journal of Social Issues

Thank God You're Here: The Coming Generation and Their Role in Future-Proofing Australia from the Challenges of Population Ageing

Academic journal article Australian Journal of Social Issues

Thank God You're Here: The Coming Generation and Their Role in Future-Proofing Australia from the Challenges of Population Ageing

Article excerpt

Introduction

In a relatively short period of time, Australia has transformed from a comparatively youthful population to an accelerating, ageing population (Australian Bureau of Statistics 2008; 2011a; Australian Government 2010) resulting in a growing level of government dependence. Population ageing is the final stage of the demographic transition whereby both fertility and mortality rates shift from high to low as countries become increasingly industrialised (Notestein 1950). These evolving changes, however, have been masked by the economic prosperity Australia has experienced in recent decades and by what demographers describe as the 'demographic dividend'. The demographic dividend occurs when there is a maximum proportion of the population in the working ages and a minimum proportion of the population who are notionally 'dependent' (Eastwood & Lipton 2012; Jackson & Felmingham 2003). Thus, the demographic dividend has the potential to enable greater investment and saving in the economy, contributing to increasing rates of economic growth as well as significantly contributing to a greater standard of living. The dividend, however, is only realised if the increasing supply of labour is effectively employed in the economy (Jackson & Felmingham 2003; Lee & Mason 2006). Industrialised societies such as Australia, led by the social and economic changes of the post-war baby boom, have been transformed into wealthy, healthy, educated and prosperous societies in part because of the benefits of the demographic dividend. Such prosperity is not endless, and as the Baby Boomers enter retirement age the advantages of the demographic dividend will begin to reverse, and the implications of population ageing will start to unfold.

In the absence of a specific population policy, the government's policy direction to address the challenges presented by an ageing population are derived from fiscal and demographic projections set out in the periodic Intergenerational Reports (IGR) (Commonwealth of Australia 2002; 2007; 2010). Since the release of the first IGR in 2002, there have been two subsequent reports released in 2007 and 2010, which have been influential in driving the national conversation around population change, particularly the 2010 IGR report. These reports are intended both to inform and to justify future policy development with a specific economic and fiscal focus. The overall objective of the IGR is to explain how the Government will balance future federal expenditures and revenues over a forty-year time span whilst taking demographic influences into consideration. It contains two key messages: first, there is a growing fiscal burden caused by Australia's ageing population, which is exacerbated as the Baby Boomer generation enters retirement age; and second, the report highlights the fiscal requirement of current and future generations to increase levels of productivity and labour force participation. By 2050, the 2010 IGR projects that for every person aged 65 years and over there will only be 2.8 people at 'working age' (15-64). This is almost half the 2010 figure of 5.0 workforce-aged persons for every individual over 65 years, and approaching one-third of the 7.5 ratio in 1970 (Australian Government 2010, viii). Spending on health and ageing as a proportion of gross domestic product (GDP) is also projected to increase from 22 per cent in the years 2015-16 to 27 per cent of GDP in the years 2049-50. To minimise the fiscal and economic impact of population ageing, the IGR asserts that greater labour force participation and increased productivity will be critical, assisted by relatively high levels of skilled migration. Despite Australia's high labour force participation compared with other OECD nations, the IGR suggests there is scope for further improvements, particularly amongst Australia's Baby Boomer population (Commonwealth of Australia 2010, xiv). While there have been historic increases in age-specific labour force participation rates, largely driven by increases in female labour force participation, the reality of further increases in participation amongst the Baby Boomers is an unlikely prospect (Australian Bureau of Statistics 2011b; Chomik & Piggott 2012; McDonald 2011; Walter, Jackson & Felmingham 2008; Warren 2008). …

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