Fears about an ageing Australia a ‘scurrilous exaggeration’: academic

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We’ve all heard the concerns: our ageing population will blow a hole in government coffers though additional Age Pension payments, overwhelm the healthcare and aged care systems, create homeownership issues for subsequent generations as more of us opt to age at home and create shortages in the workplace. A silver tsunami of doom and gloom.

But is it?

Sustainable Population Australia (SPA), an independent not-for-profit organisation, has released a new report, Silver tsunami or silver lining? Why we should not fear an ageing population, written by academic Dr Jane O’Sullivan.

She debunks a smorgasbord of claims that ageing Australians are a risk to the economy and argues that those with vested interests in population growth, including property developers and large retailers, have overstated ageing concerns in order to make high immigration seem essential.

She says Australia is reaching the final stages of a demographic transition – from when high birth rates were roughly matched by high mortality rates – to a new stable level. If population growth ends, the proportion of people aged 65 and over will settle at around 30 to 33 per cent, she says. At no point would people over 65 outnumber younger adults, even if the population was shrinking steadily.

Claims that Australia in 2050 would essentially be a “gigantic floating nursing home somewhere in the Pacific” are a “scurrilous exaggeration”.

On the health front, Dr O’Sullivan says the rise in the proportion of older citizens accounts for only a small fraction of the projected increase in health costs – the major increase being due to new, improved and additional services per person.

“Longevity has deferred, rather than extended the period in which the elderly need more healthcare and aged care.

“High levels of immigration can slow, but not prevent, population ageing. But the cost of extra infrastructure and education to sustain population growth is greater than the avoided costs of pensions, healthcare and aged care.”

She also takes aim at what she describes as the “dependency fallacy”, which assumes that those over 65 depend economically on people aged 15 to 64, and that there will not be enough people of working age to perform all the required work. Both assumptions are false and misleading, she says.

“Retirees will never outnumber younger adults. Demographic ageing will stop well before that occurs,” she says, adding that countries that have aged the most have no shortage of workers.

“Despite several countries already experiencing a declining proportion of working-age people for more than two decades, none has seen a related decline in workforce. Compared with Australia, Japan has almost twice the proportion of older citizens but roughly the same proportion of people who have jobs. With the same demand for workers but fewer working-age people competing for jobs, there is less unemployment and underemployment.

“Economic models that predict less economic activity as populations age are based on false assumptions.”

The Parliamentary Budget Office (PBO) estimates that ageing will cost the Federal Budget “around $36 billion by 2028–29”, but Dr O’Sullivan says that estimate is based on two false assumptions: one, that a smaller working-age proportion means less economic activity, and two, that health and aged care costs rise in proportion to the over-65 population.

“Even if the latter were true, the cost of extra infrastructure to support population growth outweighs the small extent to which that population growth could lessen pension, healthcare and aged-care burdens,” she says. “Most of this infrastructure cost falls to state and local governments, and private individuals, rather than to the federal government.”

She adds that the national interest should not be defined as merely achieving a balanced federal budget and says our retirement income system is costly due to “generous tax concessions for superannuation contributions which mostly benefit the richest Australians”.

Dr O’Sullivan says her report should ease the general tone of panic around discussions on our ageing population and replace it with one of optimism and potential.

Do you see our ageing population as a positive or a negative? Do you believe discussions have been hijacked by “vested interests”?

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Written by Janelle Ward


Total Comments: 22
  1. 0

    The global population has tripled since the 1970s. Birth rates will start to decrease post-pandemic. Australia’s lack of sustainable industries and dependence on the immigration industry will not allow for aging Australia for the next twenty years. Later there will be a problem due to post-pandemic birth rates being down.

  2. 0

    Hello, hello ? We, the rational thinking people, have realised for years that this sort of scare mongering reporting on how looking after aged people is going to blow Government coffers, is just one more lunatic and manic tactic by this scumbag Liberal Government and it’s paid monkey research institutes. Consistently, we see the headline and flick it away with a little finger.

  3. 0

    Not sure Iagree with the reasoning. On one hand they say there will be a need for more infrastructure then conveniently sheets that cist to the states and then claims no cost to Federal Government. Therefore no problem at all. And just where do they think the states will get the money to pay for increased costs from? Two places: increased state taxes and the Federal Government. Either way those in employment will ultimately be the funder if such largess.

  4. 0

    I have said repeatedly that our key economic problems is not the cost of the OAP, but rather the excessive tax concessions on superannuation. These concessions cost more than the total cost of the OAP, but 80% of the benefit goes to the richest 20% of the population. These people simply do not need taxpayer help to fund their retirement, so why are they being given these massive handouts when struggling retired can’t get a pension despite having very modest means?

    We could easily meet the costs the aging impose with two simple measures: (1) modify the superannuation tax concession to 15% discount on the members marginal tax rate instead of the current grossly unfair flat 15% tax rate that hands out too much to the wealthy; (2) remove the cruel assets test that provides a strong incentive for people to spend their savings to qualify for the pension, and replace it with an income/deemed-income test only, or, better still, abolish the means test completely and correct the flawed tax system to ensure the wealthy don’t keep pension income, but rather pay tax on all of their retirement earnings.

    It’s so simple – yet neither major party will entertain this solution because it would hurt them and their rich mates. Greed rules.

  5. 0

    The Morrison government is trully fcucking Australia over and it’s all based on our ignorant majority.

    There is nothing like self education when it comes to the world and what is really going on and of course having the benefit of personal involvement also helps..
    Let me just say two things.
    China pays a higher pension than Australia and it pays this pension in some cases from the age of 52 depending on who you work for and where.

    The second thing is our high cost of living is the wrecking ball .
    China ‘s cost of living is low so it makes our benefits look even sicker ,consider also that personal taxation in China is a lot lower than Australia so where do the Chinese get their money to pay these benefits ?

    let’s look at the USA where we have always been led to believe that they don’t get paid much as us and that is why you tip staff ,because it supplements their poor wages…what utter bullshit !!

    The cost of living in the USA is lower than Australia and as for those loooooooow wages do you know that an auto worker, working on the floor in a car plant looking after the robots ,occasionally sweeping the floor ,tightening a nut and bolt here and there gets paid the equivalent of $42.64.00 AU an hour ..yes thats $1705.60 on a 40 hour week.
    So my fellow Australians let’s just take our heads out of the politicians arses and realise that the truth is out there somewhere but you will not find it in Australia.

    • 0

      tobymyers how to you account for the high rate of poverty, even among people with a job, in the U.S.?

    • 0

      Tanker- The official USA poverty rate in 2019 was 10.5%, a decrease of 1.3 percentage points from 11.8% in 2018. This is the fifth consecutive annual decline in the national poverty rate. Since 2014, the poverty rate has fallen 4.3 percentage points, from 14.8% to 10.5%.

      From 2017 to 2018, the poverty rate decreased for non-Hispanic Whites; females; native-born people; people living in the Northeast, Midwest, and West; people living inside metropolitan statistical areas and principal cities; people without a disability; those with some college education; people in families; and people in female householder families.

      Between 2017 and 2018, people aged 25 and older without a high school diploma was the only examined group to experience an increase in their poverty rate. Among this group, the poverty rate increased 1.4 percentage points, to 25.9 percent, but the number in poverty was not statistically different from 2017.

      in Australia, there are more than 3 million people or 13.2% of the population living below the poverty line. That includes 739,000 children or more than 1 in 6. Many of those affected are living in deep poverty – on average $135 a week below the poverty line.

      According to ACOSS, children in Australia under the age of 15 have a poverty rate of 17.3%, and young people aged 15 to 24 have a rate of 13.9%. They suggest the high poverty rate is related to the high poverty rate among single adults (estimated 25%)

    • 0

      Mr Trump is not all bad after all then Arvo.

    • 0

      The Morrison Government cannot be blamed entirely for poverty in Australia. Many of the policies that increase poverty rates are down to Labor Governments and/or were/are supported by Labor. To blame one party is one-eyed and stupid, Tobymyers. If you understood economic policies, you would realise that Labor’s policies do far more harm to the economy than the LNP’s.

      Yes, Labor may hand out a little more to the poor, but they also overspend and their policies create more poor people – keeping the poor in their place and pushing the middle class down. Socialist policies are designed to maintain a strong class structure in which the rich are filthy rich and powerful and everyone else bows to them and begs for the crumbs under their table. LNP policies are designed to promote and reward endeavour. One of the reasons we have increasing poverty in Australia is that the LNP has moved further left, toward socialist thinking (eg. punishing retirees for having saved!)

      The combination of superannuation tax concessions and the pension means test is one policy that is driving higher rates of poverty in old age and redirecting taxpayer funds to the rich. Yet Labor wants to increase the problem rather than address it.

      Labor wanted to impoverish struggling self-funded retirees and struggling unemployed, stay-at-home parents etc. who had attempted to sure up their income with share investments, while continuing to hand millions to wealthy shareholders via tax refunds.

      These are classic examples of Labor’s contribution to increasing poverty levels.

      The LNP is more transparent in its approach to persecuting the poor and handing out to the rich. Sadly, Labor voters can’t see through the Labor Party’s deception.

    • 0

      If people understood economics they would know this country has not overspent its means. Both sides of politics make choices on how money is raised and how budgets are spent. Both sides of politics have presided over strong economic opportunity and ignored long term issues because expedient to do so. Partisanship is not helpful to the conversation and will do little to drive the government of the day to make better choices.

  6. 0

    in response to your second question ‘Do you believe discussions have been hijacked by “vested interests”’. Just about every discussion is hijacked by vested interests. Look at climate change, tax cuts, indigenous affairs, fracking, coalmining, nuclear energy, superannuation concessions, income and assets test and deeming, immigration, border control, using civilian security guards instead of ADF , etc etc. The list is almost endless, a better question is try to name an issue where ‘vested interests’ do not takeover or attempt a takeover, and it does not matter whether the ‘vested interest’ is for yea or nay? The trick is to see through the vested interests to try to find an equitable, sustainable and financially responsible solution.

  7. 0

    Could be worse – “pensioners in the United Kingdom suffer from the worst deal of any OECD country, receiving just 29% of a working wage when they retire. “


  8. 0

    Good to hear that all the problems cannot be blamed on the oldies.

    The full report can be viewed at:

    The report concludes:
    “An older, numerically stable or decreasing population offers many benefits for quality of life, environmental sustainability and economic stability. Depopulation dividends could make us richer, smarter, safer, fairer, greener, healthier and happier.”

    Win win!

  9. 0

    Stop trying to condition people to believe that franking credits are the root of all evil in the economy. They are not, many retired people who are not wealthy have their income supplemented by franking credits.
    The changes to the cap on super balances and treatment of contributions has greatly reduced the budget impact franking credits.
    Anyone with half a brain who understands finance can see this is the socialist way of pushing people out of SMSF’s into industry funds.
    I am being to see YourLife Choices as a rubbish socialist organisation aimed solely at trying to changing voter opinion.

    • 0

      Where is the reference to franking credits being the root of all evil in the economy, Kingy?

      I agree with you that Labor’s proposed franking credits policy was seriously bad and harmful, and that changes to the cap on super balances and treatment of contributions has greatly reduced the budget impact of franking credits. BUT the problem I saw referred to in the article was superannuation tax concessions – not franking credits. The problem with the tax concessions is the 15% flat tax rate. 80% of benefit of superannuation tax concessions goes to the richest 20%, and the total cost of these concessions is more than the total cost of the OAP. That’s where the problem lies. A wealthy person is saving 30% or more on every dollar contributed to super and every dollar earned in their super fund, and then paying no tax on super income in retirement. A poor person gets little or no tax benefit for their superannuation contributions, minimal benefit (if any) for their investments in super, and suffers punishment in retirement (loss of pension income) if they manage to accrue even a very modest superannuation balance.

      THAT is the problem in our economy, and addressing it properly would mean the aging would not be a burden in any way. The cost of supporting the aged would be highly affordable despite increasing numbers and reducing numbers of workers, because billions currently being directed to the wealthy could be redirected to those in need and to health and social services to support the aging.

      BTW. Labor’s franking credits policy actually impacted members of industry funds – despite claims to the contrary. The Fund managers came out, eventually, and declared that their members would be impacted unless they cheated the young by redirecting credits due to working members to benefit non-working members (which many do already, but which is unfair to workers).

    • 0

      Right or wrong I interrupted the statement “generous tax concessions for superannuation contributions which mostly benefit the richest Australians”, as being a subtle potshot at the SMSF and franking credits.
      I would be interested to know how rich is defined?
      Regarding the flat rate of 15%, if your earn over $250K, I think it is, the tax rate increases to 30%.
      The capping of super accounts will stop people loading up their accounts with after tax or tax free dollars so in time the system should reach a more equitable level.
      Changes to franking credits would impact everyone, the only different is that fund could offset costs so the impact would have been reduced. Consequently anyone with a SMSF with a very low cost base would be impacted the most.

    • 0

      You are right, Kingy, on both counts. Over time, things will equal out a bit. It is the current generation of retirees who are being thoroughly screwed over and abused, because most did not have the benefit of super and are living through a difficult economic period with interest rates at rock bottom and the superannuation tax concessions still grossly excessive.

      Labor’s franking credit policy was hideous and would really have been the final nail in the coffin for hundreds of thousands of retirees. It wasn’t widely known that industry fund members would also lose out if the fund did its accounting correctly. Many funds, however, do not account properly and just spread the total credits across the member base according to ownership percentages. That actually cheats working members. What then happens is that working members are deprived of their entitlement and it is given to retirees instead. Certainly, though, it would have made life very tough for anyone in an SMSF, and we know that Labor hates people who are able to be independent and self-motivated. They are the enemy of Labor, because socialist policy is all about suppression and equality – making everyone except the rich and powerful equally poor. Their franking credit policy would have helped that cause greatly, forcing hundreds of thousands of retirees to shed assets quickly and go on the pension, or making them live off savings until the savings ran out. That’s Labor’s idea of fairness, and sadly a lot of pensioners – who didn’t bother to save and are now sick with envy – agree with it.

      What I don’t understand is how anyone can think it’s ‘equitable’ or economically sensible to give fat tax refunds to rich people and yet to tax anyone who tries to avoid welfare by making modest investments in Australian companies – thus helping the company grow? Why should people who don’t need dividend income be the only ones allowed to benefit from tax concessions for investing in shares? That’s no equality. That’s elitism at its very worst!

    • 0

      Unfortunately in policy making it is very difficult to please all the people all the time and there will always be some with the means or nature to play the system.
      I believe the systems should be as simple as possible as this reduces compliance costs, makes the process transparent and easy to understand. Hopefully that will benefits those less well off and with limited financial understanding so they aren’t ripped off by unscrupulous advisors.
      That is one of the reasons why I think the cap is a great idea and it will weed out those with excess funds.
      Certainly Labour’s policies are designed to divide and conquer. If you have set yourself up through hard work and sensible financial decisions then you should be rewarded, not penalised and discriminated against.



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