The federal government has released the latest Intergenerational Report (IGR) on how Australia could look in the next 40 years.
Unsurprisingly, we are expected to live longer and the government is going to need to spend more money, particularly on services for a rapidly ageing population.
But one factor at play that hasn’t been in other IGRs is the ongoing impact of the COVID-19 pandemic.
Here are some of the key predictions made in today’s report.
Population predictions decline
Australia has the lowest population growth rate it has seen in over a century.
The restrictions to migration as a result of the pandemic has meant a 0.1 per cent growth rate over 2020-21 — the annual average growth rate over the past 40 years has been 1.4 per cent.
The lower rate is a combination of lower fertility rates and the assumption that even when the international borders reopen, existing caps on migration will remain the same over the next 40 years.
Current projections have Australia’s population reaching 38.8 million by 2060-61 compared with the 2015 report, which was 39.7 million by mid-century.
Aged care sees major reforms
The baby boomer generation is a key driver of the predicted growth in aged care spending, with the number of people aged 70 and over expected to more than double over the next 40 years, reaching around 6.9 million people by 2060-61.
Real per person aged care spending is also projected to increase from $5,460 to $12,500 for people aged 65 and over.
Part of that increase is the major reforms announced by the government in last month’s budget to improve the safety and quality of residents.
Health spending on a downward trend
The ageing population will also play a major role in the government’s spend on health.
The projected increase of spending per real person is from $3,250 in 2018-19 to $3,970 in 2031-32, and up to $8,700 in 2060-61.
This is based on people aged over 55 years using the health system at a higher rate than the average person.
But, projected spending is lower over successive reports indicating less money being put aside to cope with an ageing population.
Life expectancies revised down
Mortality improvements have slowed down since the 2015 Intergenerational Report resulting in lower life expectancy than predicted in the last IGR.
That said, life expectancy at birth is expected to continue to increase from 80.9 years for men and 85.0 years for women in 2018, to 86.8 years for men and 89.3 years for women by 2061.