Ageing Australia to strain economy, budget

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Australia’s population is ageing faster thanks to COVID-19 and this is expected to put pressure on a shrinking pool of workers relative to retirees.

As in other developed nations, Australian fertility rates are dropping off and modern medicine and healthier lifestyles keep people living longer.

New government population data shows the median age growing from 38.4 years to over 40 within a decade.

As well as longer life expectancies and declining fertility rates, Australia is experiencing a wave of baby boomers entering retirement.

The larger generation was created a post-war baby boom between 1946 and 1966 as well as a large cohort of migrants after the second world war.

The ageing population is expected to weigh on the economy and pose budgetary challenges as a shrinking tax base will be supporting a growing need for healthcare and other government services as people age.

The 2022 Population Report also found ageing has been accelerated by the effective pause on migration between March 2020 and December 2021 during the pandemic.

Despite the Centre for Population predicting a full recovery in migration numbers this year, the blip during the pandemic is expected to add 1.4 years to the median age compared to pre-pandemic predictions.

This is in part due to fewer migrants in Australia having children.

The pandemic also caused a short-term dip in life expectancy in 2021/22 and 2022/23 as deaths from COVID infections and other causes rose.

Still, the virus led to fewer deaths in Australia compared to other countries, the report says.

Treasurer Jim Chalmers said the 2022 Population Report highlighted the demographic challenges ahead.

“Widespread skills shortages already stand in the way of Australia’s transition from the pandemic to a new age of economic prosperity,” he said.

Dr Chalmers said the government was tackling the workforce shortages on multiple fronts, including allowing parents to work more, training Australians to fill skills gaps and improving the migration program.

On Wednesday, the government released details on its new independent body that will provide advice on the skills and training needs of workers and employers.

Commenting on the population snapshot, a youth parenting body, the Brave Foundation, said it was concerning to see birth rates to young parents increasing in rural and regional areas.

Brave Foundation chief executive officer Jill Roche said more resources were needed to support young parents so that they wouldn’t become dependent on welfare to survive.

“The predictions in the annual population statement pose a major risk for workforce shortages and so it is particularly important that young parents are supported to reach their potential,” Ms Roche said.

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