Background to the Inquiry

The ageing population—public policy challenges

1.2 Australia’s population is ageing. It is estimated that by 2044–45, almost one in four Australians will be aged 65 years and over; and in every year between 2012–28, ‘the aged share of the Australian population is projected to increase by more than 0.35 percentage points—an increase around 4 times the long-term average’.^[1] This also means that the population will comprise fewer people of ‘working age’, with only 2.7 people of working age to support each Australian aged 65 years and over by 2050, in contrast to five in 2010 and 7.5 in 1970.^[2]

1.3 The ageing of the population has implications for a wide range of public policy concerns, including, for example:

• public health;

• aged care;^[3]

• infrastructure;

• city design;

• workplace design; and

• the retirement income system—the Age Pension and superannuation.

1.4 As noted in the Intergenerational Report 2010, decisions taken ‘in the near term’ will have an impact on ‘the wellbeing of future generations’.

Productivity-enhancing reforms, particularly through nation building infrastructure and improving the skills base, will grow the economy, improve living standards, and partly offset the fiscal pressures of ageing. With an ageing population, productive growth is the key driver of future growth prospects. Reforms that reduce barriers to participation will also lift growth and reduce future pressures.^[4]

1.5 Increasing the labour force participation of older Australians is one response. But there are others. The tensions between ‘work’ and ‘retirement’, ‘work’ and ‘caring’, for example within the context of Australia’s Social Inclusion Agenda, are considered in Chapter 2.

Related activity

1.6 There has been a considerable amount of activity and initiatives directed towards ageing populations—both internationally and within Australia. Since the mid-1990s, numerous international organisations have considered the impact of population ageing on economic productivity, pension system design, and health policy. These include:

• the World Bank;^[5]

• the Organisation for Economic Co-operation and Development (OECD);^[6]

• the World Health Organization;^[7] and

• the United Nations.^[8]

1.7 In the Australian context, the Treasury published intergenerational reports in 2002, 2007, and 2010;^[9] and the Productivity Commission produced the report, Economic Implications of an Ageing Society, in 2005.^[10] There is also the work listed in the Terms of Reference for this Inquiry, namely that of the Advisory Panel on the Economic Potential of Senior Australians (Advisory Panel);^[11] and the Consultative Forum on Mature Age Participation (Consultative Forum).^[12]

1.8 The Consultative Forum was established in February 2010 to provide ‘evidence-based advice on ways to overcome the barriers to employment participation confronting many mature age people’.^[13] The Forum’s final report was completed in August 2012.^[14] The work of the Consultative Forum overlapped with this Inquiry and the issuing of Terms of Reference to the ALRC was one of the Forum’s key recommendations. The Forum’s work will continue through the Advisory Panel on Positive Ageing, to ‘support a strategic approach to maximising the potential of an ageing population’.^[15] The membership of the Consultative Forum included the Hon Susan Ryan AO, who was appointed as Australia’s first Age Discrimination Commissioner with the Australian Human Rights Commission on 30 July 2011. Ms Ryan was also appointed as a part-time Commissioner to the ALRC to assist in this Inquiry.

1.9 Significant reviews have also been conducted into specific areas related to this Inquiry. In 2008–09, the Australian Government initiated the Australia’s Future Tax System Review, chaired by Dr Ken Henry AC (the Tax Review); the Super System Review, chaired by Mr Jeremy Cooper; and the Pension Review, chaired by Dr Jeff Harmer AO.^[16] The Tax Review examined the retirement income system, including the superannuation system, as a key part of the ‘tax-transfer system’—the combination of Australia’s tax and social security systems.^[17] The Super System Review addressed the governance, efficiency, structure and operation of Australia’s superannuation system. The Pension Review examined measures to strengthen the financial security of older Australians, carers and people with disability.^[18] These reviews made a number of recommendations for reform, which are noted as relevant in this Report.

1.10 In the field of the Commonwealth workers’ compensation schemes, the Government announced a review of the Safety, Rehabilitation and Compensation Act 1988 (Cth) in July 2012 and an issues paper was released in September.^[19] At the time of writing, the final report of the review had not been made public.

1.11 With respect to employment law, in August 2012 the Australian Government released the final report of the review of the Fair Work Act 2009 (Cth). In October 2012, the Government announced it would implement the first tranche of recommendations arising from the review and on 1 January 2013 the provisions of the Fair Work Amendment Act 2012 (Cth) took effect.^[20] In March 2013, the Fair Work Amendment Bill 2013 (Cth) was introduced into Parliament.^[21]

1.12 The project to consolidate existing Commonwealth anti-discrimination laws into a single Act was also relevant to this Inquiry as the Age Discrimination Act 2004 (Cth) is one of the pieces of legislation being examined.^[22] This project forms a key component of Australia’s Human Rights Framework.^[23] In November 2012 an exposure draft Human Rights and Anti-Discrimination Bill 2012 was released and was referred to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report. The Committee’s Report was released on 21 February 2013. In March 2013, the Government announced that, aside from amendments to the Sex Discrimination Act 1984 (Cth) in relation to sexual orientation, gender identity and intersex status, the consolidation process involved a number of issues requiring ‘deeper consideration’ and that the Attorney-General’s Department will ‘continue working on this project’.^[24]

1.13 A further initiative that may be relevant in the mature age context is Disability Care Australia (formerly the National Disability Insurance Scheme)—a response to the Productivity Commission’s inquiry into a National Disability Long-term Care and Support Scheme.^[25] The scheme is to provide funding and support to eligible Australians with disability. The National Disability Insurance Scheme Bill 2013 was passed by Parliament on 21 March 2013.

1.14 Beginning in July 2013, Disability Care Australia will be launched at a number of sites around Australia.^[26] To become a participant in the launch a person must be under the age of 65 on the date the access request is made.^[27] Given that the details of the scheme and its potential impact on older workers with disability have yet to be worked out at the time of writing, it is not considered in this Report. However, issues with respect to disability-related social security payments as well as insurance more broadly are discussed—in Chapters 5 and 6 respectively.