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The picture of the latest Intergenerational Report (IGR) shows that, partly as a result of the covid pandemic, Australia’s population will grow slower than expected, and that on the other hand, the weakened state economy will have an additional burden, which is rapid population aging. In addition, the life expectancy of people in Australia is expected to increase.
Every five years, the State Treasury forecasts what the state’s economy and budget will look like over the next 40 years. As the vault was occupied by a coronary virus pandemic last year, this report was presented by Treasurer Josh Freidenberg earlier this week.
The latest report predicts that men born in the economic 2060/61. live an average of 86.8 years, compared to men born 2020/21. which is expected to have an average life expectancy of 81.4 years.
Women will live longer, so it is predicted that those who will be born in 2060/61. live an average of 89.3 years, and born 2020/21. will live 85.4 years.
Freidenberg made it clear that undoubtedly the pandemic, especially in population estimates, affected the last IGR. Namely, the report from 2015 predicted that the population of Australia would reach 40 million inhabitants by 2054/55, while the new report drastically reduced that number to 38.8 million by 2060/61.
– This is the first time that there has been a downward revision in the population growth forecast – the Treasurer pointed out and added that this indicates the fact that the economy will be weaker and the Australian population older than it would otherwise be.
According to him, the birth rate will continue to be low, which means that migration will continue to be the main source of population growth in the future. The report says that the birth rate in Australia is below the forecasts from 1976/77. and is expected to remain so for the next 40 years.
At the same time, it shows that the share of able-bodied Australians will be lower compared to those who do not work. So it is expected that by 2060/61. for every person over the age of 65, only 2.7 people work, compared to four people now or 6.6 employees per retiree in 1981/82.
As a result, the Australian economy will grow at a slower pace over the next 40 years than it has in the past four decades.
According to the IGR, there will be a reduction in total expenditures on old-age and disability pensions, followed by other social benefits, education and infrastructure. Expenditures on health and care for the elderly are projected to be the main budgetary pressures on the government for the next 40 years. He will go to health care in 2060/61. go 26 percent of total government allocations. Expenditures for the care of the elderly are expected to double by 2060/61.
Healthcare costs will increase from 19 percent in 2021/22. to 26 percent in 2060/61. In money terms, that means that health expenditures for one person will increase from 3,250 dollars, as it was in 2018/2019, to 3,970 dollars in 2031/32, and then to as much as 8,700 dollars in 2060/61. years.
The report says that the financing of state hospitals will be the fastest growing component of the Australian government in health care. Given the nation’s rapid aging, the IGR predicts that care expenditures for the elderly will almost double, and from 1.2 percent of GDP as of now, it will reach 2.1 percent by 2060/61.
There will also be an increase in allocations for old-age and disability pensions, and they will be in 2060/61. amount to five percent of GDP, as opposed to 4.5 percent in 2020/21.
Budget in deficit
The intergenerational report predicts that the budget deficit will remain for the next 40 years and will amount to 2.3 percent of GDP by 2060/61. According to the May budget, the predictions are that the budget deficit in the coming year will be five percent of GDP or 106.6 billion dollars. GDP is expected to grow at an average annual rate of 2.6 percent from 2020/21. to 2060/61, or 0.4 percentage points slower than in the last 40 years.
Net government debt is expected to peak at 40.9 percent of GDP in 2024/25, then fall to 28.2 percent in 2044/45, followed by growth again at 34.4 percent by 2060/61. . The May budget predicted that the net debt in 2021/22. amount to $ 729 billion or 34.2 percent of GDP.
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