The impact of the COVID-19 pandemic will be felt for up to 40 years, according to the latest Intergenerational Report (IGR) launched by Treasurer Josh Frydenberg in Melbourne on Monday.
The release of the Federal Treasury’s Intergenerational Report was delayed by one year to include and monitor the impact of the pandemic and it paints a stark picture of Australia’s ageing population problem speeding up over the next 40 years.
The IGR says that Australia is in middle of “the biggest demographic transition of the last century”, with Mr Frydenberg concerned that there will be more pressure put on the health and pension system.
Read more: Aussies expect pollies to lie, but expect them to resign when caught
“Many baby boomers are reaching retirement right now,” Mr Frydenberg said. “This is contributing to a rapid change in the ratio of working-age people to those over 65.
“In 1981-82, for each person aged over 65, there were 6.6 people of working age. Today, there are four working-age people. By 2060-61, there will only be 2.7.
“To date, we have managed this transition well. But ageing will remain a key source of pressure on our economy and on our budget over time.”
Read more: PM says COVID recession ’30 times worse’ than GFC
The population will continue to age, largely as a result of improved life expectancies and low fertility, according to the report.
Australia’s low fertility rate means that migration is the leading source of population growth, but this has slowed significantly as a result of the pandemic and the closed international borders.
Australia’s total population is projected to reach 38.8 million in 2060-61. This is lower than previous projections due to the lower level of migration resulting from the COVID-19 pandemic and a lower fertility rate.
Read more: Government appoints controversial new minister for government services
In 2060-61, 23 per cent of the population is projected to be over 65, a rise of around seven percentage points from 2020-21.
The IGR also explains that ageing will reduce labour force participation.
The participation rate is projected to decline from a record high of 66.3 per cent in March 2021 to 63.6 per cent by 2060-61. This reflects the increasing proportion of older people in the population, which is expected to be only partially offset by projected increases in women’s and older people’s participation.
The IGR also predicts that the Federal Budget will remain in deficit for the next 40 years, with it projected to peak at 40.9 per cent of GDP in 2024-25, but only dropping slightly to 34.3 Per cent of GDP by 2060-61.
“The economic crisis associated with the COVID-19 pandemic has placed significant demands on public finances in Australia and around the world,” the report states.
“While Australia’s stronger-than-expected economic recovery has flowed through into the fiscal position, the effects of the pandemic on the budget are expected to remain into the long term.”
Mr Frydenberg said he expected migration to play an important part in addressing some of the issues raised in the report.
“A well-targeted, skills-focused migration program can supplement our stock of working age people, slow the transition to an older population and improve Australia’s economic and fiscal outlook,” Mr Frydenberg said.
EveryAGE Counts campaign director Marlene Krasovitsky said the key to the government funding essential services while maintaining a sustainable tax burden was addressing the issue of ageism, which she has labelled a “national crisis’‘.
“Ageism is now a huge drag on our economic growth,” Ms Krasovitsky said last week. “Our assumption that everyone over 65 is rushing to retirement does not stand to scrutiny.
“The latest data from the COTA Federation last week showed only 49 per cent of those over 65 had retired, down significantly from 2018 when 60 per cent were retired. The reality is most older Australians are living longer, healthier lives and they want, or need, to work longer. So, what’s holding them back? Ageism.
“The IGR notes that the increased participation rate amongst older workers in recent years has been supported by greater life expectancy and better health, as well as greater work flexibility. But further gains are missed because of ageist recruitment processes and workplaces. Too many older workers want to work but miss out because of negative assumptions based only on their age.”
Ms Krasovitsky said that 37 per cent of Australians reported experiencing discrimination since turning 50, a figure that had risen sharply from just 23 per cent in 2018.
“If we want to maintain funding for essential services and infrastructure we need to lift the labour force participation rates of older people who want or need to work,” Ms Krasovitsky said. “That means we have to address ageism at its root – the stereotypes, assumptions, and discrimination that currently lock older people out of work.
“The IGR has found pretty much all participation increases over the next 40 years will come from people above the age of 40.
“Those projections will be hampered if we do nothing about the ageism that keeps keen older workers jobless. We simply can’t afford to continue carrying around ageist notions about older Australians. These mindsets are holding us back.”
Ms Krasovitsky said the 2021 IGR should prompt the federal government to invest in a program to start lowering the rates of ageism and age-based discrimination in Australia.
“We need a sustained public and workplace education campaign to challenge the myths and negative attitudes about older people in the workforce,” Ms Krasovitsky said.
“We should be making sure people understand the channels through which they can speak up when they experience age-based discrimination. And we should encourage organisations to develop and implement age inclusive approaches.
“We also know that multigenerational workforces are good for business and raise productivity. There’s no silver bullet for ending ageism, but we need to start tackling this problem systemically now. It’s a vital means of boosting economic growth in the years ahead, given the IGR’s projections.”
Are you worried about the IGR predictions? Do you think Australia needs to increase its migration intake to address concerns about an ageing population? What can be done to encourage a boost to Australia’s fertility rate? Why not share your thoughts in the comments section below?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.
