MEDIA: Ageing Australia: a crisis or triumph?

MEDIA: Ageing Australia: a crisis or triumph?

IGR3 is a document that shapes vital national policy, so why has the media given it soft touch? On the surface it presents some alarming headline statistics, but there are major oddities in its reasoning.

So pervasive is the assertion that we have an ‘ageing crisis’ that it seems to have entered popular belief. Having spent all of human history trying to live longer, we now hear government and big business spreading fear about a wonderful achievement.

But what does population ageing actually mean? And why is the fear mongering invariably by those with a vested interest in population growth?

Demographic ageing occurs when our average age rises with life expectancy. In the lucky country we’ve been ageing for many years. In 1909, when the national old age pension was introduced at 65, average life expectancy was around 55 and our average age under 30. Life expectancy is now over 80 and our average age around 37.

Demographic ageing is inevitable for countries like Australia with families that choose to have around two children and live into their 80s. The only way to avoid it is to have large families and die young, a condition that our ancestors suffered. Or one could move to Uganda where the average age is only 16 – that’s a crisis.

So what led to this masterstroke in public relations?

The first Intergenerational Report was compiled by Commonwealth Treasury in 2002, to address the following questions from then-Treasurer Peter Costello:

What shape will Australia’s finances be in 2042 based on current policies? And what should we do now to prepare for the generations ahead?

The conclusion in the 2002 Intergenerational Report was that population ageing presented a challenge to Australia’s prosperity. This finding was then used to justify substantial and unprecedented increases in fertility-boosting policies and immigration quotas, and the active government promotion of both. Remember "one for the country"? Subsequent intergenerational reports in 2007 and 2010 have continued the focus on ageing, with climate change added as a major risk to Australia.

Nothing has had more impact on igniting the population tinderbox than the 2010 Intergeneration Report (IGR3), with its projection of a ‘big Australia’ of 36 million in 2050. IGR3 notes that by 2050, our average life expectancy is projected to increase into the late 80s and average age into the low to mid 40s. It goes so far as to say: "The proportion of working age people is projected to fall, with only 2.7 people of working age to support each Australian aged 65 years and over by 2050 (compared to 5 working aged people per aged person today)." But there is a fallacy here - can you spot it?

A chorus of boosters have skimmed IGR3 to justify the case for a big Australia. Yet the numbers they find there tell little by themselves about our prospects for future prosperity and quality of life. Most of the wealthiest countries in the world have statistics close to these already and yet they are comfortably looking after their older citizens.

We know the lazy way for big business to make more profit is to increase its customer base. For example, The Australia Institute notes that bank profits are now running at $1,000 for every man, woman and child in Australia.

Population growth is also the lazy way to grow GDP (as opposed to GDP per capita) and make Treasurers look good. If this wasn’t enough, big business also has enormous influence on our major political parties through donations.

The golden rule with ’independent reports’ is that they are rarely commissioned unless one knows or can influence the outcome to suit an objective. Yet if this was their intention, those who commissioned the Intergeneration Reports may end up with self-inflicted wounds.

IGR3 is a document that shapes vital national policy, so why has the media given it soft touch? On the surface it presents some alarming headline statistics, but there are major oddities in its reasoning. Here are a few:

1. IGR3 uses only one projection of population growth, taking as constant both a historically high net overseas migration (NOM) figure of 180,000 and a fertility rate of 1.9 children per woman. It offers no alternative to NOM at more than double its 1990s average.

2. IGR3 counts all those over the age of 65 in 2050 as ‘dependent’. For Treasury to so define dependency is absurd. Already many Australians are choosing to work well beyond 65 as they realise the financial and health benefits. The retirement age is also legislated to rise to 67 in the 2020s and will likely be at least 70 by 2050. In any case, the vast majority of retirees will be self-supporting through superannuation well before 2050. And what about the young?

3. IGR3 suggests that Australia can stave off the effects of ageing by importing younger migrants. Who are these people that don’t age? This nonsense has been debunked many times, including by the more independent Productivity Commission. In its 2010 report entitled, ‘Population and Migration: Understanding the Numbers’ the Commission concludes that "Realistic changes in migration levels also make little difference to the age structure of the population in the future, with any effect being temporary." It simply leads to a far greater number of Australians being ‘aged’ down the track.

4. IGR3 fails to properly cross-reference its two main ‘risks’ - ageing and climate change. If we are heading into periods of extreme weather events, lower food security and increased costs to curtail carbon emissions, is population-boosting in any way responsible? In a 2010 report entitled ‘Population growth and sustainability’ Monash University demographer Bob Birrell noted that the Federal Government was in a "diabolically difficult" policy situation because record population growth was undermining its bid to cut greenhouse gases.

5. IGR3 provides no evidence on the costs associated with population growth itself. Such costs would include our growing and increasingly complex infrastructure deficit (currently valued at $770 billion by Infrastructure Partnerships Australia) and reducing our carbon emissions by 60 per cent to 2050. In a stable Australia, a 60 per cent reduction is an emissions budget of around 11 tonnes per head instead of the current 27. In a big Australia we each need get down to around 6 tonnes each, a cut of 76 per cent per head.

Treasury’s Intergeneration Reports have wrongly presented a triumphant achievement as a bleak prospect. The Productivity Commission should be urgently tasked to fully disaggregate the economic, environmental and social costs of population growth. It would very likely influence IGR4 to replace ageing with population growth as by far the more significant risk to Australia’s long term prosperity.

So what is the alternative to a big Australia?

First we need to recognise that our current relatively young age profile is an anomaly brought about by our abnormal post-war growth. This occurred for two reasons; high fertility of over three children per woman from the late 1940s to the mid 1960s and an influx of young adult migrants. Yet despite this population momentum, since the 1980s Australian women have been averaging very close to two children. So we are heading for a demographic transition to something we are not used to: a "normal" age distribution, with roughly equal numbers of people of in each ten-year group.

With many people now living into their 80s, there will of course be far more people in the older age groups than we are used to. Yet according to ABS statistics the percentage of our population in the traditional 15-64 working years will change little under all realistic NOM and fertility rate scenarios.

In 1901 when life expectancy was in the 50s and there was an average of four children per family, there were about 1.5 people aged 15 to 64 for every person aged under 15 or over 64; in 2051 (and 2100) there will still be around 1.5 people aged 15 to 64 for every person outside this age bracket, regardless of how many migrants we bring into the country. At present the ratio is unusually high, around 2 people 15 to 64 for every one outside that age-bracket, but it is this ratio that is unusual, not the one we were used to in the past and to which we will return. IGR3 ignores this point.

A more even age distribution means fewer in the most dependent group of all: the young. Some people over 80 need constant care and attention, but all those under 10 do. And few of those under 20 are truly self-supporting. Many in the aforementioned groups are actually being supported by those that IGR3 classes as dependent! That was the fallacy in the IGR3 statistic about there being only half as many workers to support each person over 65. It left out the children; there will be more people aged 65 plus in 2050 but fewer people aged less than 15.

Professor Ross Guest, an expert in population economics from Griffith University, is one of those who note that scare-mongering about the ageing population is giving way to increasingly optimistic views of it by the experts. In a report entitled ‘A potential dividend from workforce ageing in Australia’ he suggests that any negative economic effects may be swamped by the higher productivity of more experienced and substitutable workers using better equipment.

Our demographic transition to smaller families and longer life-expectancy also presents major economic opportunities in housing, superannuation and healthcare. But importantly, the major health issue we face is obesity, not ageing.

A healthy demographic transition leading to a stable population of around 23-26 million by 2050 is still possible. It would be a major triumph for Australia. Conversely it would be a tragedy if we let selfish lobbies continue to enforce population growth in the face of climate change, peak oil, the depletion of our mineral wealth and diminishing food security.

In a post-election brief to Julia Gillard, the Department of Prime Minister and Cabinet conceded that our major cities are already overcrowded and that quality of life for Australians is falling because of population growth and the clogging of major roads. Yet despite this real crisis her "stop, take a breath" promise lies dormant.

A stable population is the only way to maximise our demographic triumph and future-proof our quality of life. It could even ensure healthy longevity for our Prime Minister - and be her greatest triumph.

William Bourke is President of the Sustainable Australia Party.

This article was first published in ABC’s The Drum on 2 March 2011:
Read More

Recent responses