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


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