Aging Population to Challenge Australian Finances in Future Decades Warns Report

Australia is facing a smaller and older population as a result of coronavirus, according to a landmark government study that is published every five years. The Fifth Intergenerational Report is forecasting slower population growth in Australia due to falling levels of immigration and a sharp decline in the fertility rate.    The reports are published every five years. They forecast the outlooks for the economy and the budget over the next four decades.   Modeling has suggested that the economic legacy of the COVID-19 pandemic is going to be felt for many years to come. It has highlighted the ballooning costs of health care as the population ages.   By 2060, there will be just 2.7 people of working age for every person aged over 65 in Australia, compared to the current level of four people, which puts a greater strain on public finances.  The taxes of working-age people help to support the essential services for a growing cohort of older Australians.   The government has said its challenge was to fund aged care services while “maintaining a sustainable tax burden” on workers.   Australian Treasurer Josh Frydenberg.   “What this Fifth Intergenerational Report does show is that the Australian economy continues to grow, that we have debt increasing but it remains sustainable and low by international standards, but that we do have a major challenge ahead of us, namely the aging of the population, the longer-term impacts of COVID and the need for Australia to boost productivity,” Frydenberg said.Twenty-five million people live in Australia.  The Fifth Intergenerational Report has predicted that number will to grow to about 39 million by 2060, which is less than previous estimates.     It is the first time that long-term population projections have been revised downwards.  It means the Australian economy will be smaller and the community will be older than previously anticipated.    Migration has boosted economic growth and can reduce the impact of an aging population, but Australia closed its international borders in March 2020 to curb the spread of COVID-19 and immigration has all but stopped.  Even when travel restrictions are eased, the government says migration levels will take years to recover.  Girls born in Australia between 2017 and 2019 can expect to live 85-years, or about 4 years longer than boys. 

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