Wayne Swan plans to crank up the Ageing Population Myth

31 12 2012

This is a guest post by Mark O’Connor whose website is at www.australianpoet.com http://t3.gstatic.com/images?q=tbn:ANd9GcQbtsVA7j6PTZsreKNggykcP4FV0i8VZLIyqzQJXCtiIbkxSiXS

Paddy Weaver  reports that the government has begun to pre-leak material from the next Inter-generational Report, due out early in the new year. Many of these leaks indicate a mis-emphasis we should be ready to query.

It seems a major thrust of the report will be to head off concerns at the huge infrastructure costs of our ever-expanding population. (These costs are usually estimated at at least $200,000 per extra Australian). Australia’s population will cross the 23 million line in 2013, re-sparking the population debate.

kelvinthomsonMPLabor MP Kelvin Thomson  has argued that these infrastructure costs have almost  bankrupted state governments, forcing severe cuts to infrastructure and services, and driving Labor out of office in several states. (See http://en.wikipedia.org/wiki/Kelvin_Thomson –  section on Political Theorist.)  The Report aims to spike such concerns  by cranking up fears of a revenue crisis caused by “our ageing population”.

The Report’s suggested remedy — you guessed it — is to increase immigration to keep the population “young”. Such arguments are a now traditional use, or misuse, of the Inter-generational Reports, begun by Peter Costello and continued by Wayne Swan. Though in opposing parties, these two treasurers have both been  one-eyed promoters of  growth at all costs.

Yet the Ageing Population Scare has been repeatedly refuted. It is the young not the old who are most economically helpless and need most care; and, though we will have more old people and fewer children in future,  the percentage of those in their working years will not greatly change. Dr Ben Spies Butcher, lecturer in Economy and Society at Macquarie University, says that despite the constant talking-up of a potential ageing crisis, “the evidence of a problem is minimal”, and “there is little evidence that population ageing will hurt the budget”.

[See Ben Spies Butcher, “The myth of the ageing ‘crisis’”, The Conversation, 26 April 2011.
cf. Ben Spies Butcher, “What ageing crisis?”, 31 January 2011. http://www.abc.net.au/rn/lifematters/stories/2011/3124413.htm.]

Indeed as Dr Jane O’Sullivan of University of Queensland has  shown, the costs of population growth exceed the projected costs of population ageing by 30 to one. “Can we really be so stupid?,” she asks.  See also http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0270.2011.02125.x/pdf

Similarly, in the UK, the Select Committee on Economic Affairs of the House of Lords concluded that: “Arguments in favour of high immigration to defuse the ‘pensions time bomb’ do not stand up to scrutiny”. http://www.publications.parliament.uk/pa/ld200203/ldselect/ldeconaf/179/179.pdf.

For a list of “myths” the committee rejected, see Sir Andrew Green, “Devastating demolition of the case for mass immigration”, Daily Mail, 31 March 2008.
http://www.dailymail.co.uk/news/article-552449/Devastating-demolition-case-mass-immigration.html#ixzz1KV3RDTYm e.g. “The Government’s key claim that immigration increases Britain’s overall gross domestic product (GDP) is dismissed as ‘irrelevant and misleading’ – even though, as the report points out, it is a claim that has been ‘persistently emphasised’.”

Jane O’Sullivan, “The downward spiral of hasty population growth”, On Line Opinion, 8 March 2010.
http://www.onlineopinion.com.au/view.asp?article=10137&page=0. Jane N. O’Sullivan, “Submission to the Issues Paper on a Sustainable Population Strategy for Australia”, 2011, pp. 16-19.

In Australia the newly formed the Stable Population Party has used social media and especially tweets to point out the omnipresent costs of population growth, and the number of fiscal problems that would be solved by reducing Australia’s population growth (which, according to the demographer Graeme Hugo, is more than 3 times the average of advanced nations). Here are some samples of the Stable Population Party’s tweets, which have been widely sent to the media and to community groups – it may be their success that is forcing Swan to shore up the growth lobby:

WA LibLabs can’t deliver new #Perth hospitals, so why should we accept population explosion?

Carmageddon hits #Melbourne, as LibLabGreen pop’n explosion wears down roads http://www.theage.com.au/drive/roads-and-traffic/carmageddon-hits-melbourne-20121227-2bxwc.html …

Holidaymakers clog #Brisbane highways to the coasts, as LibLab pop’n explosion policies ruin #Qld holidays http://www.brisbanetimes.com.au/queensland/holidaymakers-clog-highways-to-the-coasts-20121227-2bx7m.html …

Youth jobs dry up – unemployment @ 20% (as #LibLabs push ferocious job comp from foreign ‘students’) http://www.dailytelegraph.com.au/news/youth-jobs-dry-up-unemployment-rate-nears-20-per-cent/story-e6freuy9-1226543761159?sv=150e614f552fee96c32e7c0bdca04723#.UNvDp92cjvo.twitter …

WA BOILING FROGS: Dog box living, agriculture & dams to plummet, sprawl to Peel http://au.news.yahoo.com/thewest/a/-/wa/15711484/planners-prepare-for-population-explosion/ …

Naive Coalition backs down on infrastructure (It can’t afford Aus pop’n explosion either) http://www.theage.com.au/opinion/political-news/coalition-backdown-on-roads-promise-20121225-2bvap.html …

‘O’Farrell hits turbulence over airport’ but #StablePopulation ELIMINATES 2nd #Sydney airpoirt issue http://www.smh.com.au/nsw/ofarrell-hits-turbulence-over-airport-20121225-2bvat.html …

WA: #Perth pushed into ‘population explosion’ by vested interests http://au.news.yahoo.com/thewest/a/-/wa/15711484/planners-prepare-for-population-explosion/ … But choice is coming in 2013…

The last Inter-generational Report was notable for dubious presentation of the economic evidence about the effects of ageing. Under political pressure its authors made it sound as if  ” The tax take will fall at exactly the same time as health care and aged care costs are rising.” However, economist Dr Richard Denniss, of the Australia Institute, points out that this is the exact opposite of Treasury’s projections which predict the tax rate will soar despite the ageing of the population.

At the Informa Australia’s Population 2050 conference in Melbourne in September 2011,  Dr Denniss was scathing about such mis-readings of the Inter-generational Report: “The latest Inter-generational Report for Australia says by 2050 we will be so rich that at current tax rates government will be swimming in money….  The scare stuff is put in the part called Costs of Ageing.  The admission that these costs are in fact small is to be found tucked away in a section rivetingly titled Methodological Issues…  So, you’ve been tricked. There’s plenty of money if we just leave tax rates where they are – or even stop lowering them so often.” [Quoted in Big Australia? Yes/No, by Mark O’Connor, Jessica Brown and Oliver Hartwich, Pantera Press 2012 ]

The Ageing Population Scare is full of contradictions. Here is how I summed them up in Big Australia? Yes/No,  Pantera Press 2012.

A key indicator of a successful, prosperous and advanced society is the proportion of people who live long and healthy lives. By definition, such nations have an older average age than those where life is short, disease and conflict are rife, and birth control unknown or unaffordable. Switzerland, the Netherlands and Norway are examples of countries with populations that are ageing sooner and more dramatically than Australia’s.[i] In contrast, Congo, Burundi and Zimbabwe, with a median age of no more than 18 years, have no “ageing problem”.[ii] Where would you rather live?  Successful European countries and Japan have not tried to use immigration to suppress the ageing of their populations – not that such tactics could work for long because migrants, too, get old.[iii]  Indeed migration thickens Australia’s demographic bulge in the 20- to 50-year age group, exactly where it is already thickest.[iv]Without migration, our age profile is heading roughly in the right direction, towards having similar numbers of people in each age group.
It is often suggested that an ageing population is much more expensive because of higher health costs and greater demand for aged care and pensions. In reality most health care costs are incurred in the last 12 months of life, regardless of age.[v] We are living longer because we are staying healthier for a longer period.[vi] Government spending on health has increased, but largely because treatments are more expensive.[vii]

 Most older Australians live independently in the community. Only 7 per cent of those aged over 70 are cared for in government-subsidised residential aged care.[viii] In fact, older people are more likely to be givers than receivers of care. They provide childcare for 19 per cent of children under 12[ix] and primary care for 21 per cent of people with disabilities.[x]

The Australian Institute of Family Studies says: “Australians aged over 65 years contribute almost $39 billion per year in unpaid caring and voluntary work and, if the unpaid contribution of those aged 55 to 64 years is included, this contribution rises to $74.5 billion per annum”.[xi] An Australia Institute study confirms this, suggesting that up until the age of 75, net transfers of money and help flow from the old to the young.[xii]

The huge costs of a young population are also often overlooked. It is the young and not the old who are the most economically dependent. There will be more old people, but fewer children, so the proportion of people in their working years will remain high.[xiii] Contrast that with South Africa where a young population of 50 million has only 11 million taxpayers. . .

Why is the Ageing Population Scare so immune to evidence, like some vampire that keeps ignoring a stake through its heart.   Basically the growth lobby loves this scare  because they know that people are worried about their personal ageing — after all, old age is what is going to kill us all if nothing else gets in first. Their PR people believe it should be possible to get people to transfer this worry from their own lives to society as a whole. The trick is not to put the ageing argument front and centre, where it may attract refutation and fall apart, but to throw it in as a distractor at the end of, say, an argument that employers should be allowed to import pre-trained foreign workers because Australian award wages and apprenticeship costs are too high — than add, “Besides, more migrants will help solve our ageing population crisis.”However it seems the Inter-generational Report will put the ageing population argument front and centre where it may attract criticism and ridicule. I believe Swan deserves both.–Mark O’Connor

[i] Department for Sustainability, Environment, Water, Population and Communities, Sustainable Development Panel Report, Canberra, 2010, p. 264. Available at: www.environment.gov.au/sustainability/population/publications/issues-paper.html

[ii] Central Intelligence Agency, “Field Listing: Median Age”, The World Fact Book, updated weekly, available at: https://www.cia.gov/library/publications/the-world-factbook/fields/2177.html (Accessed 2 May 2011.)

[iii] As the Jones report noted back in 1994, p. 100,

“The myth that immigration is an effective tool for either permanently or in the short term reducing the average age of the population has been punctured by simple demographic analysis. Australia still has a relatively

youthful age structure and the population will continue to age slowly for

some decades. The Committee, as does the Government, accepts that

immigration is an inappropriate tool to counter demographic ageing, if

indeed demographic ageing is a problem.”


[iv] cf. Michael Lardelli (on population pyramids), “Booms in immigration are the problem, not the solution”, On Line Opinion, 20 May 2010.


[v] Michele Raitano, “The Impact of Death-Related Costs on Health-Care Expenditure: A Survey”, European Network of Economic Policy Research Institutes (ENEPRI) Report No. 17, February 2006, available at: http://www.enepri.org/files/Publications/RR17.pdf  (Accessed 2 May 2011.)

[vi] James Vaupel, “Biodemography of human ageing”, Nature, 25 March 2010, Vol. 464, pp. 536-542, available at: http://www.nature.com/nature/journal/v464/n7288/full/nature08984.html

[vii] Judith Healy, “The Benefits of an Ageing Population”, The Australian Institute, Discussion Paper No. 63,  March 2004, pp. 27-29, available at: http://www.tai.org.au/documents/dp_fulltext/DP63.pdf

[viii] Australian Institute of Health and Welfare research cited in “Evaluation of the impact of accreditation on the delivery of quality of care and quality of life to residents in Australian Government subsidised residential aged care homes – Final Report”,  Department of Health and Ageing, Commonwealth of Australia, 2007, available at: http://www.health.gov.au/internet/main/publishing.nsf/Content/ageing-iar-final-report.htm~ageing-iar-final-report-3.htm (Accessed 2 May 2011.)

[ix] ABS Australian Social Trends June 2010 Pub. No. 4102.0, “Childcare” available at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features50Jun+2010

[x]David de Vaus, Matthew Gray and David Stanton, “Measuring the value of unpaid household, caring and voluntary work of older Australians”, Australian Institute of Family Studies, Commonwealth of Australia 2003, p. 4, available at:

http://www.aifs.gov.au/institute/pubs/respaper/RP34.pdf (Accessed 2 May 2011.)

Note also the graph showing the projected need for health care workers in Long-Term Physical Implications, p. 97. It disproves the claim that a smaller Australia will have to find a much higher proportion of them.

[xi] David de Vaus et. al., op. cit., p. viii.

[xii] Judith Healy, op. cit.

[xiii] Jane N. O’Sullivan, “Submission to the Issues Paper on a Sustainable Population Strategy for Australia”,  2011,  pp. 16-17.

Also, note that the percentage who will be in their working years also improves when these are defined as the years between 20 and 69.  (The traditional notion that a person’s working years are from  15 to 64 is now badly out of date. It leads to a serious under-count of those too young to work, and an over-count of those too old.)  See also the Sustainable Development Panel Report, op. cit., p. 41