Australia 2050: 40m people and a huge health budget

Australia’s population will approach 40 million by the middle of the century with many of them celebrating their 100th birthday.

The Intergenerational Report, released by Treasurer Joe Hockey today, shows that even with a flat immigration rate over the next four decades Australia will be home to 39.7 million people in 2055 compared to the current 23.7 million.

At the last Intergenerational Report in 2010, the population was tipped to reach 35.9 million by 2050. Australia’s population is now expected to reach 35.9 million in 2045.

Of that near 40 million, 1.9 million will be at least 85. It would be a fourfold increase on the current number of elderly Australians which sits just under 500,000.

About 40,000 people will have received a birthday card from the King or Queen, having enjoyed their 100th birthday. In 1974-75 there were just 122 centenarians in Australia.

The number of people aged between 65 and 84 will also grow strongly over the coming years, to seven million from 3.1 million.

For people born in 2054-55, the chances of getting that royal card will be particularly high. The Government believes the average lifespan for a person born in the middle of the century will be 95.1 for men and 96.6 for women.

The report notes that life expectancy, the quality of life in older age, will continue to improve even beyond the forecasts contained in the report.

“Medical research underway today in areas such as stem cell therapy, new medicines and other biotechnology has the potential to provide some further dramatic improvements in life expectancy,” it notes.

All of this increase in older Australians will add to the pressures on the Federal Budget which Mr Hockey said could be addressed if every measured announced last year were put in place.

The report estimates that the Commonwealth would have no net debt by about 2034 under the settings outlined in last year’s Budget.

But with many of those measures blocked in the Senate or now abandoned by the Government, the report estimates net debt will hit $2.6 trillion by 2054-55.

Despite being a huge figure, it would still be about 60 per cent of GDP that would have reached close to $4.5 trillion. Yesterday’s GDP figures showed national economic output at $1.6 trillion.

Apart from policy changes, the report notes that further economic growth and productivity improvements will come from technologies just starting to be developed.

“Technological advances, such as advanced robotics, 3D printing and self-navigating vehicles have the potential to unlock qualify of life improvements,” it said.

The report warns rising health spending will be one of biggest pressure points on the Budget. It predicts health spending will more than double from about $2800 to $6500 per person in today’s dollars by 2054-55.

Advances in medical technology, rising rates of chronic disease, wage increases and people’s demand for higher quality health services as income rises will be the main driver of health spending increases rather than demographic change by itself.

But health spending on people aged over 85 is four times the average of spending on people of all ages.

The maturation of compulsory superannuation scheme is expected to alleviate some of the burden on age pensions. While the total number of recipients will rise, Treasury predicts the rate of eligible people receiving the age pension will fall to 67 per cent from 70 per cent in 40 years’ time. Spending on pensions is tipped to fall from 2.9 per cent of GDP to 2.7 per cent.

Despite its controversial higher education reforms as well as falling numbers of school students, per person spending on education is expected to rise from $1500 to $1900 in today’s dollars.

The report significantly scales back the number of mentions of climate change compared to the 2010 version. The 2010 report had 74 references to “climate change” but this year’s one has 11.