Australia must hire and keep more older people and women in the workforce to lift economic and income growth and offset a decline in labour participation over the next 40 years, according to the government’s latest Intergenerational Report.
Treasurer Joe Hockey said on Thursday Australia’s “grey army” of workers would be critical to the nation’s future and enabling their participation would be the focus of a lot of “structural effort over the next few years.”
Workforce participation rates of people over 65 are projected to increase from 12.9 per cent in 2014-15 to 17.3 per cent in 2054-55.
“We need older Australians – we want older Australians, if they choose to do so, to remain in the workforce and come back into the workforce,” said Mr Hockey.
He said business attitudes needed to change as well as policy, and he pointed to New Zealand’s removal of discriminatory policies towards older workers as a contributing factor to its higher participation rates.
Mr Hockey said Australia’s female workforce participation rate also lagged behind other countries such as Canada.
According to the report, the number of Australians 70 years and over is expected to almost triple over the next 40 years, reaching around 7 million people by 2055. By this time, the number of centenarians is tipped to reach 40,000 – almost nine times the number in 2014-15.
Government spend on aged care
While Federal Government expenditure on aged care is forecast to double as a share of the economy by 2055, it will remain a small percentage of total GDP (1.7 per cent) and is less than government spending on health and defence.
The report said higher private incomes and tighter means testing in aged care would constrain future government spending in this area as part of a greater user pays system.
The long-term forecasts also recognise the current shift away from low care residential aged care to community care, which is cheaper to deliver, and the smaller cohort that will enter aged care following the baby boomers.
The biggest spending growth will be in the area of health, which will jump from 4.2 per cent of GDP in 2014-15 to 5.5 per cent in 2054-55.
However 80 per cent of this projected increase in real expenditure per person is the result of non-demographic factors such as higher incomes, health sector wages growth and technological change, said the report.
National Seniors chief executive Michael O’Neill said the report provided a foundation for policymakers to put to bed the doom and gloom outlook pushed in recent years.
However, more needed to be done to encourage mature age workforce participation: “The reality remains that, once unemployed, people in their 50s will spend two-and-a-half times longer out of work than a younger person – and many will never get a job again,” he said.
NARI’s director of health promotion, Associate Professor Briony Dow, said employers needed to recognise the value of employing older workers and cities and workplaces must become older person-friendly,
Council on the Ageing (COTA) Australia chief executive Ian Yates said the report highlighted the need to address the prevalence of age discrimination in the workplace and for a more comprehensive workforce participation policy. Offering more flexible working arrangements to older people would also be an important strategy, he said.
However he said a “glaring omission” in the report was the cost of superannuation tax concessions on public revenue, which was equivalent to the age pension and rapidly rising.
Budget cuts to the rate of growth of the Commonwealth Home Support Program from 2017 would be also be significant over time and would represent 0.4 per cent of GDP, Mr Yates said.
HammondCare chief executive Dr Stephen Judd said the report highlighted a triumph of public health and that population ageing was not just about aged care.
“Two out of three people aged over 70 will never need age care. But 100 per cent of people will go to a pharmacy for prescribed medication or for radiology or pathology tests – this is by far the main area we should be looking at to make savings,” said Dr Judd.
Benetas CEO Sandra Hills said that while significant reform had taken place, it was important to further develop strategies on quality of life, aged care funding arrangements and service provision in light of the report’s findings.
“This challenge can be met but will require a greater discussion of ageing beyond the confines of recent debate,” Ms Hills said, adding that it was imperative Australia had a cabinet-level minister responsible for ageing who could work constructively across government to ensure the challenges were strategically addressed.