Cost of Ageing Populations

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Elections, budgets and governance in most western and now developing nations that are democracies are being impacted by increasing numbers of retirees and pensioners in the upper median age demographic, being catered to by politicians, especially conservatives.

Growing budget imbalances due to increasing numbers of retirees and pensioners drawing on budgets with declining net contributors of working age.

Older Households Drawing upon Budget (Image copyright Grattan Institute)

From the Australian Broadcasting Commission:

The costs of an ageing population keep growing, but who’s going to pay?

 

By chief economics correspondent Emma Alberici

Updated 27 May 2019, 9:29am

‘…..The politics may be tricky but future governments will have to confront the grim economic reality of the post-World War II baby boom.

Australians born after 1946 began to retire in huge numbers in 2011. Demand for the aged pension, aged care and health services have been rising commensurately.

The working age population is a net contributor to the federal budget. Older people, on the other hand, are the largest recipients of welfare, aged care and health care services.

Retirees are getting expensive

A report released last month by the independent, non-partisan Parliamentary Budget Office (PBO) warns the ageing population will exert “historically unique” pressure on the federal finances in the decade to 2028-29.

New figures in the report show that by 2028, Australians born between 1946 and 1964 will cost the Government more than Medicare does each year. Based on 2018 budget forecasts, the PBO estimates the cost of Medicare to be $32 billion in 2028-29. By then, lost revenue ($20 billion) and increased spending ($16 billion) on baby boomers will amount to $36 billion.

The number of working-age Australians for every person aged 65 and over has fallen from 7.4 in the mid-1970s, to 4.4 in 2015. That figure is projected to fall to just 3.2 in 2055.

Economists and policy makers need to find new taxpayers and increase workforce participation to support the hordes of older people entering retirement.

The ageing population means that by 2028-29, the PBO estimates there will be 600,000 fewer workers.

While the Australian population has been ageing, life expectancy has also improved.

As far as the government’s fiscal fortunes go, it’s a perfect storm. The pension was introduced in 1909 with 65 set as the qualifying age for men.

While mostly conservative parties attract most of the upper median age vote they are or have been compromised by financial policies catering to the same, but impairing budgets into the long term.  Who’s going to pay? Younger generations…..

For more articles or blogs about ageing democracy and demography, click through.

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Population Ageing – Populist Politics

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With ageing societies, living longer, back grounded by increasing mobility of youth and working age, are younger generations viewed as a threat and going to be disadvantaged by upper median age voting demographics, led on by Nativist and populist politicians?

‘From Project Syndicate.

Is Pensioner Populism Here to Stay?

Oct 10, 2018 EDOARDO CAMPANELLA

It is often assumed that the rise of populism in Western democracies is primarily a response to economic insecurity and anger toward privileged elites. But the fact is that neither of those sentiments can be understood without also accounting for the political consequences of population ageing.

Elderly including pensioners living longer are voting for populist leaders and against youth.

Ageing Voters and Populism versus Youth? (Image copyright Pexels).

MILAN – The right-wing populism that has emerged in many Western democracies in recent years could turn out to be much more than a blip on the political landscape. Beyond the Great Recession and the migration crisis, both of which created fertile ground for populist parties, the ageing of the West’s population will continue to alter political power dynamics in populists’ favour….

….Britons voted disproportionately in favour of leaving the European Union, and older Americans delivered the US presidency to Donald Trump. Neither the Law and Justice (PiS) party in Poland nor Fidesz in Hungary would be in power without the enthusiastic support of the elderly. And in Italy, the League has succeeded in large part by exploiting the discontent of Northern Italy’s seniors. Among today’s populists, only Marine Le Pen of France’s National Rally (formerly the National Front) – and possibly Jair Bolsonaro in Brazil – relies on younger voters……

…Most likely, a growing sense of insecurity is pushing the elderly into the populists’ arms. Leaving aside country-specific peculiarities, nationalist parties all promise to stem global forces that will affect older people disproportionately.

For example, immigration tends to instil more fear in older voters, because they are usually more attached to traditional values and self-contained communities….

….By backing right-wing populists, older voters hope to return to a time when domestic affairs were insulated from global forces and national borders were less porous. At the heart of today’s nationalist politics is a promise to preserve the status quo – or even to restore a mythical past.

Hence, nationalist politicians often resort to nostalgic rhetoric to mobilise their older supporters. For his part, Trump has pledged to bring back jobs in the American Rust Belt, once the centre of US manufacturing. Likewise, there could be no clearer symbol of resistance to change than his proposed wall on the US-Mexico border. And his crackdown on illegal immigration and ban on travellers from predominantly Muslim countries signals his commitment to a “pure” American nation.

Similarly, in continental Europe, right-wing populists want to return to a time before the adoption of the euro and the Schengen system of passport-free travel within most of the EU. And they often appeal directly to older voters by promising to lower the retirement age and expand pension benefits (both are flagship policies of the League).

In the United Kingdom, the “Leave” campaign promised vindication for those who have been left behind in the age of globalisation. Never mind that it also touted the idea of a free and independent “Global Britain.” The Brexiteers are not known for their consistency.

At any rate, to the extent that today’s populist wave is driven by demographics, it is not likely to crest anytime soon. In greying societies, the political clout of the elderly will steadily grow; and in rapidly changing economies, their ability to adapt will decline. As a result, older voters will demand more and more socioeconomic security, and irresponsible populists will be waiting in the wings to accommodate them…..

For related blogs and articles about population growth (and decline), immigration and NOM net overseas migration click through.