05 December 2013


And for people who need a reminder that old age is just around the the corner, the Productivity Commission has released a research paper [PDF] on An Ageing Australia: Preparing for the Future.

The report
examines the effects of ageing on economic output (underpinned by changes in population, participation and productivity) and the resulting implications for government budgets were current policy settings to be maintained.
The Commission argues that
  • Australia's population will both grow strongly and become older. Such slow but profound shifts in the nature of a society do not elicit the same scrutiny as immediate policy issues. The preferable time to contemplate the implications is while these near inevitable trends are still in their infancy. 
  • Population ageing is largely a positive outcome, primarily reflecting improved life expectancy. A female born in 2012 will on average live for an estimated 94.4 years. A male born in 2012 will on average live for an estimated 91.6 years. Population growth and ageing will affect labour supply, economic output, infrastructure requirements and governments' budgets. 
  • Australia's population is projected to rise to around 38 million by 2060, or around 15 million more than the population in 2012. Sydney and Melbourne can be expected to grow by around 3 million each over this period. 
  • The population aged 75 or more years is expected to rise by 4 million from 2012 to 2060, increasing from about 6.4 to 14.4% of the population. In 2012, there was roughly one person aged 100 years old or more to every 100 babies. By 2060, it is projected there will be around 25 such centenarians. 
  • Total private and public investment requirements over this 50 year period are estimated to be more than fivetimes the cumulative investment made over the last half century, which reveals the importance of an efficient investment environment. 
  • Labour participation rates are expected to fall from around 65 to 60% from 2012 to 2060, and overall labour supply per capita to contract by 5%. 
  • Average labour productivity growth is projected to be around 1.5% per annum from 2012-13, well below the high productivity period from 1988-89 to 2003-04. Real disposable income per capita is expected to grow at 1.1% per annum compared with the average 2.7% annual growth over the last 20 years.
  • Collectively, it is projected that Australian governments will face additional pressures on their budgets equivalent to around 6% of national GDP by 2060, principally reflecting the growth of expenditure on health, aged care and the Age Pension. 
  •  Major impending economic and social changes can create the impetus for new reform approaches not currently on the policy horizon, eg
  • design of the Age Pension and broader retirement income system might be linked to life expectancy after completion of the current transition to 67 years in 2023.
  • Using some of the annual growth in the housing equity of older Australians could help ensure higher quality options for aged care services and lower fiscal costs. 
  • Wide ranging health care reforms could improve productivity in the sector that is the largest contributor to fiscal pressures. Even modest improvements in this area would reduce fiscal pressures significantly.
At the other end of the continuum the Commission has released a discussion paper on Childcare and Early Childhood Learning, given the Government's stated commitment to -
establishing a sustainable future for a more flexible, affordable and accessible child care and early childhood learning market that helps underpin the national economy and supports the community, especially parent’s choices to participate in work and learning and children’s growth, welfare, learning and development. 
The paper indicates that
The market for child care and early childhood learning services is large, diverse and growing, and it touches the lives of practically every family in Australia. Almost all children in Australia participate in some form of child care or early learning service at some point in the years before starting school. In 2012, around 19,400 child care and early learning services enrolled over 1.3 million children in at least one child care or preschool programme (comprising around 15,100 approved child care services and 4,300 preschools). The Australian Government is the largest funder of the sector, with outlays exceeding $5bn a year and growing. It is important that this expenditure achieves the best possible impact in terms of benefits to families and children as well as the wider economy.
The child care and early learning system can be improved because: • families are struggling to find quality child care and early learning that is flexible and affordable enough to meet their needs and to participate in the workforce • a small but significant number of children start school with learning and developmental delays • there are shortfalls in reaching and properly supporting the needs of children with disabilities and vulnerable children, regional and rural families and parents who are moving from income support into study and employment • services need to operate in a system that has clear and sustainable business arrangements, including regulation, planning and funding • there is a need to ensure that public expenditure on child care and early childhood learning is both efficient and effective in addressing the needs of families and children.
In undertaking the inquiry the  Commission is to use evidence to report on and make recommendations about  -
1) The contribution that access to affordable, high quality child care can make to: a) increased participation in the workforce, particularly for women b) optimising children’s learning and development.
2) The current and future need for child care in Australia, including consideration of the following: a) hours parents work or study, or wish to work or study b) the particular needs of rural, regional and remote parents, as well as shift workers c) accessibility of affordable care d) types of child care available including but not limited to: long day care, family day care, in home care including nannies and au pairs, mobile care, occasional care, and outside school hours care e) the role and potential for employer provided child care f) usual hours of operation of each type of care g) the out of pocket cost of child care to families h) rebates and subsidies available for each type of care i) the capacity of the existing child care system to ensure children are transitioning from child care to school with a satisfactory level of school preparedness j) opportunities to improve connections and transitions across early childhood services (including between child care and preschool/kindergarten services) k) the needs of vulnerable or at risk children l) interactions with relevant Australian Government policies and programmes.
3) Whether there are any specific models of care that should be considered for trial or implementation in Australia, with consideration given to international models, such as the home based care model in New Zealand and models that specifically target vulnerable or at risk children and their families.
4) Options for enhancing the choices available to Australian families as to how they receive child care support, so that this can occur in the manner most suitable to their individual family circumstances. Mechanisms to be considered include subsidies, rebates and tax deductions, to improve the accessibility, flexibility and affordability of child care for families facing diverse individual circumstances.
5) The benefits and other impacts of regulatory changes in child care over the past decade, including the implementation of the National Quality Framework (NQF) in States and Territories, with specific consideration given to compliance costs, taking into account the Government’s planned work with States and Territories to streamline the NQF.
6) In making any recommendations for future Australian Government policy settings, the Commission will consider options within current funding parameters.