This week Australia's population will reach 24 million. It's a demographic marker sure to trigger debate about the future – some will argue for a much bigger Australia, others want much slower population growth. But the milestone draws attention to the changing profile of the population, not just the total. There's much to celebrate in Australia's demographic data but it foreshadows big challenges as well.
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Let's start with some positives. Maybe the brightest spot of all is our longevity. Improvements in living conditions, rising incomes and medical advances have combined to increase life expectancy at birth by about 33 years since Federation in 1901. Even since the mid-1970s life expectancy has improved by 10 years.
Females born in Australia can now expect to live 84.4 years and males 80.3 years. The Bureau of Statistics points out this is one the highest life expectancies in the world. On current trends it's likely that one in three children born today will live to 100.
The news is especially good for men. While they still have a lower life expectancy than women, the gender gap has been getting smaller. Since the turn of the century life expectancy for men has risen by 3.7 years compared with a 2.4 year improvement for women. Economic change, especially the nature of work, has contributed to this trend. Improved safety standards have lowered the death rate in relatively dangerous, male-dominated industries such as agriculture, mining, manufacturing and construction. Also, a larger proportion of men now work in knowledge-based office jobs where the risk of early death is low. The compulsory use of seat belts has also been a factor.
Australia's growing longevity is a decisive indictor of national progress. But longer life spans are contributing to a major challenge that officials have been warning us about for years: the ageing of the population.
In 1968, when Australia's population was half what is today, just over 1 million people were aged over 65 – about 8 per cent of the total. But the number of over 65s has now swelled to 3.57 million, or 15 per cent of the population. Meanwhile, the proportion of the population aged 14 years and under has fallen from 29 per cent to 19 per cent in that period. By mid-century one in four Australians will be aged over 65 and about one in 14 people will be aged over 85, up from one in 50 now.
One big policy response to Australia's changing demographic profile is the government's plan to gradually lift the retirement age, now 65, in a bid to contain spending on the age pension.
That raises an important question: will people be healthy enough to keep working into their late 60s or early 70s?
Economists have been investigating. This month America's National Bureau of Economic Research published research assessing the capacity of older people to work longer in a dozen developed countries including the US, UK, Canada, Japan and Spain. Overall the news is good. The researchers found "substantial" additional work capacity among older people in all the countries studied, especially among 65- to 69-year-olds. In the United States, for example, economists Courtney Coile, Kevin Milligan and David Wise found the share of the population with the health capacity to work at ages 60 to 64 is about 17 per cent higher than the current level. But between the ages of 65 and 69, the difference was about 31 per cent.
"As people live longer and healthier lives, it may be appropriate for policymakers to consider how these gains in life expectancy should be divided between years of work and retirement," the study concluded.
But that assumes there will be demand for employees in their 60s and beyond. Advocates for older workers claim that bias against those aged over 50 in the jobs market is endemic. This week's demographic landmark is a reminder that will have to change.
