An Ageing Australia: Preparing for the Future

Commission research paper

This report was released on 22 November 2013. An errata was released on 17 June 2014.

The report focuses on the effects of ageing on economic output (underpinned by changes in population, participation and productivity) and the resulting implications for government budgets were current policy settings to be maintained. In that context, it will help inform the forthcoming Intergenerational Report (IGR) by The Treasury.

Printed copies

The overview of this paper is available from the Media and Publications Section.

Frequently Asked Questions

If you still have questions or would like to provide some general feedback on the report, please visit Frequently Asked Questions.

  • Australia's population will both grow strongly and become older. Such slow but profound shifts in the nature of a society do not elicit the same scrutiny as immediate policy issues. The preferable time to contemplate the implications is while these near inevitable trends are still in their infancy.
  • Population ageing is largely a positive outcome, primarily reflecting improved life expectancy. A female (male) born in 2012 will on average live for an estimated 94.4 (91.6) years.
  • However, population growth and ageing will affect labour supply, economic output, infrastructure requirements and governments' budgets.
  • Australia's population is projected to rise to around 38 million by 2060, or around 15 million more than the population in 2012. Sydney and Melbourne can be expected to grow by around 3 million each over this period.
  • The population aged 75 or more years is expected to rise by 4 million from 2012 to 2060, increasing from about 6.4 to 14.4 per cent of the population. In 2012, there was roughly one person aged 100 years old or more to every 100 babies. By 2060, it is projected there will be around 25 such centenarians.
  • Total private and public investment requirements over this 50 year period are estimated to be more than 5 times the cumulative investment made over the last half century, which reveals the importance of an efficient investment environment.
  • Labour participation rates are expected to fall from around 65 to 60 per cent from 2012 to 2060, and overall labour supply per capita to contract by 5 per cent.
  • Average labour productivity growth is projected to be around 1.5 per cent per annum from 2012-13, well below the high productivity period from 1988-89 to 2003-04. Real disposable income per capita is expected to grow at 1.1 per cent per annum compared with the average 2.7 per cent annual growth over the last 20 years.
  • Collectively, it is projected that Australian governments will face additional pressures on their budgets equivalent to around 6 per cent of national GDP by 2060, principally reflecting the growth of expenditure on health, aged care and the Age Pension.
  • Major impending economic and social changes can create the impetus for new reform approaches not currently on the policy horizon. For example:
    • The design of the Age Pension and broader retirement income system might be linked to life expectancy after completion of the current transition to 67 years in 2023.
    • Using some of the annual growth in the housing equity of older Australians could help ensure higher quality options for aged care services and lower fiscal costs.
    • Wide ranging health care reforms could improve productivity in the sector that is the largest contributor to fiscal pressures. Even modest improvements in this area would reduce fiscal pressures significantly.

Background information

Ralph Lattimore (Assistant Commissioner) 02 6240 3242