Opinion article

Intergenerational struggle: Confronting Australia’s demographic headwinds

Older, bigger, slower growing, more diverse. Living standards at risk of going backwards. These were the key takeaways from the latest Federal Intergenerational Report (IGR), writes Dr Liz Allen. The intergenerational bargain or contract, which implicitly suggests that the country handed to each subsequent generation is the same, if not better, than the socioeconomic conditions enjoyed previously, has been eroded. Increasing or maintaining living standards can no longer be guaranteed. Australia’s dumb luck has run out.

Older, bigger, slower growing, more diverse. Living standards at risk of going backwards. These were the key takeaways from the latest Federal Intergenerational Report (IGR).

The sixth edition, second under a Labor government, is the first to wholly capture the impacts of COVID-19 lockdowns and border closures. There was a lot among the hundreds of pages of statistical hypotheticals and social crystal balling. One thing was certain, though: We’re headed into the greatest demographic headwinds of our time.

Climate boiling, housing affordability, job insecurity (including cost-of-living) and gender equality are big challenges. While not necessarily explicitly stated, these were the crux of the risks explored in the 40-year future-looking document as they related to the population predicament the nation’s in the thick of.

The solution to population challenges in the context of an ageing population and shrinking taxpayer base? Innovation. Learning to do more with less. Less income tax to go around, as the demands on government coffers due to things such as retirement and health expenditure increases.

Among the talk of an ageing population, young people and those not yet born barely get a look-in. Herein lies the future of Australia, and we appear to have lost our concerns for the nation we bestow our young people.

The intergenerational bargain or contract, which implicitly suggests that the country handed to each subsequent generation is the same if not better than the socioeconomic conditions enjoyed previously, has been eroded. Yep, increasing or maintaining living standards can no longer be guaranteed. Australia’s dumb luck has run out.

Demographic headwinds 

We’ve known about the looming hypothesised demographic doom of population ageing since the 1990s. Ageing was an unprecedented and as-yet-unknown challenge demographers saw on the horizon. Our success at living longer and having fewer children has come at a price.

The trouble with ageing is that human populations have never experienced a society in which the number of seniors dwarfs that of younger people. We don’t know how this will play out, and the world is observing and responding in real-time – most often, not very well.

Young people are confronted with the need to shoulder the future of a nation, humanity even. It’s a hard weight to bear. The prospects of renting for life, out of control cost-of-living and a climate hell all make for terrible aphrodisiacs. Even if we could get this stuff addressed, the barriers to having children are insurmountable for far too many in contemporary society.

International migration has helped meet the deficiencies in the local Australian workforce that have come with an ageing population, and in doing so, helped keep the country economically afloat.

No, a shrinking, ageing population isn’t something Australia should embrace. Coercion would be required to create that end, as the population is still growing due to natural increase. And well we know how population control works out.

The natural population experiment of closed borders during COVID-19 proved a number of truths: migrants don’t inflate house prices, migrants don’t steal local jobs, migrants don’t suppress wages.

I hear you, climate change must be addressed through considered and effective policy. But shutting off migration to the country doesn’t achieve this. In fact, people from overseas bring the skills and knowledge to keep building Australia’s economy and society; from housing to cultural institutions to scientific breakthroughs.

Migration is one way Australia is embracing innovation.

Long-haul planning 

We’ve had decades to plan for our demographic troubles. Too many wasted opportunities have come and gone. (And no, a baby bonus isn’t good procreation policy.)

Australia needs to get strategic and look long-term.

The IGR offers potential for such strategic planning, but it will be grossly limited by the politics and populism seen as necessary for electoral survival.

The first IGR came around the time the first tranche of baby boomers matured into retirement, and the latest considers the next window, as the bulk of baby boomers enter their old old years. We can’t just keep kicking this can down the road and cry foul when nothing changes.

Australia can’t afford another COC-up like the Challenge Of Change, which occurred on the back of the 2015 IGR. So many squandered opportunities, least of all the hilarious acronym.

The IGR includes details about the factors that affect the budget bottom line. As such, it’s probably the most forward-facing government undertaking. Yes, even more so than federal budgets. The choose-your-own adventure gifted to the nation in the form of the IGR is invaluable, but we ultimately need to decide the course we chart ahead – and commit through policy and funding. Really commit. Beyond political terms of government.

The way to go is through a whole-of-government, cradle-to-the-grave approach to policy and programs, to ensure inequality is reduced and wellbeing maximised for all. Population-related issues straddle numerous policy portfolios and these disparate puzzle pieces need to be better brought together for a comprehensive and coherent response to our demographic challenges.

The key to Australia’s future success lies in housing, health, education and employment policies that seek to reduce inequalities from the moment a baby is conceived right the way through the life course.

As a nation, we must start actually investing in us: the now, tomorrow and 40 years down the track.

Governments must start making tough, politically challenging decisions.

About the authors
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Liz Allen

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Dr Liz Allen is a demographer and senior lecturer at ANU Centre for Social Research and Methods, where she researches population dynamics and teaches research methods. She is a member of ANU Council and an advocate for inclusive and accessible higher education. Liz was named among the ABC Top 5 Humanities and Social Sciences academics in Australia in 2018, and a woman to watch by the Australian Financial Review in 2023. She is a regular media commentator for all things demography. Her book, The Future of Us (2020), is a call to action to build a stronger Australia through fairness and equality.

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