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Policy Implications of an ageing Australia: an illustrated guide

Chairman's speech

Gary Banks gave a presentation Policy Implications of an ageing Australia: an illustrated guide to the Financial Review Ageing Population Summit, held in Sydney on 27 September 2005.

Contents

The destiny of our demography: from pyramid to … coffin?

Participation rates decline with age

Labour participation will fall

Economic growth slump ahead

Sources of fiscal pressure (and relief)

Medical costs rise with age

Don’t panic!

Don’t blame the baby boomers

Longevity is the main source of ageing

The historical perspective

But fiscal sustainability must be resolved

Projections are not forecasts: a boulder is lying on a rail track!

Reactive responses

The ‘banana’ republic option

Older people have low incomes…

But the old have significant wealth in housing

Pro-active policy choices

Pro-active policy choices I
Is higher fertility the answer?
Alas, fertility has only minor effects on dependency
Higher fertility initially makes matters worse
Increased migration affects population size more than age structure
Australia as population superpower
Fiscal effects of population policies

Pro-active policy choices II
Remember, participation is at an all time high
Older males around the median
Prime age males doing badly?
Prime aged females rank more highly than males
Working longer?
Poorer societies have the highest participation rates
Policy areas in raising participation
Education raises participation
Policy areas in raising participation
Retirement provisions can have a powerful influence
Retirement income arrangements implicitly tax ‘soldiering on’
Policy areas in raising participation
The expansion in DSP numbers has reduced participation
Getting DSP recipients into work isn’t easy
Policy areas in raising participation
Employees don’t grey much
Part-time work rises after age 55
Impact of raising participation rates
Some workers want more hours

Pro-active policy choices III
A little extra productivity growth adds up
Higher productivity growth provides a capacity to fund the fiscal gap
Further reform is needed to raise national productivity

Carpe Diem: Electorates are ageing too!