Advanced Australia: The Politics of Ageing

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INTRODUCTION

A Bigger, Older Australia

My mother is a very typical Baby Boomer, born in 1951. Mum’s grandfather was in the first landing party at Gallipoli, and her father served in North Africa and New Guinea in World War II. In stark contrast to the privations and struggles of those earlier Australian decades, Mum and her siblings grew up in the post-war prosperity of Adelaide in the 1950s and 1960s, marvelling at television and the Beatles. Never before had it been so much fun to be young. Like many of her generation, Mum married early—a Vietnam veteran— and had her children at the peak of the Echo Boom in 1970 and 1971. Mum and her friends were presented with opportunities at work that very few women had had before, and they enthusiastically took them up. Relative economic independence along with the Whitlam government’s family law reforms also meant that they had a freedom to leave unfulfilling relationships, which their mothers and grandmothers had generally lacked.

Mum worked hard from the time she was a teenager, raising children—sometimes by herself—and exploring a number of different careers. She has now settled into what we call her ‘third age’: a phase of life in which those twin demands of child-rearing and paid work have dropped away, and more time and energy can be devoted to self-fulfilment. Mum still does some paid work, but also paints, travels and spends time with her grandchildren. She is fit and healthy, and an avid consumer of all manner of things, both cultural and material. Mum came of age in a political sense during the Whitlam era, and her worldview remains deeply shaped by that experience. She is confident and forthright, and places a great deal of stock in the importance of treating others with respect. So it comes as quite a shock to her to be frequently spoken to by younger shop assistants as if she were either a small child or simply incapable of processing serious thoughts. This is a common story—Baby Boomers moving into their third age in good health and with lots of plans are now feeling the rough end of modern society’s demeaning attitude towards age.

In 2011, the oldest members of the generation that sang ‘I hope I die before I get old’ started to turn sixty-five and qualify for the Age Pension. No generation in history has attracted more analysis than the Baby Boomers, and for good reason—they have profoundly changed society over the course of their lives. Beyond its capacity to drive social change, the Baby Boomer generation is also remarkable for the degree of contrast with the generations that preceded it. The pre-Boomers are now in their seventies and eighties, dominating the aged care and geriatric health systems. To the extent that generations can be stereotyped, theirs is usually described as ‘stoic’ and ‘unassuming’ and, in Australia, labelled the ‘frugal’ and ‘silent’ generation. They could scarcely be further removed from the outspoken and ambitious Baby Boomer generation.

In Australia, the ageing of the Baby Boomers doesn’t represent a statistical hump; instead, it presages a long-term trend for Australia in the age mix of our population. The most striking thing about the Boomers is how much bigger their numbers are than the pre-Boomers who were born during a period of exceptionally low fertility in Australia, caused by the Great Depression. Although their numbers were swelled by the early part of the post-war immigration program, theirs is still a relatively small cohort.

The ageing of the Baby Boomers represents one of Australia’s most challenging demographic shifts ever. The most obvious challenge lies in the numbers. Once this generation numbering more than 5 million have all celebrated their sixty-fifth birthdays (in 2030), there will be 6 million Australians in that upper age bracket, in contrast to around 3.5 million today. The demand for age-related services will increase dramatically. And there are substantial challenges in supporting that number of people (mostly) in retirement to stay financially secure, active, healthy and connected to their communities. This shift is not a one-off event isolated to the Baby Boomers. Australia’s strong history of immigration and healthy birth rates mean that—unlike many other nations—the generations that follow them are even bigger than the Boomers. The present shift is a window into the new normal for Australia: where a much larger share of the population is sixty-five or older.

The Baby Boomers are also the first generation to benefit fully from the longevity revolution of the twentieth century that added the best part of three decades to Australian life expectancy. The opportunity to live a fulfilling third age is one which previous generations could only imagine and which we are only beginning to comprehend. How we manage this shift has profound implications for the generations to come as much as for the Baby Boomers. Happily, theirs is a generation well accustomed to being on the cutting edge of social and economic change. The Boomers re-engineered every phase of their life in a profoundly enduring way: their adolescence (a term they coined), their working lives (especially for women) and their parenting. The generations that have followed have largely lived their lives within those new paradigms, overwhelmingly to their advantage. The Baby Boomers will almost certainly have the same impact on what it means in Australia to be older.

After the 2010 federal election, I was appointed by Julia Gillard as Minister for Mental Health and Ageing. While the allocation of portfolios is always a matter for the prime minister, I had specifically asked to be given those responsibilities. During my first week in the job, a radio interviewer asked me what I was going to do ‘about the problem of ageing’. I eventually lost count of the number of times I was asked about the ‘burden’ or ‘crisis’ of ageing, or even how we might be able to ‘fix’ ageing. The ‘time bomb’ narrative around ageing has deep roots in Australia. Some commentators and politicians regularly link the ageing of our population to the collapse of the health system, an unsustainable budget and, even, a ‘gerontocracy’ where the electorate becomes overwhelmed with older voters who use their new political clout to entrench their own privileges at the expense of everyone else. This narrative is by no means peculiar to Australia; it has even deeper roots in the United States with President George W Bush warning in his sixth State of the Union address that ‘the retirement of the Baby Boomer generation will put unprecedented strains on the federal government … present[ing] future Congresses with impossible choices; staggering tax increases, immense deficits or deep cuts in every category of spending’. In the United States, this terrifying picture is typically employed to support a case to privatise Medicare or Social Security. In Australia, similar language was deployed to drive home the broader national interest apparently involved in reducing Age Pension entitlements in the 2014 budget. But, as this book shows, that brand of self-serving rhetoric paints a misleading picture of Australia’s economic future.

Not much more than a century ago, the average Australian lived until their late fifties. In that short period of time, we’ve added about thirty years to the average Australian life span. Far from being a problem we should aim to fix, the World Health Organization is right in describing that change as ‘one of humanity’s greatest triumphs’. It has never been clear to me how any government would be able to ‘fix ageing’, even if it wanted to do so. The additional life expectancy enjoyed by the Baby Boomers and their children means that the figures for ageing over coming decades are pretty much locked in. As I describe through this book, the proportion of Australia’s population aged sixty-five years and older will be influenced by variables like migration policy, birth rates and our ability to add yet more years to existing life expectancy. But we do know with some certainty that the raw numbers in that age cohort will climb to around 9 million by the middle of the century. Even more dramatic will be the increase in numbers of the ‘very old’; the cohort aged eighty-five years and older will more than quadruple over that same period.

Australia is better positioned than almost any other nation to manage the economic and budgetary impact of that substantial change in the age mix of our population. The past twenty years have been something of an economic ‘sweet spot’ for Australia, as it has reaped the benefits of the high demand in our region for Australian exports. Less frequently discussed, though, is the impact that the historically high proportion of the population in the working age cohort over the past two decades has had on the nation’s productive capacity. Both of these peaks will recede in coming years and decades; firstly, as our three largest export markets (China, Japan and South Korea) all start to shrink in population; and, secondly, as the size of Australia’s working age cohort returns to more usual levels following the retirement of the Baby Boomers. In spite of these changes, though, it is clear that Australia can continue to maintain high levels of economic activity and prosperity, and that the budgetary impacts of a much larger population aged sixty-five years and over will be manageable.

Australia has some important advantages over other nations facing the retirement of the Baby Boom generation. Unlike many other nations, the Baby Boomers gave birth to large ‘Echo Boom’ generations, which, in turn, are maintaining relatively high birth rates. Combined with strong immigration to Australia since World War II, this has helped Australia keep a relatively healthy demographic balance. We are also approaching the shift off the back of more than twenty years of relatively strong economic growth and with government balance sheets in better shape than almost every other major developed economy. And, finally, our retirement incomes policy (blending a sustainable public pension with compulsory superannuation savings) is the envy of much of the rest of the member states of the Organisation for Economic Co-operation and Development (OECD). In spite of those advantages, though, the task of managing this major demographic shift will still be heavily impacted by broader population trends.

Coincidentally, as the oldest Baby Boomers were contemplating their imminent shift to the Age Pension, a furious debate broke out in 2010 about our future population growth, dividing the community into those who supported a ‘Big Australia’ and those who did not. Before 2010, the official projections of Australia’s population had consistently suggested a nation of somewhere between 25 and 29 million people by the middle of this century. The 2010 Intergenerational Report from Treasury, on the other hand, applied data from the 2006 census and announced that Australia was likely to be a nation of 36 million people by 2050. It’s now clear that Treasury and the Australian Bureau of Statistics substantially underestimated immigration rates in the new century (especially the explosion in international student numbers) and mistook a change in the average childbearing age as a structural decline in the overall birth rate. Just this last misinterpretation meant that Treasury underestimated the number of births in Australia over the five years from 2004 to 2009 by about 150 000, with obvious effects on anticipated demand for paediatric health services, childcare and, later, schooling. Before long, those unexpected children needed the equivalent of more than 250 large primary schools and 8000–10000 teachers whom education authorities had been led to believe would be surplus to requirements.

Resistance to the idea of a Big Australia is not new. Nugget Coombs and other public intellectuals started to call for Australia’s population to be stabilised at an ‘ecologically sustainable level’ back in the 1970s. Prominent environmentalists like Tim Flannery and Ian Lowe maintain that position today. And politicians and commentators have often responded to community concerns about infrastructure bottlenecks in high growth areas like Western Sydney by also supporting these calls. It is true that Australia’s environment is a particularly fragile one, more vulnerable than many others to the impacts of climate change. But Australia is also a huge country with substantially more arable land and freshwater than most others. The World Bank tells us that three quarters of the Group of Twenty (G20) countries have less than one quarter of the arable land per person that we have in Australia; the closest nation to Australia on this measure is Canada, which has about 40 per cent less than we do. We have about ten times as much freshwater per person as China, the United Kingdom and Spain, and more than twice the amount enjoyed by Americans. Environmental sustainability is an important element of Australia’s population debate, but is not in itself a reason not to welcome new migrants to our country. Given that the vast bulk of population growth will be in Australia’s major cities, it is also important for the nation to have a forward-looking cities and infrastructure agenda, as the Australian Labor Party has been arguing for many years now. But the truth is that Australia’s cities remain much sparser than the cities of the rest of the world. No other nation to which we usually compare ourselves has less dense cities than Australia, not even New Zealand. Of the 276 cities measured for population density in the United States, only eight have lower density than Sydney and the largest of those eight is about the size of Newcastle. The solution to having more liveable cities lies in good urban policy rather than pulling up the drawbridge on population growth.

It’s hard now to see how we could engineer a situation that restricts Australia’s mid-century population to much less than 30 million people, even if we decided that was what we wanted to do. Continuing improvements to average life expectancy are obviously not going to be reversed by any government. Equally, ours is a nation that encourages families to decide themselves how many children they have and at what time in their lives to have them. The only real lever to keep Australia’s population growth at a lower level is immigration. To limit our growth to much less than 30 million over the coming twenty years would require a decision essentially to stop immigration, to reverse our ‘open border’ arrangements with New Zealand, to terminate our humanitarian and other permanent migration programs, and to close down the burgeoning international student market and other temporary visa classes for employment.

Policy changes of that magnitude would have an immediate and dramatic effect on Australia’s economy. It would also send a strong signal about a seismic shift in how we relate to the rest of the world. Switzerland is one of the few other developed nations expecting substantial population growth in coming decades. Although its growth is slower than Australia’s, it is also largely due to relatively high immigration levels. In late 2014, around three quarters of Swiss voters overwhelmingly rejected a referendum proposal to slash the migration program and restrict population growth to 5 per cent (instead of the projected 50 per cent) by mid-century. I’m confident that such a reversal of Australia’s decades-old approach to immigration would also be rejected by the Australian community.

But an Australia approaching 40 million people by the middle of the century is not only difficult to avoid, it is also something that will make the task of adjusting to life where almost one quarter of the population is aged sixty-five years and older enormously easier. In contrast to Switzerland, many other European nations are confronting a future of anaemic population growth or, in some cases, even population shrinkage. At the beginning of the twenty-first century, for example, Spain was twice Australia’s size; by 2050, its population is likely to be comparable to ours. The beginning of that process is a significant contributor to the inability of many European nations to pull themselves out of economic decline. By contrast, maintaining a strong immigration program and current birth rates will position Australia better than any other developed nation to prosper through a period of ageing.

In 2011, I held a series of forums across the country with older Australians. We were shortly expecting a report from the Productivity Commission about aged care. The forums I conducted were intended as an opportunity to hear directly from older Australians about what they thought the priorities should be in re-designing a decades-old aged care system, and more broadly about ageing. The forums were attended by several thousand older Australians and took place in all capital cities and a series of regional centres, each attracting anywhere between a few dozen and a few hundred attendees. A number of the events were targeted at particular groups in the community, such as ethnic communities, families living with dementia, and sexually and gender diverse older Australians. The format focused on questions and contributions from the floor over a period usually of a couple of hours. These forums gave me the most valuable insights into my responsibilities as Minister for Mental Health and Ageing—substantially more valuable than the standard parade of expert briefings and written submissions that characterises so much of the life of a government minister. It is clear that older Australians are, on the whole, enjoying their retirement. Nonetheless, it struck me through those forums how widespread is a general sense of unease or foreboding. Older Australians are generally living on the edge financially, and are very nervous about the constant chatter about the unsustainability of existing pension entitlements. They are resentful—and often shocked—by the way in which the rest of society treats them as they age. And