Earlier this month the Australian Government's Intergenerational Report was released, ‘outlining and assessing the long-term sustainability of current Government policies and how changes to Australia’s population size and age profile may impact on economic growth, workforce and public finances over the next 40 years’. (Aust Gov).
Social researchers and demographers Mark McCrindle and Claire Madden have given thought, analysis and media commentary on the report’s content, as well as implications this has for Australia moving forward.
Mark McCrindle on the Intergenerational report
Claire Madden on the Intergenerational report
1. Is increased immigration the answer to work participation shortages?
Currently, three fifths of our population increase is through migration with only two fifths from natural increase, so it’s already pretty high by historic levels. Also, migration doesn’t necessarily reduce the average age, since it is 37 for both an Australian and similarly a migrant coming in. So while increased migration meets the immediate workforce need, it will also add to the ageing population. Certainly it has been critical to Australia’s growth and will remain important into the future however it is just one part of the solution. The Intergenerational Report addresses the three P’s – population, productivity and participation. Participation refers to how the workforce can allow people to work later in life, as well as how workforce options and flexibility can build the participation of more young people and women. So apart from population factors, participation and productivity hold the key to future economic prosperity.
2. What jobs will help and pop up over time?
With the decline of manufacturing and the whole industrial base in Australia, there has always been talk of Australia moving to this knowledge economy and service jobs. I think from an older Australian perspective, if we do want to work through our 60s and 70s it is going to have to be in more technology-type roles rather than manual roles. But that’s part of the problem of the third P – productivity – we must ensure that we add the jobs to accommodate this and jobs that older people, students and others want to take up.
3. What does this mean for our cities?
Australia’s capital cities make up a significant proportion of Australia’s population. Because we are adding more than a million people every three years, we need to accommodate and plan for that – the infrastructure has to be there. People are not moving further and further out they are moving into the infill, into vertical communities. Infrastructure investment is critical to maintain the quality of life that Australians have come to expect.
4. Are intergenerational households set to increase?
Due to the increase in the cost of housing, we are going to see intergenerational households increase. Young people who can’t afford the $900,000 median house price in Sydney will be staying at home longer, as well as older Australians that don’t want to move into supported aged care, who will move back in with their families. So we are going to see a lot of change in household structures – where we are living and how we are living.
5. Will 2055 present a better experience of living in Sydney than today?
If you look at Sydney now it’s as good as it’s ever been. In fact the lifestyle is such that people are moving into the inner suburbs and we are seeing the renewal of areas that just a decade ago were not desirable. So I think we can find solutions. As this report says we do have to work, not harder – people don’t want to work longer or harder – but smarter. We’ve got to find some innovation skills and technology skills to solve the 21st century problems.
6. What challenges do Gen Y face in the wake of Australia’s Ageing Population?
It is certainly a challenge with the ageing population, the impact on government budgets, meeting the growing service demands, workforce shortages, leadership succession, wealth transfer and generational change. Keep in mind that the ageing of our population is a good news story. We are living longer, active later and able to work and contribute far more than any previous generation. But expectations will have to be managed. We have found in our research that some in Gen Y have a lifestyle expectation that they will be able to start their economic life in the manner which they have seen their parents finish theirs but such growth and gains are not always possible and should not be expected.
7. How does Gen Y’s situation differ from that of Gen X and the Baby Boomer generation?
The Baby Boomers certainly benefited from the post war boom, an increase in house worth and have had four decades of an economic boom. They’ve had stable economy and rising incomes over that time. And while we are at a point where the earnings have increased over the last couple of decades, wages have not kept up with the pace of house prices. So four decades ago the average earnings were $7600 in a year, while today it is around $72,000 so quite an increase, almost tenfold. But over that same period of time houses have increased by thirtyfold.
8. Considering the difficulty for Gen Y to become first home buyers, will we see a big preference shift among young Australians with regards to buying their first home?
The desire to buy a home is deep in the Aussie psyche, it’s the Aussie dream to have a place of your own but not necessarily a detached house with a backyard and a shed and a hills hoist. The Baby Boomers could pick up an average house in Sydney for $28,000 a couple of decades ago – now the average Sydney house price is over $850,000 so that is a dramatic change. Apart from the affordability challenge of such a home, there are changing lifestyles as well with new generations seeking not just a suburban life but an urban one, closer to public transport and more walkable communities. We are witnessing in Australia right now massive generational transitions.