Australia is on the cusp of two of the greatest disruptive transformations in history: the ageing of the population and a technological revolution. How the nation manages with both of these prospects will determine its fortune.
These two phenomena will cause a ripple effect across the Australian economy and society, but Australia is now at the point where it can choose how it will react and rectify the exposed problems and inefficiencies caused.
It is expected that productivity growth will slow in coming years, in part due to Australia’s working age dependency ratio dropping from 7.3 in 1974- 75 to just 2.7 by mid-century. But the advent of health innovations and lifestyle changes for many Australians has resulted in longer life expectancies, and a greater level of health for a greater proportion of life. This translates into a longer period of time spent in retirement in an active and healthy state for many Australians.
With even a small growth in productivity, enormous benefits could be seen over the long term. For example, this report notes that an increase in labour productivity of 0.3 percentage points per year from 2013-4 to 2059-2060 could increase the cumulative sum of GDP by $13 trillion over that period.
The transition into the information age has also brought about changes in work styles. Rather than working largely laborious jobs, many Australians are now employed in white collar, knowledge industry jobs that are less taxing on the body as we age. So too, the traditional distinction between full and part-time work is becoming increasingly blurred through technology-enabled workplace flexibility, with a continuum of work options becoming available throughout life.
However, the cost of health becomes exponentially higher as we age. The federal government currently spends 4.1% of GDP on health, but that figure could rise to 7% by 2060. The ageing of the population is anticipated to account for about 10% of growth in health expenditure: pharmaceutical and public hospital spending on those over the age of 85 is more than four times the spending on an average person across all other age categories.
In spite of this, targeted investment in healthcare technologies and treatments we know to be effective, such as joint replacements and medicines for diabetes and mental health, is essential to maintaining a productive workforce throughout life.
All these require a concerted and coordinated effort to ensure Australia remains a prosperous nation well into the future.
This report proposes a series of recommendations to address the various inefficiencies within our current systems, and the emerging conditions caused by an ageing nation and our greater dependency on technology.