Australia says aging population needs more babies
CANBERRA (Reuters) - The Australian government's plea for couples to have more children, with "one for mum, one for dad and one for the country," has helped slow the aging of the nation's population, Treasurer Peter Costello said on Monday.
But Australia still faced slowing economic growth and a significant budget shortfall in 40 years due to the demographic impact of the aging population, Costello said.
"Demographic changes are still working against us," Costello said in an address to the National Press Club as he released a government analysis on the impact of an aging population.
He said Australia was currently enjoying a "demographic sweet spot" with the number of working age people, or those between 15 to 64, higher than at any time in the past 40 years.
But he warned that the numbers were set to decline from 2010.
The analysis, by a range of government agencies, said the number of Australians aged 65 or older is set to double by 2047 to 25 percent of the population, while the number of people aged 85 or more will triple to 5.6 percent of the population.
At the same time, the number of working-age Australians is set to increase only marginally, and will fall as a proportion of the population, putting stress on the nation's health and aged care costs and leading to lower economic growth per capita.
Costello said in 2007, there were five people of working age for every person aged 65 or older, but by 2047, there will be only 2.4 people of working aged for everyone aged 65 or more.
MORE BABIES NEEDED
Costello said progress was being made on increasing the birth rate, with women now having an average of 1.8 children compared about 1.7 five years ago.
But that meant Australia was still well below the 2.1 births per woman needed to ensure the population replaces itself.
"The fact is that the lower fertility rates of the 70s, 80s and 90s are still winding their way through the system. The large population bulge caused by the post-war baby boom is moving through the population and heading toward retirement," he said.
The latest projections suggest Gross Domestic Product (GDP) per person is set to increase by 1.6 percent on average over the next 40 years, compared to 2.1 percent over the past 40 years.
Costello said the aging of the population will force the cost of health care to double to 7.3 percent of GDP by 2047, while aged care costs would rise to 2.0 percent of GDP from 0.8 percent in 2006/07.
By 2047, government spending was expected to exceed revenue by about 3.5 percent of GDP, leading to big budget deficits.
The government has targeted the aging population by offering $4,000 to the parents of every new-born child, by encouraging workers to stay in the workforce beyond the usual retirement age of 65, and by encouraging workplace flexibility and productivity.
