whether or not we are having a baby boom, and whe
Managing Queensland’s Population Growth: Adding a Demographic Perspective Institute of Public Administration, Qld Division Keynote Address 20 April 2005
Dr Natalie Jackson University of Tasmania
Abstract Queensland’s population is projected to grow substantially over the next several decades. However that growth will be spread very unevenly across Queensland’s local government areas, where, by 2011, almost half are projected to have either declined in size or not to have grown. At the same time all of Queensland’s local government areas will experience massive growth in their elderly populations, leading to the argument that in the context of population ageing it is necessary to reconceptualise what is meant by growth. Failure to do so could see Queensland ill-prepared for both the problems and opportunities offered by an ageing population. This talk provides a demographic perspective for use in regional planning.
I am sure that most of you are aware that Queensland’s population is projected to grow substantially over the next several decades, and that this growth will be as much as twice the rate for Australia as a whole – that is probably why you are here. This outlook is vastly different to that projected for Tasmania – where I live - and South Australia, both of which are projected to slow right down or even decline in size (Table 1).
I have good news and bad news about this situation. The good news is that Queensland’s business community and others who want see population growth may indeed anticipate that outcome. The bad news is that this growth will be experienced most unevenly across Queensland’s local government areas,
where, by 2011, almost half (53) are projected to have either declined in size or not to have grown (14). At the same time, all of Queensland’s local government areas will experience massive growth in their elderly populations, which leads me straight to my main point, that in the context of population ageing it is necessary to reconceptualise what is meant by growth. Failure to do so could see Queensland ill-prepared for both the problems and opportunities that an ageing population will bring. I hope this talk will add a useful demographic perspective to the Queensland Government’s Draft Regional Plan (2004), which currently seems somewhat devoid of this element.
Leaping ahead for a moment, the following figure (Figure 1) shows the overall change by age projected for Queensland under the ABS ‘medium variant’ projections. While the total population of Queensland is expected to grow by some 670,000 over the decade to 2015, and by more than 1.3 million over the two decades to 2025 (around 22 per cent, but much greater if migration remains very high and/or the birth rate goes up), that growth will disproportionately be at the older ages. Between now and 2025, Queensland’s population aged 65+ years will grow by around 121 per cent, while all other age groups combined will grow by a mere 20 per cent. Between now and 2051, Queensland’s population aged 65+ years will grow by around 260 per cent, while all other age groups combined will grow by less than 40 per cent.
Thus as elsewhere in Australia, the majority of the growth occurs at the older ages, so developing appropriate infrastructure and building the changing age structure into projecting future demand for a wide range of resources and services must become the number one priority; it is the age composition of the population, and where it lives, not its overall size, that is important. This message is critical for those who must work within the States Grants Funding to Local Governments (an issue I have outlined at length elsewhere). For the first time in our history, the changes mean that populations contain within them an internal dynamic of decline that cannot be resolved through migration (and probably not through fertility either) (see Kippen 1999; Kippen and McDonald 2000). Much infrastructure (such as transport, energy and housing) built to accommodate the population growth that will occur in the immediate future is likely to be redundant long before its ‘technical’ use-by date, a major contrast to the past when we expected populations to grow forever.
2
Relatedly, I would like to digress for a moment.
Does anyone know this man? If you read any of the national newspapers the weekend before last you would have been confronted by a grinning Peter Costello surrounded by newborn babies, and claiming that he was just as proud as any new father. You will recall his exhortation to Australia’s young people at the announcement of the Baby Bonus in July 2004, to go forth and multiply: have one for you, one for your husband, and one for your country. The media hype that accompanied last week’s picture attributed the increase in births to the Baby Bonus, and Peter was happy to take responsibility.
However, the reports that Australia’s young parents had delivered 255,000 babies to the population over the previous 12 months were referring to the Australian Bureau of Statistics latest data release – for the year ended September 2004. Either these were extremely short pregnancies or the Baby Bonus didn’t have much to do with them; in short, the Baby Bonus was only a twinkle in Peter Costello’s eye when these particular babies were conceived.
The primary reason for the increased numbers of babies is simply that the largest cohort in Australia’s history is currently passing through the key reproductive age group – 30-34 years – and in fact birth numbers have been growing steadily since 2001, when this cohort first began to partner and have children. There are no surprises here – demographers have been expecting this little ‘baby burp’ to arrive ever since their parents were born back in the early 1970s. It is in fact an echo of the baby boom.
It remains to be seen if the baby bonus will actually get the birth rate back up a little, or at least stop it falling further. Most countries that have tried this pro-natal approach have found that the main thing that happens is that people who were planning to have a baby – or to have another baby – in the near future, get on with it, and there is consequently a small increase in births bought forward and a reduction in the space between children. However these new parents seldom go on to have more children than they were planning.
3
Now you may be wondering why I have chosen this preamble to my talk. The reason for Peter Costello’s exhortation to go forth and multiply was of course population ageing: as the birth rate falls, the proportion of the population at the older ages goes up. At the same time, the ratio of people at labour market entry age (say 15-24 years) vis-a-vis those approaching retirement age (say 55-64 years) goes down – and it is this trend that really underlies government – and business – concerns with the issue. Declining ratios of labour market entrants to exits means reduced supply (of labour market participants), increased competition for them, and higher wage costs. It also means a declining tax base vis-à-vis a burgeoning elderly population. I will return to these points.
My concern is that the current focus on whether or not we are having a baby boom; whether or not the birth rate will go up or down; to whom should we attribute responsibility for the recent increase in birth numbers etc., is sending a strong message out there that population ageing is resolvable – that a lift in the birth rate will have us all back to square one and all will be plain sailing.
I am about to show you how incorrect that is. At best it can only resolve one aspect of population ageing – that is, structural ageing (the increasing proportion of the population that is old – and even then the desired impact will be some 20 years away). Also, as I have already noted, population ageing is not unfolding at an even rate across Australia. The states and territories differ markedly in their demographic makeup – and in the drivers of this makeup – and the situation is even more volatile at the level of local government. It is all very fine to claim that a national-level increase in births will reduce structural ageing, but that is small comfort to local government areas that have very few people of reproductive age in them, or are already dealing with negative labour market entry/exit ratios, or are ‘old’ and geographically located next to another ‘old’ local government area.
Let me illustrate with a couple of age structures (Figure 2), and then I will begin to draw my points together. The two age structures shown here – Redcliffe (with 20 per cent over the age of 65) and Ipswich (with 9.5 per cent aged 65+) – are examples of, respectively, ‘older’ and ‘younger’ local government areas.
4
Currently around 12 per cent of Queensland’s population is aged 65+ years (this compares with 13 per cent for Australia as a whole, so Queensland is slightly younger). Across Queensland’s (approximately) 127 local government areas this figure ranges from 3.4 per cent (in Duaringa) to 25 per cent (in Mount Morgan). While total Queensland is relatively young vis-à-vis Australia, 67 (54 per cent) of its local government areas are ‘structurally older’ than the state average, and 51 (41 per cent) are older than the national average.
So there is enormous demographic diversity both across the country and within the state, and this diversity is made even more complex because of the different rates at which each local government area is ageing. Queensland in total is ageing at the rate of around one-third of a percentage point per year, or in other words, the proportion of the population aged 65 and over is increasing at the rate of around one percentage point every three years. Redcliffe’s 65+ population is ageing at around one percentage point every two years, while for Laidley (not shown) that is one percentage point every 1.3 years.
Ultimately the changing ratio of old to young means more deaths than births, and the onset of natural decline. Insufficient migrants to offset the lost births and increased numbers of deaths thereafter translates into absolute decline.
Before I alarm or confuse you too much let me hasten to add that this situation won’t bother total Queensland for some time yet. Over the past thirty years or so, only 40 per cent of Queensland’s growth has come from natural increase (currently it is only 30 per cent) (see Figure 3). Migration has been, and will continue to be, the main driver of population change in Queensland. Queensland’s migrants are also disproportionately young. Contrary to popular belief, only 7 per cent of Queensland’s interstate migrants are aged 65+ years; 68 per cent are in the working ages, and 25 per cent are aged less than 15 years. As a result, natural decline is not expected in Queensland before the 2040’s (a little later than total Australia). But there are already more elderly than children in seven (6 per cent) of Queensland’s local government areas, and the phenomenon is projected to increase steadily to around 18 local government areas (14 per cent) by 2011 and 43 (34 per cent) by 2016. By 2019, just 14 years away, it will be the experience of almost half of Queensland’s local government areas as they are currently defined.
5
Paradoxically, the disproportionate growth at the older ages is hurtling many regions towards decline. Our current preoccupation with the birth rate is preventing us from developing the contingency plans that we will need if we fail to get the birth rate stabilised, let alone back up. Taking a cargo-cult mentality to the birth rate means that we are identifying neither the problems that will come with the increased numbers of elderly, nor the short- and medium-term opportunities that will arise as labour market exits outnumber entrants – for example – the possibility that full employment will soon ensure a much wealthier younger population – and that we will need this to happen if these relatively depleted younger cohorts are going to buy the houses and shares of the distended baby boom generation once they begin to divest themselves of these.
Let me summarise these points and briefly illustrate them as I go.
I find it very useful to break population ageing down into four dimensions: numerical and structural ageing, and natural and absolute decline. These dimensions can be given a sort of confidence level with which they can be anticipated.
Numerical ageing refers to the absolute increase in the numbers of elderly. Its primary cause is improving life expectancy, which keeps more people alive, but the ageing of the baby boom cohort will soon add enormously to these numbers.
Currently Queensland has around 480,000 people aged 65+ years (Figure 4). By 2025 that is projected to be over one million – an increase of 134 per cent on the high variant (Series A) projections or 121 per cent on the medium projections – in either case an enormous increase.
The numbers take on more reality for planning purposes if we look at them in terms of their annual increase – next year in Queensland there will be around 16,000 more people aged 65+ years than this year; the following year, an additional 17,000; the following year, an additional 19,000. In just four years from now (in 2009) the increment will be over 22,000. In 2012, just seven years away, numbers will skyrocket to around an additional 35,000 every year for the following 12 years shown on this graph. 6
(Numbers at these ages will actually remain above an additional 30,000 a year until after 2030, whereupon they will slowly subside. Nevertheless Queensland is projected to still be gaining an additional 20,000 65+ year olds every year to at least 2050.).
As intimated earlier, growth in these numbers is 100 per cent guaranteed – not necessarily their precise numbers, but their upward trend. Those who will be 65 years and older in ten years time are 55 and older today – we know the approximate rate at which they will die, and at which they are likely to migrate, so we can project their numbers with a fair degree of accuracy. As you can see the data differ very little by whether they are the ‘high’ or ‘medium’ projection series, and there is almost no disparity between the two sets for the next decade.
An even more useful perspective is gained when we disaggregate the numbers by broad age group – this shows us that the elderly will come in age waves, allowing us time to plan. Currently there is massive growth occurring in the 55-64 year age group as the baby boomers move into this age group. As they begin to leave this group and move into the 65-74 year group, the latter will grow and the former will steady off, and so on.
7
The next question is, how do these numbers relate to the rest of the population. To answer this question we need to return to structural ageing, which is the dimension I was referring to earlier – the increase in the proportion of the population over the age of 65 years, the consequence of the declining birth rate. The resulting decline in the number of children entering the base of the population age structure causes the older proportion to grow.
Now if the birth rate were to rise it would indeed reduce the proportion over the age of 65 years. However, with birth rates declining across the entire world, and Australia’s at 1.75 actually being relatively high, it is unlikely that we will buck the trend by very much. (The average birth rate across the entire world is now less than 2.5 births per women, down from 5.4 when I was born in 1950; you need 2.1 births per woman to exactly replace each generation, and demographers are projecting that this level will be reached globally within a decade – the trend has enormous implications for Australia’s migration program in the long-term). As I intimated earlier, my concern is that while we are focussed on getting the national birth rate up (or preventing it from declining further) we are not developing contingency plans with which to proceed if we fail in these endeavours, nor are we seeing the problems or the opportunities, nor their regional diversity.
Countless types of graphs can be used to show you what structural ageing looks like, but I am going to focus on just four. The first shows what the current and projected (for 2025) age structures of Queensland look like; the second (Figure 1, given earlier), what the changes at each age between these two points in time look like; the third, how these changes play out in terms of the ratio of labour market entrants to exits (remember this is at state level, not local government level, which is highly diverse); and the fourth, how the trends play out in terms of the ratio of elderly to children and what that means for Queensland’s long-term growth.
Although Queensland’s age structure is relatively young compared with the rest of Australia, the projections in Figure 7 clearly show that as elsewhere it is also ageing rapidly. Figure 1 (given earlier) 8
made the changes by age explicit – the growth in the 65+ population will be between five and six times that for all other age groups combined. Such data tell a thousand stories. In most other Australian states, where the growth at the older ages is accompanied by absolute declines at the younger and middle working ages, they give clear answers to questions like ‘do we need to build a new peak hour transport system’? (answer: no). In Queensland’s case the data provide a similar base for strategic planning, but in Queensland’s case the questions are what sort of transport system to build (because Queensland also expects growth in the working age population), what will occur to peak energy demand (which age groups are the biggest users of air conditioners?), how will housing demand change, and so on.
Another clear picture to emerge from structural ageing is the changing ratio of young to old. Let’s look at it first in terms of the ratio of labour market entrants to exits, defined here as those aged 15-24 years and 55-64 years. Despite Queensland’s relative youth, the numbers at labour market entry age fall below those at (or approaching) labour market exit age by 2020. Currently the ratio is 1.4, or 14 entrants for every ten exits. Beyond 2020 this ratio falls quite steadily to 0.8, or eight entrants for every ten exits (in 1971 the ratio was 2.0).
As the Productivity Commission’s Report released last week agrees, this emerging situation will likely result in a significant tightening of the labour market and has almost got to see unemployment fall. Most of the jobs servicing an ageing population cannot be shipped offshore like the manufacturing of sneakers and toasters was during the 1980s and ‘90s (McDonald and Kippen 2001). Such jobs will remain local, and they will draw in everyone, whether skilled or unskilled. In support of the Commission’s argument I can tell you that an analysis I have recently completed for the Local Government Association of Tasmania shows that as the entry/exit ratios of each of Tasmania’s 29 local government areas have fallen across the period 1991-2001, so too has each local government area’s unemployment. The overall (Pearson’s ‘r’) correlation is 0.82, indicating a very strong relationship. For Queensland in total, r=0.92, an even stronger relationship (see Table 3). 9
There is of course much more to labour market supply (and demand) than pure demographic forces, but these declining ratios also differ markedly across the state and by industry and occupation (see Tables 3 and 4). The ‘problem’ at industry level was noted by the Management Advisory Committee’s (2003) investigation into the forthcoming retirement of Australia’s public servants, finding that around 23 per cent are expected to retire in the next 5 years. Jackson (forthcoming) shows that around 38 per cent of Queensland’s local government areas already have fewer people at labour market entry than exit age, and this is projected to increase to around 50 per cent by 2011 and 63 per cent by 2016.
10
And where you have an ‘old’ local government area bordering another, you can expect some major problems (and opportunities) unfolding (see the following maps which indicate the concentration of elderly and youthful regions). Uppermost among the problems will be recruitment and retaining of workers, as industries and regions compete for a declining demographic (including industries such as tertiary education institutions); while as implied there must surely abound opportunities for a whole raft of new age-related industries.
Queensland by Region: Percentage Aged 65+ Years
Persons 65 Years or Older (Percent)* 2003 Local Government Area ASGC Version 01
11
*Number in the category as a percentage of the total for each region. Footnote: (a)This data represents the preliminary estimates of the resident population for Queensland statistical regions as at 30 June. (b) 2003 figures are preliminary release and backward concorded from ASGC 03 to ASGC 01. Source: Queensland Government Website/Australian Bureau of Statistics, 3235.0.55.001 - Population Estimates by Age and Sex, Queensland
Queensland by Region: Percentage Aged 15-24 Years
Persons 15 to 24 Years (Percent)* 2003 Local Government Area ASGC Version 01
*Number in the category as a percentage of the total for each region. Footnote: (a)This data represents the preliminary estimates of the resident population for Queensland statistical regions as at 30 June. (b) 2003 figures are preliminary release and backward concorded from ASGC 03 to ASGC 01. Source: Queensland Government Website/Australian Bureau of Statistics, 3235.0.55.001 - Population Estimates by Age and Sex, Queensland My final illustration of structural ageing is the changing ratio of elderly to young. The data in Figure 9 show the numbers of elderly (65+) and young (0-14 years). Currently Queensland has around five elderly for every ten children, but by 2018 this ratio will be equal (one for one), and by 2051 it will be 1.8, or 18 elderly for every ten children. As noted earlier, the situation of more elderly than children is already extant in six of Queensland’s local government areas. 12
We have no recorded history of having more elderly than children in our communities, so we don’t yet know what it will mean – although of course we can look to contemporary Europe for an indication, since most European countries are already encountering this experience. However one thing we do know is that once there are more elderly than children it is a short step to there being more deaths than births, whereupon we move from our long-term experience of natural increase, to one of natural decline.
In conclusion, in the context of population ageing, we must reconceptualise what we mean by growth, and engage with the growing diversity that will be the experience of our regions. According to the United Nations Population Division (2000: 4), the emerging situation requires objective and comprehensive reassessments of many long established economic, social and political policies and programs, and the principles on which they are based. Many of these were developed at a time when populations were young and growing from natural increase, and the world paid scant attention to the idea that that natural growth would ever come to an end.
Among the problems that will occur are that much of the infrastructure (such as roads, housing, energy and service reticulation) that will have to be built to accommodate growing populations in the short- to medium-term is likely to become redundant before its ‘technical’ use-by date; this is unprecedented in the modern world that has become used to the idea that populations grow forever. Structurally ‘old’ regions that are geographically adjacent to other ‘old’ areas may experience particular difficulties in recruiting and retaining workers.
Queensland in total is still a long way off being faced with either natural or absolute decline, but the fact that these circumstances and their antecedents (negative labour market entry/exit ratios and more elderly than children) are already extant in several of Queensland’s regions – and are projected to be the ‘norm’ within two decades - is food for thought. In the interim there are many opportunities to be engaged with as Queensland enjoys its demographic gift – not least its likely declines in youth and general unemployment as the massive numerical ageing of the population generates an entire industry of jobs that will not be able to be shipped offshore (as occurred with the manufacturing of the ‘80s and ‘90s). As 13
elsewhere, Queensland will need its relatively depleted cohorts of future young to be highly employed, sought after and competed for, so that they will be in a position to buy up the houses of the distended baby boom cohorts as the latter pass into history. There is more to population ageing than meets the eye
Source: Unknown but gratefully acknowledged References Australian Bureau of Statistics (2000) Australia Population Projections by SLA (ASGC1996) 1999-2019. Commonwealth Department of Health and Aged Care, Catalogue 3222.0 (Datacubes) Australian Bureau of Statistics (2003a) Population Projections 2002-2100. Catalogue No. 3222.0. Australian Bureau of Statistics (2003b) Basic Community Profiles 2001.0 Australian Bureau of Statistics (2003c) Time Series Profiles 2003.0. Jackson, N.O. (2004a forthcoming) Regional Population Ageing and Local Government Funding: Some Considerations, accepted for publication in Australasian Journal of Regional Studies. Kippen, R. (1999) A note on ageing, immigration and the birthrate, People and Place, 7(2), 18-22. Kippen, R. and McDonald, P. (2000) Australia's population in 2000: the way we are and the ways we might have been, People and Place, 8(3), 10-17. Management Advisory Committee (2003) Organisational Renewal, Canberra, Commonwealth of Australia. McDonald, P. and Kippen, R. (2001) Strategies for labour supply in sixteen developed countries. 2000-2050. Population and Development Review 27(1): 1-32. Office of Urban Management (2004) Draft South East Queensland Regional Plan, Queensland Government. United Nations (2000) Replacement Migration, Population Division, Department of Economic and Social Affairs, United Nations Secretariat.
This document is available from the IPAA Knowledge Centre - www.ipaa.org.au
14
Dr Natalie Jackson University of Tasmania
Abstract Queensland’s population is projected to grow substantially over the next several decades. However that growth will be spread very unevenly across Queensland’s local government areas, where, by 2011, almost half are projected to have either declined in size or not to have grown. At the same time all of Queensland’s local government areas will experience massive growth in their elderly populations, leading to the argument that in the context of population ageing it is necessary to reconceptualise what is meant by growth. Failure to do so could see Queensland ill-prepared for both the problems and opportunities offered by an ageing population. This talk provides a demographic perspective for use in regional planning.
I am sure that most of you are aware that Queensland’s population is projected to grow substantially over the next several decades, and that this growth will be as much as twice the rate for Australia as a whole – that is probably why you are here. This outlook is vastly different to that projected for Tasmania – where I live - and South Australia, both of which are projected to slow right down or even decline in size (Table 1).
I have good news and bad news about this situation. The good news is that Queensland’s business community and others who want see population growth may indeed anticipate that outcome. The bad news is that this growth will be experienced most unevenly across Queensland’s local government areas,
where, by 2011, almost half (53) are projected to have either declined in size or not to have grown (14). At the same time, all of Queensland’s local government areas will experience massive growth in their elderly populations, which leads me straight to my main point, that in the context of population ageing it is necessary to reconceptualise what is meant by growth. Failure to do so could see Queensland ill-prepared for both the problems and opportunities that an ageing population will bring. I hope this talk will add a useful demographic perspective to the Queensland Government’s Draft Regional Plan (2004), which currently seems somewhat devoid of this element.
Leaping ahead for a moment, the following figure (Figure 1) shows the overall change by age projected for Queensland under the ABS ‘medium variant’ projections. While the total population of Queensland is expected to grow by some 670,000 over the decade to 2015, and by more than 1.3 million over the two decades to 2025 (around 22 per cent, but much greater if migration remains very high and/or the birth rate goes up), that growth will disproportionately be at the older ages. Between now and 2025, Queensland’s population aged 65+ years will grow by around 121 per cent, while all other age groups combined will grow by a mere 20 per cent. Between now and 2051, Queensland’s population aged 65+ years will grow by around 260 per cent, while all other age groups combined will grow by less than 40 per cent.
Thus as elsewhere in Australia, the majority of the growth occurs at the older ages, so developing appropriate infrastructure and building the changing age structure into projecting future demand for a wide range of resources and services must become the number one priority; it is the age composition of the population, and where it lives, not its overall size, that is important. This message is critical for those who must work within the States Grants Funding to Local Governments (an issue I have outlined at length elsewhere). For the first time in our history, the changes mean that populations contain within them an internal dynamic of decline that cannot be resolved through migration (and probably not through fertility either) (see Kippen 1999; Kippen and McDonald 2000). Much infrastructure (such as transport, energy and housing) built to accommodate the population growth that will occur in the immediate future is likely to be redundant long before its ‘technical’ use-by date, a major contrast to the past when we expected populations to grow forever.
2
Relatedly, I would like to digress for a moment.
Does anyone know this man? If you read any of the national newspapers the weekend before last you would have been confronted by a grinning Peter Costello surrounded by newborn babies, and claiming that he was just as proud as any new father. You will recall his exhortation to Australia’s young people at the announcement of the Baby Bonus in July 2004, to go forth and multiply: have one for you, one for your husband, and one for your country. The media hype that accompanied last week’s picture attributed the increase in births to the Baby Bonus, and Peter was happy to take responsibility.
However, the reports that Australia’s young parents had delivered 255,000 babies to the population over the previous 12 months were referring to the Australian Bureau of Statistics latest data release – for the year ended September 2004. Either these were extremely short pregnancies or the Baby Bonus didn’t have much to do with them; in short, the Baby Bonus was only a twinkle in Peter Costello’s eye when these particular babies were conceived.
The primary reason for the increased numbers of babies is simply that the largest cohort in Australia’s history is currently passing through the key reproductive age group – 30-34 years – and in fact birth numbers have been growing steadily since 2001, when this cohort first began to partner and have children. There are no surprises here – demographers have been expecting this little ‘baby burp’ to arrive ever since their parents were born back in the early 1970s. It is in fact an echo of the baby boom.
It remains to be seen if the baby bonus will actually get the birth rate back up a little, or at least stop it falling further. Most countries that have tried this pro-natal approach have found that the main thing that happens is that people who were planning to have a baby – or to have another baby – in the near future, get on with it, and there is consequently a small increase in births bought forward and a reduction in the space between children. However these new parents seldom go on to have more children than they were planning.
3
Now you may be wondering why I have chosen this preamble to my talk. The reason for Peter Costello’s exhortation to go forth and multiply was of course population ageing: as the birth rate falls, the proportion of the population at the older ages goes up. At the same time, the ratio of people at labour market entry age (say 15-24 years) vis-a-vis those approaching retirement age (say 55-64 years) goes down – and it is this trend that really underlies government – and business – concerns with the issue. Declining ratios of labour market entrants to exits means reduced supply (of labour market participants), increased competition for them, and higher wage costs. It also means a declining tax base vis-à-vis a burgeoning elderly population. I will return to these points.
My concern is that the current focus on whether or not we are having a baby boom; whether or not the birth rate will go up or down; to whom should we attribute responsibility for the recent increase in birth numbers etc., is sending a strong message out there that population ageing is resolvable – that a lift in the birth rate will have us all back to square one and all will be plain sailing.
I am about to show you how incorrect that is. At best it can only resolve one aspect of population ageing – that is, structural ageing (the increasing proportion of the population that is old – and even then the desired impact will be some 20 years away). Also, as I have already noted, population ageing is not unfolding at an even rate across Australia. The states and territories differ markedly in their demographic makeup – and in the drivers of this makeup – and the situation is even more volatile at the level of local government. It is all very fine to claim that a national-level increase in births will reduce structural ageing, but that is small comfort to local government areas that have very few people of reproductive age in them, or are already dealing with negative labour market entry/exit ratios, or are ‘old’ and geographically located next to another ‘old’ local government area.
Let me illustrate with a couple of age structures (Figure 2), and then I will begin to draw my points together. The two age structures shown here – Redcliffe (with 20 per cent over the age of 65) and Ipswich (with 9.5 per cent aged 65+) – are examples of, respectively, ‘older’ and ‘younger’ local government areas.
4
Currently around 12 per cent of Queensland’s population is aged 65+ years (this compares with 13 per cent for Australia as a whole, so Queensland is slightly younger). Across Queensland’s (approximately) 127 local government areas this figure ranges from 3.4 per cent (in Duaringa) to 25 per cent (in Mount Morgan). While total Queensland is relatively young vis-à-vis Australia, 67 (54 per cent) of its local government areas are ‘structurally older’ than the state average, and 51 (41 per cent) are older than the national average.
So there is enormous demographic diversity both across the country and within the state, and this diversity is made even more complex because of the different rates at which each local government area is ageing. Queensland in total is ageing at the rate of around one-third of a percentage point per year, or in other words, the proportion of the population aged 65 and over is increasing at the rate of around one percentage point every three years. Redcliffe’s 65+ population is ageing at around one percentage point every two years, while for Laidley (not shown) that is one percentage point every 1.3 years.
Ultimately the changing ratio of old to young means more deaths than births, and the onset of natural decline. Insufficient migrants to offset the lost births and increased numbers of deaths thereafter translates into absolute decline.
Before I alarm or confuse you too much let me hasten to add that this situation won’t bother total Queensland for some time yet. Over the past thirty years or so, only 40 per cent of Queensland’s growth has come from natural increase (currently it is only 30 per cent) (see Figure 3). Migration has been, and will continue to be, the main driver of population change in Queensland. Queensland’s migrants are also disproportionately young. Contrary to popular belief, only 7 per cent of Queensland’s interstate migrants are aged 65+ years; 68 per cent are in the working ages, and 25 per cent are aged less than 15 years. As a result, natural decline is not expected in Queensland before the 2040’s (a little later than total Australia). But there are already more elderly than children in seven (6 per cent) of Queensland’s local government areas, and the phenomenon is projected to increase steadily to around 18 local government areas (14 per cent) by 2011 and 43 (34 per cent) by 2016. By 2019, just 14 years away, it will be the experience of almost half of Queensland’s local government areas as they are currently defined.
5
Paradoxically, the disproportionate growth at the older ages is hurtling many regions towards decline. Our current preoccupation with the birth rate is preventing us from developing the contingency plans that we will need if we fail to get the birth rate stabilised, let alone back up. Taking a cargo-cult mentality to the birth rate means that we are identifying neither the problems that will come with the increased numbers of elderly, nor the short- and medium-term opportunities that will arise as labour market exits outnumber entrants – for example – the possibility that full employment will soon ensure a much wealthier younger population – and that we will need this to happen if these relatively depleted younger cohorts are going to buy the houses and shares of the distended baby boom generation once they begin to divest themselves of these.
Let me summarise these points and briefly illustrate them as I go.
I find it very useful to break population ageing down into four dimensions: numerical and structural ageing, and natural and absolute decline. These dimensions can be given a sort of confidence level with which they can be anticipated.
Numerical ageing refers to the absolute increase in the numbers of elderly. Its primary cause is improving life expectancy, which keeps more people alive, but the ageing of the baby boom cohort will soon add enormously to these numbers.
Currently Queensland has around 480,000 people aged 65+ years (Figure 4). By 2025 that is projected to be over one million – an increase of 134 per cent on the high variant (Series A) projections or 121 per cent on the medium projections – in either case an enormous increase.
The numbers take on more reality for planning purposes if we look at them in terms of their annual increase – next year in Queensland there will be around 16,000 more people aged 65+ years than this year; the following year, an additional 17,000; the following year, an additional 19,000. In just four years from now (in 2009) the increment will be over 22,000. In 2012, just seven years away, numbers will skyrocket to around an additional 35,000 every year for the following 12 years shown on this graph. 6
(Numbers at these ages will actually remain above an additional 30,000 a year until after 2030, whereupon they will slowly subside. Nevertheless Queensland is projected to still be gaining an additional 20,000 65+ year olds every year to at least 2050.).
As intimated earlier, growth in these numbers is 100 per cent guaranteed – not necessarily their precise numbers, but their upward trend. Those who will be 65 years and older in ten years time are 55 and older today – we know the approximate rate at which they will die, and at which they are likely to migrate, so we can project their numbers with a fair degree of accuracy. As you can see the data differ very little by whether they are the ‘high’ or ‘medium’ projection series, and there is almost no disparity between the two sets for the next decade.
An even more useful perspective is gained when we disaggregate the numbers by broad age group – this shows us that the elderly will come in age waves, allowing us time to plan. Currently there is massive growth occurring in the 55-64 year age group as the baby boomers move into this age group. As they begin to leave this group and move into the 65-74 year group, the latter will grow and the former will steady off, and so on.
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The next question is, how do these numbers relate to the rest of the population. To answer this question we need to return to structural ageing, which is the dimension I was referring to earlier – the increase in the proportion of the population over the age of 65 years, the consequence of the declining birth rate. The resulting decline in the number of children entering the base of the population age structure causes the older proportion to grow.
Now if the birth rate were to rise it would indeed reduce the proportion over the age of 65 years. However, with birth rates declining across the entire world, and Australia’s at 1.75 actually being relatively high, it is unlikely that we will buck the trend by very much. (The average birth rate across the entire world is now less than 2.5 births per women, down from 5.4 when I was born in 1950; you need 2.1 births per woman to exactly replace each generation, and demographers are projecting that this level will be reached globally within a decade – the trend has enormous implications for Australia’s migration program in the long-term). As I intimated earlier, my concern is that while we are focussed on getting the national birth rate up (or preventing it from declining further) we are not developing contingency plans with which to proceed if we fail in these endeavours, nor are we seeing the problems or the opportunities, nor their regional diversity.
Countless types of graphs can be used to show you what structural ageing looks like, but I am going to focus on just four. The first shows what the current and projected (for 2025) age structures of Queensland look like; the second (Figure 1, given earlier), what the changes at each age between these two points in time look like; the third, how these changes play out in terms of the ratio of labour market entrants to exits (remember this is at state level, not local government level, which is highly diverse); and the fourth, how the trends play out in terms of the ratio of elderly to children and what that means for Queensland’s long-term growth.
Although Queensland’s age structure is relatively young compared with the rest of Australia, the projections in Figure 7 clearly show that as elsewhere it is also ageing rapidly. Figure 1 (given earlier) 8
made the changes by age explicit – the growth in the 65+ population will be between five and six times that for all other age groups combined. Such data tell a thousand stories. In most other Australian states, where the growth at the older ages is accompanied by absolute declines at the younger and middle working ages, they give clear answers to questions like ‘do we need to build a new peak hour transport system’? (answer: no). In Queensland’s case the data provide a similar base for strategic planning, but in Queensland’s case the questions are what sort of transport system to build (because Queensland also expects growth in the working age population), what will occur to peak energy demand (which age groups are the biggest users of air conditioners?), how will housing demand change, and so on.
Another clear picture to emerge from structural ageing is the changing ratio of young to old. Let’s look at it first in terms of the ratio of labour market entrants to exits, defined here as those aged 15-24 years and 55-64 years. Despite Queensland’s relative youth, the numbers at labour market entry age fall below those at (or approaching) labour market exit age by 2020. Currently the ratio is 1.4, or 14 entrants for every ten exits. Beyond 2020 this ratio falls quite steadily to 0.8, or eight entrants for every ten exits (in 1971 the ratio was 2.0).
As the Productivity Commission’s Report released last week agrees, this emerging situation will likely result in a significant tightening of the labour market and has almost got to see unemployment fall. Most of the jobs servicing an ageing population cannot be shipped offshore like the manufacturing of sneakers and toasters was during the 1980s and ‘90s (McDonald and Kippen 2001). Such jobs will remain local, and they will draw in everyone, whether skilled or unskilled. In support of the Commission’s argument I can tell you that an analysis I have recently completed for the Local Government Association of Tasmania shows that as the entry/exit ratios of each of Tasmania’s 29 local government areas have fallen across the period 1991-2001, so too has each local government area’s unemployment. The overall (Pearson’s ‘r’) correlation is 0.82, indicating a very strong relationship. For Queensland in total, r=0.92, an even stronger relationship (see Table 3). 9
There is of course much more to labour market supply (and demand) than pure demographic forces, but these declining ratios also differ markedly across the state and by industry and occupation (see Tables 3 and 4). The ‘problem’ at industry level was noted by the Management Advisory Committee’s (2003) investigation into the forthcoming retirement of Australia’s public servants, finding that around 23 per cent are expected to retire in the next 5 years. Jackson (forthcoming) shows that around 38 per cent of Queensland’s local government areas already have fewer people at labour market entry than exit age, and this is projected to increase to around 50 per cent by 2011 and 63 per cent by 2016.
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And where you have an ‘old’ local government area bordering another, you can expect some major problems (and opportunities) unfolding (see the following maps which indicate the concentration of elderly and youthful regions). Uppermost among the problems will be recruitment and retaining of workers, as industries and regions compete for a declining demographic (including industries such as tertiary education institutions); while as implied there must surely abound opportunities for a whole raft of new age-related industries.
Queensland by Region: Percentage Aged 65+ Years
Persons 65 Years or Older (Percent)* 2003 Local Government Area ASGC Version 01
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*Number in the category as a percentage of the total for each region. Footnote: (a)This data represents the preliminary estimates of the resident population for Queensland statistical regions as at 30 June. (b) 2003 figures are preliminary release and backward concorded from ASGC 03 to ASGC 01. Source: Queensland Government Website/Australian Bureau of Statistics, 3235.0.55.001 - Population Estimates by Age and Sex, Queensland
Queensland by Region: Percentage Aged 15-24 Years
Persons 15 to 24 Years (Percent)* 2003 Local Government Area ASGC Version 01
*Number in the category as a percentage of the total for each region. Footnote: (a)This data represents the preliminary estimates of the resident population for Queensland statistical regions as at 30 June. (b) 2003 figures are preliminary release and backward concorded from ASGC 03 to ASGC 01. Source: Queensland Government Website/Australian Bureau of Statistics, 3235.0.55.001 - Population Estimates by Age and Sex, Queensland My final illustration of structural ageing is the changing ratio of elderly to young. The data in Figure 9 show the numbers of elderly (65+) and young (0-14 years). Currently Queensland has around five elderly for every ten children, but by 2018 this ratio will be equal (one for one), and by 2051 it will be 1.8, or 18 elderly for every ten children. As noted earlier, the situation of more elderly than children is already extant in six of Queensland’s local government areas. 12
We have no recorded history of having more elderly than children in our communities, so we don’t yet know what it will mean – although of course we can look to contemporary Europe for an indication, since most European countries are already encountering this experience. However one thing we do know is that once there are more elderly than children it is a short step to there being more deaths than births, whereupon we move from our long-term experience of natural increase, to one of natural decline.
In conclusion, in the context of population ageing, we must reconceptualise what we mean by growth, and engage with the growing diversity that will be the experience of our regions. According to the United Nations Population Division (2000: 4), the emerging situation requires objective and comprehensive reassessments of many long established economic, social and political policies and programs, and the principles on which they are based. Many of these were developed at a time when populations were young and growing from natural increase, and the world paid scant attention to the idea that that natural growth would ever come to an end.
Among the problems that will occur are that much of the infrastructure (such as roads, housing, energy and service reticulation) that will have to be built to accommodate growing populations in the short- to medium-term is likely to become redundant before its ‘technical’ use-by date; this is unprecedented in the modern world that has become used to the idea that populations grow forever. Structurally ‘old’ regions that are geographically adjacent to other ‘old’ areas may experience particular difficulties in recruiting and retaining workers.
Queensland in total is still a long way off being faced with either natural or absolute decline, but the fact that these circumstances and their antecedents (negative labour market entry/exit ratios and more elderly than children) are already extant in several of Queensland’s regions – and are projected to be the ‘norm’ within two decades - is food for thought. In the interim there are many opportunities to be engaged with as Queensland enjoys its demographic gift – not least its likely declines in youth and general unemployment as the massive numerical ageing of the population generates an entire industry of jobs that will not be able to be shipped offshore (as occurred with the manufacturing of the ‘80s and ‘90s). As 13
elsewhere, Queensland will need its relatively depleted cohorts of future young to be highly employed, sought after and competed for, so that they will be in a position to buy up the houses of the distended baby boom cohorts as the latter pass into history. There is more to population ageing than meets the eye
Source: Unknown but gratefully acknowledged References Australian Bureau of Statistics (2000) Australia Population Projections by SLA (ASGC1996) 1999-2019. Commonwealth Department of Health and Aged Care, Catalogue 3222.0 (Datacubes) Australian Bureau of Statistics (2003a) Population Projections 2002-2100. Catalogue No. 3222.0. Australian Bureau of Statistics (2003b) Basic Community Profiles 2001.0 Australian Bureau of Statistics (2003c) Time Series Profiles 2003.0. Jackson, N.O. (2004a forthcoming) Regional Population Ageing and Local Government Funding: Some Considerations, accepted for publication in Australasian Journal of Regional Studies. Kippen, R. (1999) A note on ageing, immigration and the birthrate, People and Place, 7(2), 18-22. Kippen, R. and McDonald, P. (2000) Australia's population in 2000: the way we are and the ways we might have been, People and Place, 8(3), 10-17. Management Advisory Committee (2003) Organisational Renewal, Canberra, Commonwealth of Australia. McDonald, P. and Kippen, R. (2001) Strategies for labour supply in sixteen developed countries. 2000-2050. Population and Development Review 27(1): 1-32. Office of Urban Management (2004) Draft South East Queensland Regional Plan, Queensland Government. United Nations (2000) Replacement Migration, Population Division, Department of Economic and Social Affairs, United Nations Secretariat.
This document is available from the IPAA Knowledge Centre - www.ipaa.org.au
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