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4102.0 - Australian Social Trends, 1999  
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Contents >> Population >> Population Projections: Our ageing population

Population Projections: Our ageing population

As the youngest of the baby-boom generation turns 65 in 2031, the median age of the population is projected to reach 42-43 years, and the proportion of the population aged 65 and over is projected to reach between 21% and 22%.

Population ageing is a major focus of social and economic planners and policy makers in Australia, as it is throughout the more developed regions of the world. Of particular concern is the anticipated increase in costs associated with the care and income support of a rapidly growing aged population, and how much Australians will be willing and/or able to pay. Much of recent government policy has focused on cost reduction as well as shifting costs and responsibility from the public sector to individuals, families, community groups and private business. For example, recent reforms to the system of retirement income support include: mandatory occupational superannuation for all workers (Superannuation Guarantee Charge) introduced in 1992; tightening of the means test on the age pension; and the introduction, in July 1995, of a progressive increase in the pension age for women from 60 to 65 by 2012.


Population Projections

This review makes use of the latest series of ABS population projections (1997 to 2051).1 The base population for the projections is the estimated resident population at 30 June 1997. The projections are estimates of future populations based on a combination of assumptions about future levels of births, deaths and migration. As such, they provide an indication of what could reasonably happen to Australia's population over the next 50 years. Population projections are not predictions or forecasts.

Three main series (high, medium and low population growth) have been produced which cover three sets of possible future outcomes. For the sake of simplicity, most of the analysis in this review is based on the medium series (Series II).

Series II is based on the following assumptions:
  • total fertility rate will continue to fall during the next decade - to 1.75 births per woman by 2006 - then remain constant at 1.75 until 2051;
  • age-specific death rates will continue to decline, resulting in life expectancy at birth increasing by 5-7 years by 2051; and
  • net overseas migration of 78,000 in 1998 then 70,000 per year from 1999 to 2051.

AGE COMPOSITION OF THE POPULATION, ESTIMATES AND PROJECTIONS(a)

1946
1961
1971
1997
2001
2011
2031
2051
%
%
%
%
%
%
%
%

Proportion aged
    Under 15
24.5
30.3
28.7
21.2
20.3
18.3
16.5
15.6
    15-64
67.6
61.2
63.0
66.7
67.3
67.7
62.2
60.2
    65 and over
8.0
8.5
8.3
12.1
12.4
14.0
21.3
24.2
Baby boom age cohort(b)
. .
30.3
36.5
30.0
29.0
26.3
18.7
4.5

years
years
years
years
years
years
years
years
Median age
30.8
29.3
27.5
34.3
35.5
38.3
42.2
44.1

million
million
million
million
million
million
million
million
Total population
7.5
10.5
13.1
18.5
19.3
21.0
23.7
24.9

(a) Data for 2001 to 2051 are projections (Series II).
(b) Australian residents who were born in Australia or overseas during the years 1946 to 1965.

Source: Demography, 1961; Population by Age and Sex, Australian States and Territories, June 1992 to June 1997 (cat. no. 3201.0); Population Projections, Australia, 1997 to 2051 (cat. no. 3222.0).


Australia's population has aged steadily throughout this century, apart from a temporary reversal due to the post-war baby boom. During the 25 years after World War II the median age declined, reaching a low of 27.5 years in 1971 as the first of the baby boomers began to have children of their own. Since then it has risen to 34.3 years in 1997 and is projected to reach between 42 and 43 years in 2031 (as the youngest baby boomers turn 65). The proportion of the population aged 65 years or older (12% in 1997) is projected to increase to between 21% and 22% by 2031.

AGE DISTRIBUTION OF THE POPULATION


1961
2001(a)
2031(a)
(a) Projections (Series II).


Source: Demography, 1961; Population Projections, 1997 to 2051 (cat. no. 3222.0).



Why is the population ageing?
Structural ageing in Australia (i.e. the declining proportion of the population to be found in younger age groups and the consequent increase in the proportion found in older age groups)2 is mainly due to the sustained decline in fertility which followed the post-war baby boom. In 1961, at the height of the baby boom, the total fertility rate peaked at 3.6 babies per woman. By the late 1970s, it had fallen to around half that level and has continued to decline (at a much slower rate) throughout the eighties and nineties.4 Based on assumptions of continued low fertility, and continued small declines in mortality, Australia's population is projected to continue ageing into the next half century.


Baby Boom

The period from the end of World War II until around the mid 1960's, has come to be known as the baby boom in Australia and in several other countries such as New Zealand, Canada and the United States. After the war, these were all relatively prosperous, industrially advanced countries with rapidly expanding economies, rising living standards and serious labour shortages. These countries welcomed high levels of immigration, and a rapidly growing population was seen as essential to continued economic progress.3

While the end of the baby boom is not as exactly defined as the beginning, it is clear that a change began to take place in the 1960s. With the introduction of oral contraceptives, changing perceptions of desired family size, and growing acceptance of women's participation in paid employment, birth rates declined. (See Australian Social Trends 1998, Family Planning) In Australia, the fertility rate peaked in 1961 and by 1965 had dropped back to just below the 1946 level.4

In this review, baby boomers refers to Australian residents who were born in Australia or overseas during the years 1946 to 1965. This group includes people in the baby-boom age cohort who immigrated to Australia from countries which did not experience a post-war baby boom.


Baby boomers and ageing
The baby-boom generation, the result of a period of high fertility and high levels of immigration which followed the Second World War, is significantly larger than preceding cohorts. Because of this, it has made, and will continue to make, a large impact on the absolute size of a range of population groups of specific policy interest as it progresses through the age structure. For example, in 1961, baby boomers formed a prominent bulge at the younger end of the age distribution (all children under 15). At the other end of the spectrum, between 2011 and 2031, baby boomers will make a significant contribution to the numbers of people aged 65 years and over. During this period, the population aged 65 and over is projected to grow from 3 to 5 million. By 2031, all surviving baby boomers will be 65-84 years of age. Between 2031 and 2051, baby boomers are projected to swell the population aged 85 and over from 612,000 to 1.1 million.

Immigration and ageing
Immigration has played an important role in Australia's population growth and economic and social development. During the post World War II period, high levels of immigration, combined with high fertility, contributed to a more youthful age structure. Since immigrants have a younger age profile than the general population, the initial effect of any migrant intake is to delay the ageing process, but this effect is relatively small over the long term. For example, if net migration were assumed to be zero (instead of 70,000 per year) from 1999-2051, the median age of the projected population in 2051 would be 47 years (instead of 44 years).1

Ageing in States and Territories
Population age profiles vary between States and Territories as a result of past differences in fertility, mortality and migration trends. Nevertheless, all of the State and Territory populations are projected to continue ageing into the next half century, some more rapidly than others. Tasmania's population is projected to age the most rapidly, overtaking South Australia as the ‘oldest’ State in about twenty years' time and reaching a median age of around 51 years by 2051. By 2051, the proportion of the population aged 65 and over is projected to reach 32% in Tasmania and 29% in South Australia, well above the average of 24% for total Australia. (See Australian Social Trends 1999, Population - State summary table).


    POPULATION IN SELECTED AGE GROUPS (YEARS), 1946 TO 2051(a)
(a) Projections (Series II).

Source: Demography, 1961; Population by Age and Sex, Australian States and Territories, June 1992 to June 1997 (cat. no. 3201.0); Population Projections, Australia, 1997 to 2051 (cat. no. 3222.0).

Supporting a growing aged population
Australia's changing age structure has implications both for the level of social expenditure that might be required in future, and the level of resources that might be available to fund it. For example, as the population aged 65 and over increases in size, associated social expenditures on income support, care and health services can be expected to increase. However, since the potential labour force (roughly represented by the population aged 15-64) is projected to grow at a slower rate after 2011, it may be more difficult to generate the level of resources and public support needed to maintain a large aged population with an acceptable standard of living and quality of life. The most rapid change in the relative size of these two age groups is projected to occur between 2011 and 2031 as the baby-boom generation moves out of the labour force and into retirement. During this period, the population aged 0-14 is projected to remain fairly stable so there is unlikely to be a compensating decline in demand for social expenditures associated with this group.

In addition to the changing age structure of the population, there are many other factors, social and economic, which could also have an important bearing on future levels of social expenditure and how it is distributed. For example, future rates of economic growth, productivity improvements and taxation levels will affect the level of resources potentially available.5 At the same time, the circumstances of future older generations (e.g. labour force participation, level of private income and asset holdings, health status, availability of family/community support networks) will influence the level of resources that will be needed for aged care, health, housing and income support. On the other hand, future trends in education, labour force participation, unemployment rates and income distribution among the younger age groups will influence the level and nature of competing demands (e.g. university funding, employment programs, unemployment benefits, support for low-income families) on available resources.

Changes in social values, attitudes and government policy will also influence the level of support provided for older people (and other groups such as children, unemployed people and people with disabilities) as well as the respective roles of government, private business, community groups, families and individuals in providing it.6


Ageing World

Australia's population is relatively old by world standards and the proportion aged 65 and over is projected to double between 2001 and 2051 to around 24%. However, compared to many other more developed countries, Australia's population is relatively young and will remain so for some time. For example, in Italy, Greece and Japan, the proportion of the population aged 65 and over is projected by the UN to exceed 30% by 2050. (See Australian Social Trends 1999, International - Population projections.)

Ageing populations are not unique to the more developed countries, though they currently have the world's oldest populations. All of the world's populations are projected to age rapidly during the first half of next century as mortality and fertility rates continue to decline.

UN projections indicate that, between 2000 and 2050, the median age could increase by an average of 7 years in the more developed regions; 11 years in the less developed regions; and 12 years in the least developed countries of the world. During the same period, the proportion of the population aged 65 years and over is projected to almost double in the more developed countries and almost treble in the less developed countries of the world.

While the more developed regions are projected to age less rapidly than the less developed regions, they will still be significantly older in 2050. The median age in the more developed regions is projected to reach about 44 years, on average, compared to 36 years in the less developed regions, and 30 years in the least developed countries. The proportion of the population aged 65 years and over is projected to reach 25% in the more developed regions, 14% in the less developed regions, and 8% in the least developed countries of the world.
POPULATION PROJECTIONS(a) FOR WORLD REGIONS

Median age of population
Proportion aged 65 and over


2000
2030
2050
2000
2030
2050
World regions
years
years
years
%
%
%

More developed regions(b)
37.4
43.8
43.9
14.2
21.8
24.7
Less developed regions(c)
24.3
31.5
35.6
5.0
9.4
13.8
Least developed countries(d)
18.3
23.6
30.1
3.0
4.4
7.7
World
26.5
33.0
36.5
6.8
11.2
15.1

(a) Medium-variant projection.
(b) Northern America, Japan, Europe, Australia and New Zealand.
(c) All regions of Africa, Asia (excluding Japan), Latin America and the Caribbean, and Oceania (excluding Australia and New Zealand).
(d) The 48 least developed countries in the world (of which 33 are in Africa, 9 in Asia, 5 in Oceania, and 1 in Latin America and the Caribbean).

Source: United Nations World Population Prospects: 1996 revision.

Baby boomers in retirement
It appears likely that many, though not all, baby boomers will be in a better position than the current older generation to provide for a financially secure retirement without relying on the age pension for most of their income. This is particularly so for those individuals and households who have been able to benefit from the relatively favourable economic conditions and low unemployment rates during the seventies and eighties to accumulate significant assets such as superannuation, the family home, investment property, stocks, shares, etc. Higher rates of labour force participation among women baby boomers, and the consequent high rates of two-income families, have put this group in a better position than previous generations to accumulate such assets.

However, not all baby boomers have had these opportunities, and it will take at least 20 years of contributions under the Superannuation Guarantee Charge arrangements for these funds to mature into a significant retirement income for most employees. Those with lower incomes and/or discontinuous employment may never be able to accumulate enough superannuation to replace the age pension as the primary source of retirement income.7 It is possible that the recent trend towards early retirement (see Australian Social Trends 1994, Early retirement among men) will be offset to some extent in the future as some baby boomers choose to extend their working lives beyond the current expected retirement ages. Compulsory retirement has been abolished in all Australian States (except Tasmania) and Territories.

However, if recent trends in economic restructuring, technological change and rapidly changing skill requirements in the workplace continue, job opportunities for older people could be limited. (See Australian Social Trends 1999, Older job seekers) On the other hand, large numbers of older people wishing to update their skills, or to acquire new qualifications which would enable them to compete in the labour market for longer, could have significant implications for the future education market.

Not only are baby boomers expected to live longer than the current older generation but to remain healthier for longer. The period of life for which older people make the most intensive use of health care resources, i.e. the two years preceding death,8 is not expected to widen significantly in the future. A combination of better health, higher incomes, and government policy designed to reduce costs associated with institutional care of the aged, could see baby boomers remaining in their own homes and living relatively independent lives with the aid of family, paid help, and community support programs. They may also have access to a broader range of supported housing options between fully independent living and full nursing home care. (See Australian Social Trends 1999, Home care, hostels and nursing homes)

A largely healthy, active older population could make a valuable contribution, either as private individuals or through voluntary organisations, to the care and support of the very old or infirm (and to the welfare sector in general). Currently, about 17% of people aged 65 years and over donate time to voluntary organisations (see Australian Social Trends 1997, Voluntary work). Older volunteers work more hours, on average, than their younger counterparts and are much more likely to be involved in the welfare and community fields. In addition to formal volunteer work, older people provide a range of unpaid services to family, friends and neighbours. The 1998 Survey of Disability, Ageing and Carers9 estimated that people aged 65 and over accounted for 21% of all people who were the primary providers of informal care to someone needing help with self-care, mobility or verbal communication. The majority of older primary carers were providing care to another older person - 75% were caring for their partner and 10% were caring for a parent.

While much of the current research and policy on ageing tends to focus on the potential ‘burden’ to society of a large older population, the potential economic stimulus created by a growing demand for services (e.g. home help, specialised housing, financial and personal services) has been largely overlooked.6 Better educated and more affluent than their parents' generation, baby boomers are currently a large and influential market sector and could remain so well into their retirement years. Also, as the population ages, it is to be expected that public debate and government policy on ageing will be increasingly influenced by the views of older people.6 By 2031, over a quarter (27%) of all Australians of voting age (18 years and over) will be aged 65 or older.


Endnotes

1 Australian Bureau of Statistics 1998, Population Projections 1997 to 2051, cat. no. 3222.0, ABS, Canberra.

2 Jackson, N. 1999, Understanding Population Ageing, paper presented to Department of Family and Community Services Seminar, Canberra.

3 Statistics New Zealand 1995, New Zealand Now: Baby Boomers, Wellington.

4 Australian Bureau of Statistics 1997, Australian Demographic Trends, cat. no. 3102.0, ABS, Canberra.

5 Clare, R. and Tulpule, A. 1994, Australia's Ageing Society, Background Paper No. 37, Office of Economic Planning Advisory Council, Canberra.

6 Saunders, P. 1996, Dawning of a New Age? The Extent, Causes and Consequences of Ageing in Australia, Discussion paper no. 75, Social Policy Research Centre, Sydney.

7 Rosenman, L. and Warburton J. 1997, ‘Retirement Policy, Retirement Incomes and Women’ in Ageing and Social Policy in Australia, Cambridge University Press, Melbourne.

8 Goss, J. 1994, Population Ageing and Its Impact on Health Expenditure to 2031, paper presented to Australian Institute of Health and Welfare Seminar, Canberra.

9 Australian Bureau of Statistics 1999, Disability, Ageing and Carers: Summary of Findings, 1998, cat. no. 4430.0, ABS, Canberra.



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