The Aging of Australia
Pension and superannuation ages need to be raised to 70
years and indexed to longevity, the Productivity Commission,
the government’s premier economic advisory body has
warned, in a report that reveals the ageing of the population
is a much bigger threat than previous Treasury reports have
suggested. Calling for an urgent commitment to reform, the
Commission's report states any return to surplus will be shortlived
with permanent and growing deficits beyond 2020
reaching 5.9% of GDP by 2060. In today's dollars that
would be equivalent to a deficit of $100 billion. The Commission
calculates taxes would have to rise 21% unless steps
are taken to reduce the impact of the ageing population.
The Commission's deficit forecasts are much more alarming
than those included in Treasury's 2010 intergenerational
report which examined the effect of ageing and envisaged
the deficit reaching 2.7% of GDP by 2050. The Commission
calculates that by the end of the century there will be as
many centenarians as babies born each year.
And there's the clue as to why our budget forecasts spell
so much trouble - it is too few babies. The ageing population
will bring a steady reduction in the working share of
the adult population from 64% to 59%. Super funds and other interest groups have called on the Federal government
to face up to the dramatic ageing shift foreshadowed in the
Commission's report. All of the suggested solutions by the
Commission and other stakeholders are unpalatable - raising
the pension age to 70 or compelling retirees to draw on
the equity in their homes to support themselves.
Neither the Productivity Commission nor any of the other
interest groups has suggested a way to deal with the shortage
of babies who are the future workers and taxpayers of
Australia, and that would be to decrease the incidence of
induced abortion in this country. An abortion rate of 90,000
or more every year is simply unsustainable in terms of economic
survival, let alone any “right to life” implications.
The statistics from the USA and Iran - two countries very
different culturally and economically - are sobering. In 1945,
there were 42 working Americans paying payroll taxes for
every retiree receiving Social Security benefits. By 1960,
the ratio was about 5 to 1. Today it is about 3 to 1. Like us,
Americans are living longer but having fewer children, and it
is one reason why the US economy is in the doldrums.
Iran with a birth rate of l.6, according to a new UN
report, also has a rapidly ageing population which will heavily
tax Iran's public health infrastructure and social security network.
A generation hence, there will be two elderly dependents
for every three workers, compared to seven elderly
dependents for every 93 workers today. That is a death
sentence for a poor country, and looks virtually irreversible.
Our Federal government shows little sign of heeding these
alarming statistics. All the emphasis is on getting mothers
into the paid workforce, with no recognition that those mothers
who remain out of the workforce because they have
more than the average l.9 childen are performing a valuable
service to the nation. Discrimination against the single-income
family (see p. 2) means that those couples who want
to have more children feel they cannot afford to do so.
It is a tragedy that politicians cannot see that babies grow
to be our most useful economic assets and are not mere
problems to be disposed of as clinic waste.