SOME very encouraging research was published by the Australia Institute at the weekend that debunks some of the myths about the ageing population.
The fear of policy-makers in Australia and other developed countries is that with declining fertility rates, the average age of the population will increase and that this will result in more dependent people in the community who require more income support, home help, aged accommodation and draw more on health services.
The Australia Institute research suggests that this will not be the case and that we need not fear a society that cannot afford to support its old people.
At present only 3.5 per cent of people over 65 required public assistance for daily living. There is no need to assume this percentage will go up.
The research quite rightly suggested that we should look at the plus side of the ageing population, as well as just the cost side. The standard dependency ratio is misleading. It takes people aged 15 to 65 and assumes they are working and supporting those aged over 65 and under 15. In fact, we can expect many older people to work beyond the age of 65, particularly as the pool of younger workers get proportionately smaller and employers are forced to draw on whatever labor is around or go without. As employers do this, they will soon find out that older employers tend to be very good ones. They have experience and their mental agility does not markedly decline with age. Moreover they often have a good work ethic. Older people tend to contribute to voluntary work – both it he family and the community. These contributions are likely to increase with the ageing population.
Youth dependency will decline. Also, youth unemployment is likely to fall as young employees become rarer – once again, reducing dependency.
Further, as the baby boomers reach retirement we can expect a higher proportion of them to we self-funded retirees. Australia has a flat-rate, means-tested pension system so we are in a good position to cope with an ageing population.
As for increased health costs with age, the institute’s research pointed out that large health costs are not so much a function of age itself, but a function of proximity to death. A person’s last few weeks of life tend to cost the health system disproportionately more, irrespective of their age at death.
In short, we will not have an ageing population creating an unsustainable burden on a shrinking workforce – just as a booming young population shortly after World War II did not cause an unsustainable increase in dependency.
Several things should flow from this research. We should not panic about the continued provision of public-sector help to the aged. But we should not be complacent. We should continue to support polices that help people provide for themselves in their old age – particularly superannuation and health care. Superannuation is taxed too highly and is still not high enough for low and middle-income earners. We should not engage in silly schemes to change the age structure of the population, particularly through immigration. All the evidence and projections tell us that increasing immigration will have precious little effect on the age structure. And various schemes to encourage women to have more babies are probably equally misguided.
It would be better to look at policies that accept the fact of an aging population and react in a balanced way: there are pluses and minuses. Moreover, most of those ageing people have an enormous amount to contribute, economically and socially.