What about our ageing population?
Another certainty is our population is ageing. This has given overseas demographer Harry Dent the opportunity to suggest that our ageing population and their lack of spending is going to cause the next depression.
He cites the fallout of a Baby Boom gone wrong in Japan, where the number of retirees escalated beyond the number of working age citizens and had a notable impact on their local economy.
Dent suggests that Australia is facing its own demographic tsunami as more of our Baby Boomers hit retirement age.
Populate or perish
To me the conclusion is inescapable – we are going to have to populate or perish.
Look at the facts. Today, 43% of our workforce is made up of Baby Boomers (people born between 1945 and 1964).
This means the first wave of the tsunami has hit, as the first Baby Boomers are now turning 65. Over the next 15 years, Australia’s 5.3 million Boomers are going to reach retirement age and as they leave the workforce they will stop paying tax, many will go on the pension and most use our public health care system.
The problem is that most Baby Boomers don’t have enough savings or superannuation to see them through retirement.
This means many will have to keep working longer than they had anticipated but, eventually, when they do retire, they will place a massive burden on our financial system.
The governments will have to find the money for their pensions and health costs while at the same time making up for their lost taxation revenue by either:
>Increasing taxes for those in the workforce, which would be political suicide: or
>Increasing the size of the tax paying workforce by importing younger workers.
If we import young skilled adults to fill the increasingly wide gap in skilled labour that we are experiencing, these immigrants will work for some years and, given their skills, will earn high incomes and pay more tax.
What does the government say about all this?
In its 2010 Intergenerational Report, the Federal Treasury – on seemingly conservative assumptions of net overseas immigration of 180,000 each year in the future – concluded that we would, in fact, have 35.9 million residents living in Australia by 2050.
Economists BIS Shrapnel addressed the question of the shorter term impact of these figures and concluded that Australia’s population will likely increase by 25% to around 28.3 million people by 2026.
Based on this analysis there will be 5.7 million new Australians within 15 years. About 55% of these will be immigrants and the balance due to net births.
BIS Shrapnel projects that this translates to about 2.3 million new “households”, with on average 2.5 people per household by 2026.
