Alarm Unjustified Over Ageing Population - Report

The impending retirement of baby boomers that has prompted alarm in policy circles is unjustified, a university report has shown.

In the report, The ageing of the Australian population: triumph or disaster?, researcher Katharine Betts, from the Monash Centre for Population and Urban Research, shows Australia’s labour force participation rate and ratio of dependents to workforce are at record highs, despite an increase in Australia’s median age.

The report’s release comes after Federal Treasurer Joe Hockey identified the aged pension as the Government’s “single biggest spending program” in a recent speech entitled “The Case for Change”.

“Spending on the Age Pension already takes up 10 per cent of all Commonwealth spending,” he said.

“And demand for the Age Pension will continue to increase as the population ages…

“The problem we have is that the volume of demand for these programs is outstripping the capacity of taxpayers to fund them. Between 2010 and 2050 the percentage of people of working age supporting those over the age of 65 in Australia will almost halve.

“So the policies must be changed, either now or more dramatically in the future.”

However the Monash report shows that the recent trend towards increasing workforce participation and improvements in the health of older people mean that concerns about the public costs of ageing have been overstated.

“The impending retirement of the post World War II baby boomer generation has prompted alarm in policy circles. This alarm is unjustified,” Monash University said.

According to the report: “Fears that dwindling numbers of workers will have to support larger numbers of aged pensioners dominate the ageing debate. Yet labour-force participation rates among older people are rising and the greater part of government revenue (61 per cent) does not come from taxes on paid labour.

“Currently cash payments for welfare to older people constitute just over a third of government expenditure on such payments.

“Concerns about the future capacity of governments to pay for the welfare costs of an ageing population are belied by the recent liberality of the Commonwealth Government. It has abolished income tax on superannuation payments, increased access to the age pension, and lifted the level of benefits.

“While the cost of the age pension has grown faster than GDP over the last decade, demographic ageing is not the cause; rising costs have been due to discretionary policy changes.

“Even low rates of per capita economic growth should allow governments to continue to pay aged-pension costs, an outcome that would be even more readily achieved if some of the extraordinarily liberal provisions for middle-class retirees were reformed.”

As the May Budget looms, Palmer United Party leader Clive Palmer said his party would do everything it could to ensure the Abbott Government kept election promises, including no change to pensions.

Palmer said a series of softening up statements from Hockey had put many pensioners under unnecessary and unwelcome stress with a string of the government’s pre-election promises set to be broken in the coming weeks.

“My office in Maroochydore takes many calls from concerned pensioners who are worried about their ability to cope under the financial pressures the government is subjecting them to,” Palmer said.

“The government continually talks about their ‘mandate’ when it suits them, yet they are all too willing to break the promises that were key to their election platform.

“Tony Abbott promised ‘no cuts to education, no cuts to health, no change to pensions, no changes to the GST and no cuts to the ABC or SBS’.

“It is clear to members of my electorate that these promises are about to be broken and there is a great deal of concern about that, especially among pensioners.

“It’s about time governments kept their election promises and the Palmer United Party will do everything we can to ensure that happens.”

To view the full report, The ageing of the Australian population: triumph or disaster?, click here.