Treasurer Joe Hockey will tomorrow release the 2015 Intergenerational Report, the fourth in the series. Looking 40 years into the future the demographic projections of the previous reports have been relatively stable, though less so for the Government debt and deficit forecasts.
Releasing the first Intergenerational Report in 2002 then Treasurer Peter Costello said:
This is the first report of its kind and the first time any attempt has been made in the Budget to look across the generations and identify the challenges which lie ahead for our society and our governments. What challenges will our children and their children have to confront in forty years time? What shape will Australia’s finances be in 2042 based on current policies? And what should we do now to prepare for the generations ahead?
The first Intergenerational Report projected that by 2042 the number of people over age 65 will have more than doubled and the number of people over age 85 will have quadrupled. This projection has remained steady in the subsequent reports.
In the 2002 there were around 5 working age people for every person over age 65. By 2042 it is projected to be around 2.5 people.
Real GDP per person was projected to decline to around 1.5% by the 2020s, down from the 30 year average of 1.75% and the 2.1% of the 2000s.
Commonwealth health spending was projected to almost double from 4.3% of GDP to 8.1% by 2041/42.
When Peter Costello released the 2007 Intergenerational Report he did not know that shortly much of the projections would be thrown off by the GFC. The report said that “net debt is projected to re-emerge by the mid-2030s, and rise rapidly.”
In 2007 there were 5 working age people for each person over age 65. It was projected that by 2047 this would fall to 2.4.
The average growth rate in real GDP per person was also projected to slow to 1.6% per year from 2.1% in the previous 40 years.
As in the 2002 report health expenditure was forecast to nearly double as a proportion of GDP.
“This IGR is a stark reminder that we can’t sit on our hands or play political games with this country’s future,” said Wayne Swan, releasing the 2010 Intergenerational Report.
The 2010 report estimated there was 5 people of working age for every person aged 65 and over. This was projected to fall to 2.7 people by 2050.
The report also projected that by 2050 almost 25% of the Australian population will be aged 65 or over, compared to 13% in 2010.
Growth in real GDP per person was projected to slow to 1.5% per year between 2010 and 2050, compared to 1.9% over the previous 40 years.
“Health expenditure is projected to nearly double as a proportion of GDP over the next 40 years. It accounts for two-thirds of the projected increase in total spending as a proportion of GDP over this period,” said the report.
The 2015 Intergenerational Report will be released at 12.00pm (AEDT) Thursday the 5th of March.
Want to be kept up-to-date with changes to superannuation and SMSFs – why not subscribe to our Newsletter?
This article, as with all content on this site, is for informational purposes only, and is not legal, financial, tax or other advice. Please read our Terms and Conditions of Use.