The balance between public and private provision of services will assume greater prominence as Australia's population ages.
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Growth 51: Australia's Ageing Population
Growth 51: Australia's Ageing Population
Posted : Wednesday, November 18, 2009
Report highlights
CEDA's Ageing report argues that the initial impacts of
demographic change are only a few years away, and a comprehensive
policy package is required now to alleviate future fiscal pressures
and ensure that all Australians enjoy an adequate standard of
living in retirement.
The CEDA report contains in-depth analysis of the effects of
demographic change by some of Australia's most senior government
advisors, private sector economists, policy commentators and
academics. The impact of population ageing on government budgets
(both Commonwealth and state), the labour market, workplace
practices, futures consumption patterns, and savings and retirement
incomes are assessed. A range of policy measures aimed at
minimizing the costs of an ageing population are presented.
The report acknowledges the importance of maintaining strong
economic growth driven by high rates of productivity growth. This
will ensure that an increased dependency ratio associated with
population ageing does not lead to a decline in Australia's living
standards.
However, the report argues that reliance on economic growth
alone is dangerously complacent. Three key areas require urgent
policy action:
- Enhancing labour force participation, particularly by older
workers.
- Ensuring the adequacy of retirement incomes.
- Ensuring that income support and retirement policies do not
discourage workforce participation.
Workforce participation
Dr Michael Keating, former head of the Prime Minister's
Department and a contributor to the CEDA report, stresses the need
to reverse recent declines in workforce participation by older
males (often due to involuntary retirement). He argues that
population ageing would not present a problem for another 50 years
if the next cohort of men entering their late 50's postponed their
retirement for as long as the previous generation did. According to
Keating: 'a reversal of the trend to early retirement would go a
long way towards financing the fiscal demands from an ageing
society.
National savings guru Dr Vince FitzGerald argues that current
levels of superannuation provision will not provide the standard of
living in retirement aspired to by most Australians. "Only in the
most favourable of circumstances will people relying solely on the
9 per cent Superannuation Guarantee enjoy in retirement a standard
of living close to what they enjoyed while working, and most of the
many Australians who came into superannuation only in the past 15
years or so, will not achieve an adequate retirement income".
Dr FitzGerald calls for urgent measures to address the
inadequacy of superannuation provision including increased
compulsory superannuation contributions; co-contributions and other
matched saving schemes targeted at lower income groups, and
shifting superannuation taxation from the contributions stage to
the benefits stage. Measures aimed at unlocking housing wealth,
such as reverse mortgage products, can also help address savings
adequacy.
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