In another argument for increasing migration an article in Adelaide Now last year explained how a $68 billion pension blow out will force the Federal Government to raise immigration levels and taxes.
Economists say the mass retirement of 4.5 million post-war baby boomers over the next decade, with the first wave born in 1946 reaching the pension age of 65 this year, will lead to a $68-billion-a-year blowout in the cost of aged pensions and healthcare, creating an “Enron-style” black hole in the federal budget.
Analysis by demographic economists MacroPlan Australia, using government data, shows the annual bill for pensions will almost double to $63.5 billion a year by 2020.
Health-related spending for retirees will rise by $40 billion a year, from $51 billion in 2010 to $90.7 billion in 2020.
And experts warn the Labor Government’s already-flagged measures such as increasing the Super Guarantee from 9 per cent to 12 per cent, raising the retirement age to 67 from 2017, and targeting “improved productivity” — especially from older workers — are “too little, too late” to avert the impending financial crisis.
“We have to radically increase the number of taxpayers through more immigration — and increase the amount of tax we all pay,” MacroPlan CEO Brian Haratsis said.
“The Government tried to raise billions through its mining tax to pay for all of this but it’s fallen far short — some say $60 billion — of its target. Now it is talking about a $5 billion disability levy. We will see more of these little taxes introduced before the real tough decisions are made.”
Although the Families, Housing, Community Services and Indigenous Affairs Department insists the pension system is “sustainable”, Treasury’s own data shows it is not.
In its latest Intergenerational Report on the ageing population, Treasury admits to a slowly shrinking budget within just seven years.
“From 2018-19 onwards . . . ageing and health pressures are projected to lead to a gradual deterioration in government finances,” it says.
“A fiscal gap [deficit] is projected to emerge in 2031-32 and grow to around 2.75 per cent of GDP by 2049-50.”
Economists say personal taxes will rise shortly into the next government’s term to head off the massive shortfall.
The number of people aged 65 or older will this year jump by 7.8 per cent to 248,641, and increase aged pension payments by $2.4 billion to $31.8 billion. But that is just the start.
The costs steadily increase year on year, pushing the pension and income support bill for retirees to $38.5 billion in 2013-14 — an increase of 30 per cent in just four years.
And it’s not just pension payments that are spiralling.
Government spending on aged residential care will rise by $1 billion a year to $7.5 billion annually by 2013-14.
Other expenses such as community care, seniors allowances and concessions, and wages of staff at aged-care and health facilities will all rise in line with the retiring boomers, the government figures show.
All this spells bad news for generations X and Y, who will be asked to foot the bill despite already struggling with record house prices, rising interest rates, rents and utility bills.
“This is the baby bust,” demographer Bernard Salt warned. “This crisis has been waiting for 30 years or more and has come home to roost. The costs are astronomical and adjusting to it is going to be painful and expensive.”
As I’ve regularly stated in my blogs, we’re going to have to populate or perish. The conclusion is inevitable so we’ll have to work out a sustainable way to keep our population growing. And as it does, it will have a positive effect on our property markets.
Source: Adelaide Now
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