"Demographic change is driven by changes in fertility, life expectancy and immigration. The ageing of the population will alter fundamentally the structure of Australia's population."
Conclusion "Demographic projections point to Australia's population growth slowing over the next 50 years and, in turn, the population ageing. Under these circumstances, it is likely that the growth in the labour force will decline, perhaps significantly. It is possible that the average annual rate of growth in the workforce towards the end of the coming decade could be around 1 per cent, or around 0.4 percentage points below that in the 1990s, and could be negative by the middle of the century. The key uncertainty in these labour force projections is the likely participation responses of the various age and gender cohorts to the changing labour environment, particularly amongst older workers. While outcomes so far into the future are highly uncertain, these emerging trends in the labour force suggest a possibility that Australia's trend GDP growth could be lower over the coming decade than during the 1990s. However, growth in GDP per capita is not expected to decline to the same extent, if at all." from http://www.treasury.gov.au/documents/119/PDF/3demo.pdf
Over the past two and a half centuries, the developed world has experienced what is arguably one of humanity's greatest achievements: the demographic transition. This transition, denoted by a fall from high to low fertility and mortality, has taken place in every developed country, and is currently under way in every developing country. It has brought and continues to bring with it a number of momentous changes, most notably a shift from youthful age structures and expansive growth to ageing and stationary or declining populations.
The implications of the shifts are profound. More than any phenomenon in the recent past, they will challenge our social, economic, political and cultural structures, and the policy- making communities that must respond to these changes. However, while the implications of the transition are increasingly understood and recorded, a user-friendly explanation of the basic demography on which they are based is typically missing. The gap, usually a reflection of word constraints, causes problems for those who recognise the importance of understanding what is going on, yet are at a loss to know where to begin.
This 'toolkit', a compendium of concepts and specifically related to population ageing, is especially written for busy policy-makers, advisers and analysts. It does not purport to cover these concepts and issues comprehensively, but rather, to outline the key principles involved, and to indicate where further information may be found. The main points are summarised below.
* The demographic transition has one major outcome: a shift from youthful and growing populations to populations that are ageing and potentially declining. For policy purposes, a distinction needs to be made between structural and numerical ageing. The former refers to an increase in the proportion of aged in the population, and is primarily caused by falling fertility. Assuming a continuation of low fertility, the main effect of structural ageing will be to reduce the size of the working-age population/primary tax base in comparison with the increasing proportion of elderly. Numerical ageing, on the other hand, refers to an absolute increase in the number of aged, and is primarily caused by increasing life expectancy, first at the younger ages, then at older ages. * The total fertility rate (TFR), which is used as a proxy for average family size, is a synthetic measure with many limitations. Most importantly, it conceals both the effect of delayed and recuperated fertility, and the proportion of women having no children at all. Over time, actual completed family size is typically higher than the lowest TFR, and lower than the highest TFR. * Life expectancy specifies the additional number of years a person in a given birth cohort can expect to live beyond a reference age. Typically what is referred to is life expectancy at birth. This changes over the life cycle. When considering future demand for elder-oriented goods and services, it is important to be aware of measures of life expectancy at older ages, for example, age 65. * A population is considered young when it has a median age of less than 20 years (or less than 5 per cent aged 65 years and over), and old when it has a median age of more than 30 years (or more than 10 per cent over the age of 65). Other useful indices of population ageing are the aged/child ratio and the familial support ratio. The more commonly used dependency and potential support ratios have many limitations. Uppermost among these is that they treat the working-age population (15-64 years) as if all its members of it were economically active. * A cohort is a group of people connected by a similar event (for example, birth in a given year). The size of a birth cohort is the combined function of prevailing birth (and mortality) rates and the number of women at reproductive age (and actually giving birth). This caused Australia's largest birth cohort to be born in 1971, rather than 1961 (the peak of the baby boom). It also means that most baby bust cohorts are larger than most baby boom cohorts. Changes in cohort size should not be confused with population ageing—the large cohorts born during the baby boom years initially made the population younger. * A youthful age structure typically contains a momentum of population growth, while an older age structure contains a momentum of decline. The momentum effect is the unavoidable growth or decline potential contained with the age structure. For example, at the same time as the number of births are declining (causing structural ageing), the increased numbers of elderly (the result of numerical ageing) are causing an increase in the number of deaths. The two trends are on a seemingly unavoidable collision course that, in Australia, will see a shift from natural increase to natural decline around 2035. * Net migration gains can have small reducing effects on structural ageing, but, in the long term, add to both structural and numerical ageing. Attempts to maintain either the size of the working-age population, or the ratio of working-age to elderly through replacement migration, would increase the size of host populations beyond what is believed to be socially or politically acceptable. (Replacement migration aimed solely at maintaining population size (in the context of intrinsic decline) is an exception.) A useful means of understanding the trade-off is McDonald and Kippen's index of efficiency, which demonstrates the percentage reduction in structural ageing for each net million migrants gained. Fertility increase is argued to be a more efficient counter to population ageing than immigration. However, substantial fertility increase may now be unattainable, and in the short term would add to the total dependency ratio. * Within the total population there are different age structures for different sub-population groups (sex, ethnic and regional). The Aboriginal and Torres Strait Islander population is considerably younger than the total Australian population, while the main immigrant groups of the 1940s and 50s are considerably older. Among the latter, males tend to outnumber females at older ages, which differs from the total population. Differences in age structure by State and Territory indicate that Tasmania and South Australia will begin intrinsic decline several decades before the remaining States and Territories. * Demographic compression occurs when a number of key demographic events (such as age at child birth, age at which the last child leaves home, the length of the working life/ retirement, the ageing of parents), become compressed into a shorter space of the life cycle. They may also overlap with the demographic experiences of an individual's own parents and offspring. Different cohorts may have different abilities to respond to inter-generational demands. * The welfare states of most developed countries were developed at a time when the age structures of these countries were young and juvenescent. The 'social contract', pay-as-you- go type of welfare state may in fact require a more youthful demographic structure for long-term sustainability. If so, the Australian welfare state (and others like it) may have a built-in 'use-by' date. * Policy has many dimensions, among which are explicit, implicit, direct, indirect, unintentional, and net effects. These sometimes conflicting dimensions mean that it is almost impossible to attribute a change in a social phenomenon to any single policy intervention. However, ostensibly non-demographic policies (such as higher education fees) can have demographic effects. Where possible, policies should be scrutinised for their potential anti-natal effects. * Population projections are not predictions. They are computed on clearly specified and biennially revised sets of assumptions about birth, death and migration rates. Because birth and death rates change slowly, and migration into a country such as Australia can be reasonably well controlled and monitored, projections for the immediate years and decades are highly reliable. It is typical to use the medium variant assumptions for regional and international comparisons. * When undertaking statistical analysis of social phenomena over time, it is important to distinguish between changes due to shifts in age structure (or changes due to other compositional factors, such as marital status), and actual changes in the variable(s) of interest (the 'true' or underlying change). The same applies when comparing data for two or more populations at a single point in time. The techniques of standardisation and decomposition are particularly suited to these tasks.
Britain faces fiscal time bomb KATHRYN HOPKINS From: The Times July 11, 2011 10:01AM
NATIONAL debt could rise towards 100 per cent of GDP if future governments do not boost tax revenues and slash public spending to defuse the fiscal time bomb of an ageing population, the Office for Budget Responsibility will warn this week.
A report by the spending watchdog will state that Britain's ageing population is set to impose a mounting strain on already stretched public coffers in the coming decades.
The report, the OBR's first on long-term fiscal sustainability of the economy, will say that society will be left to make difficult choices in order to keep the national finances on a sustainable path.
Ahead of the report's publication on Wednesday, Robert Chote, the head of the OBR, told The Times that demographic pressures would intensify over the next 50 years as the population ages, pushing up spending on health, long-term care and pensions.
The alarming forecasts build on preliminary analysis from the OBR in November, which showed that demographic factors would push up spending by 2.6 per cent of GDP by 2029-30 and almost 4.6 per cent of GDP by 2049-50, bringing public sector net debt to 58 per cent and 97.6 per cent of GDP, respectively.
Public sector net debt is 66.1 per cent of GDP. It is forecast to peak at 70.9 per cent in 2013-14 then begin declining before the cost of an ageing society kicks in and it heads north once more.
Mr Chote said: "The demographic factors when we presented the interim analysis in November pointed to the fact that the ageing population does put upward pressures on spending and that changes the sustainability picture.
"The demographic bulge has probably not shifted much in the last few months but given the uncertainties you need to look at these figures afresh."
The accountant PwC has previously warned that governments will face the challenge of providing for retiring baby-boomers and the continuing trend of people living longer.
The PwC report cautioned that there may need to be additional tax rises or spending cuts of up to 20 billion pounds ($30bn) by 2020 in order to prevent the older demographic from having a detrimental effect on the deficit. Further policy changes such as raising the state pension age to 70 by 2046 rather than 68 as is planned may also be needed.
The OBR will also speak out about other factors that could have a significant impact on the government's finances, including student loans and the value of assets that could be sold by the government.
Its report will for the first time present a full audit of the overall public balance sheet, including liabilities, private finance initiative contracts and public sector pensions. The report is a key moment for the body that was created just over a year ago and had a difficult birth as the media questioned its independence.
The OBR has also come under fire for repeatedly having to downgrade its growth forecasts as the economic recovery proves to be much weaker than expected.
German Population's Ticking Time Bomb Sept. 19 (Bloomberg) -- Despite Germany's economic success, birth rates are among the lowest in Europe. Bloomberg's Jessica Howard reports on the potential labor crisis brewing in Europe's biggest economy.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy
