Tue. Nov 5th, 2024
Occasional Digest - a story for you

Treasurer Jim Chalmers will today release one of the most important documents that will help shape public policy for decades to come.

Called the Intergenerational Report, it offers a snapshot of Australia over the next 40 years.

It’s a document that governments release periodically, most recently in 2021, and 2015 before that.

While we are yet to see the full picture, we have been getting a sense of what the report includes.

So what do we know already? 

Population growing, people living longer

Australia’s population looks set to grow by around 50 per cent in the next 40 years.

That would see the population increase 13.8 million people to 40.5 million and while that might sound like a huge number, if realised, it would be the slowest rate of growth in any 40-year period since federation. 

Australia won’t just have more people, it will have older people.

The report forecasts that the number of people aged 65 and older will double and there will be triple the number of people aged 85 and older.

Life expectancy for Australians in 2062-63 is tipped to be 89.5 years for women and 87 years for men. 

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Older people, fewer pension payments

The aged pension is among the biggest single line items in the federal budget. 

But Australia is fast approaching a tipping point, where workers will be retiring after having spent their whole career earning superannuation. 

It means that while Australians will be older and living longer, aged pension payments, as a proportion of gross domestic product (GDP), will decline.

This will set Australia apart from many other nations, with the intergenerational report forecasting the lowest public spend on pensions, as a proportion of GDP, in the OECD by the mid-2030s.

But superannuation tax concessions, as a share of GDP, will rise from 1.9 per cent to 2.4 per cent. If realised, that will see these concessions overtake aged pension spending in the 2040s.

“The superannuation system is maturing, with around 17 million Australians collectively owning around $3.5 trillion in superannuation assets,” the report states.

“By the mid-2040s most people retiring will have been receiving the superannuation guarantee at 9 per cent or more for the duration of their working lives.”

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Tax receipts tipped to fall 

The Intergenerational Report forecasts that Australia’s economy will be 2.5 times larger in real terms in 2062-63.

Forecasters expect growth to slow in the coming decades because of Australia’s ageing population and slower population growth. 

An ageing and growing population is also forecast to contribute to driving up how much the federal government spends on health and aged care, with Australia’s ageing population estimated to account for about 40 per cent of the increase.

Currently, Mr Chalmers’ federal budget is benefiting from a strong labour market with low unemployment. That helps the government in two ways — a higher personal income take and fewer unemployment payments. 

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