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Population Projections: Our ageing population
AGE COMPOSITION OF THE POPULATION, ESTIMATES AND PROJECTIONS(a)
(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
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 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).
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
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.