The Intergenerational Report shows Australia’s population is ageing, but we need not panic

by David Richardson and Greg Jericho


Australia’s population is set to age, but that does not mean we need to go without – we just need to be honest about paying for it.

Every Intergenerational Report since 2002 has highlighted that Australia’s population is set age and will cause significant issues for our ability to raise revenue and to pay for services. But what is often forgotten is that while Australia might be home to the oldest continuing living culture we are very much a nation of young people.

The latest Intergenerational Report released today notes that by 2063 Australia’s old-age dependency ratio – which measures the number of people aged 65 and over for every 100 people of traditional working age (15 to 64) – is set to rise to 38.3% – well above the current level of 26.6%. While that will be a significant change it is not one that will be at all unprecedented throughout the world. In fact, many nations in Europe such as Germany and Italy already have higher dependency ratios now than we anticipate having here in 40 years’ time.

None of these nations with dependency ratios at the levels Australia expects to have in 40 years’ time are economic disaster zones. Sweden, which currently has close to the same dependency ratio as Australia is expected to have in 2063 has almost the same level of GDP per capita as does Australia. Sweden also consistently ranks higher than Australia on levels of well-being and happiness.

The issue is not that an ageing population means you have to go without, but that we need to adapt and face the reality that Australia has been a very low-taxing nation by virtue of our very young age. Sweden raises around 43% of GDP worth of revenue each year compared to Australia raising just 28%.

The Intergenerational Report is not a warning that we need to forego services and support as our population ages, but that we need to face up to the reality that Australia has been able to coast along as a low-taxing nation and now it needs to talk about the need to raise more revenue, more fairly in order to ensure our society continues to thrive.

In October, the Australia Institute Revenue Summit will debate these issues and provide some reality and context to the challenges ahead.

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