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Tax rates to rise in an ageing Australia

By SUE DUNLEVY
April 12, 2005


EVERY Australian will have to pay an extra $4500 a year in tax by 2044 to pay for the ageing population, a key Government report has warned.


The bill for health services and the aged pension will rise by $2.2 trillion as the population aged 65-plus more than doubles from 2.6 million today to 7 million in 2044-45.

The Federal Government's Productivity Commission reported taxes would have to rise by 21 per cent over the next 40 years to pay for these extra costs of Australia's ageing population.


But the good news is that although tax bills will rise, incomes are projected to increase even faster.

The average income of Australians in 2044-45 will be $35,000-a-year higher than today, and that higher tax bill will eat up only 15 per cent of the extra pay.

On the eve of a Federal Cabinet meeting to discuss the May Budget the report warns the Government that it must act now in order to reduce the future costs of the nation's ageing population.


"Timely action would avoid a need for costly or inequitable 'big bang' interventions down the track," the Government report concludes.


The burden of paying for the ageing of the baby boomer generation will fall on a shrinking work force.


Today there are 5.2 workers for every person aged 65 or older – but by 2044-45 this will have fallen to just 2.4 workers.

The commission rules out immigration and incentives for women to have more children as being workable solutions to the problem.


Australia would need a 500 per cent increase in its immigration rate to 575,000 migrants a year to delay any increase in the cost of our ageing population.

This would mean an Australian population of about 85 million in 2044. Current predictions are 28.3 million.

And the report warns that bids to increase the fertility rate would take women out of the work force, further reducing the number of workers paying taxes needed to fund the ageing population.

Instead it calls for measures to keep workers aged 55-plus in the work force, and force those on the disability pension back into work.


This could include raising the qualifying age for the pension from 65 to 67 or 70.


If all workers improved their productivity and worked harder for their money, this would boost the nation's income and capacity to pay for the costs of ageing through tax.


The report warns health care costs will be the main area of increased spending as the population ages.


It calls for an overhaul of the nation's health system to make it more cost effective.


This would include introducing cost-benefit analysis of new health treatments and technologies. The report concludes that breaking down the barriers which stop nurses performing tasks reserved for doctors could also reduce health costs.


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South Australia and Tasmania will continue to have the greatest concentration of older people by 2044-45.


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Babies not key to ageing crisis

Katharine Murphy and Clara Pirani
April 12, 2005


FEARS about the nation's declining fertility rate have been exaggerated, but having more babies will not save the nation from the rising costs of an ageing population.

Indeed, incentives to have a child have little benefit in the population stakes, with almost all of those having a baby likely to do so regardless of taxpayer handouts such as the baby bonus.

In its landmark analysis of the economics of ageing, the Productivity Commission says Australia's fertility crisis is overstated. There may be good policy reasons for wanting to boost fertility rates, including helping people who want to have a family, it says.

"However, there should be no expectation that, even if successful, fertility policy could act as a significant moderator of ageing over short horizons, such as the focus of this study to 2044-45," the commission declares in its new report.

"Plausible fertility scenarios make only a modest difference to population over this period."

The commission has examined the latest data on Australia's fertility rates and found that the total fertility rate (TFR) has recovered slightly in recent years.

It also argues that the more definitive measure of fertility in Australia is the completed fertility rate (CFR), not the TFR, which masks the trend of Australian women postponing having children into their 30s and 40s.

The commission argues against the conventional wisdom that if fertility falls below the replacement rate -- about 2.1 children per woman -- the population will automatically decline. It says if the TFR remains at its current rate over the long run, migration can decline from its current levels without causing the population rate to fall.

The commission also says about 25per cent of women and their partners report that they would have liked to have had more children. "This suggests that there is an unmet demand for children. Were the social and economic circumstances that generated this gap to change, then women might have more children."

So while Treasurer Peter Costello may be urging Australian women to have one child for themselves, one for their husband and one for the country, breaking the baby drought does not guarantee a solution to ageing.

Sophie Cross, 34, who has a four-month-old daughter Francesca, believes there is no simple way to encourage more Australians to have children.

"It should be simple to just have a baby, but it's not," she said. "Age is a factor, financial stability is a factor and (so is) whether you are ready to give up some of your social life.

"We had a baby because we got to a stage where we felt ready to look after a child.

"Also, when all of your friends start having children you feel a bit left out when you're the only couple who doesn't have a child."

Mrs Cross said she and her husband had not yet decided whether they would have another child.

"I know a lot of people worry about having only one child.

"I'm not worried about Francesca growing up without any playmates because all my friends here have babies about the same age."
 

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Discussion Starter · #2 ·
Govt takes on ageing population

Govt takes on ageing population
April 12, 2005 - 6:44AM


The federal government is on track to deal with an ageing population thanks to its strong economic management and support for families, Family and Community Services Minister Kay Patterson has said.

The Productivity Commission has released its final report on the economic impact of ageing in Australia and predicted one in four Australians would be aged 65 or more by 2044-45 - roughly double the current rate.

An increase in fertility, which hit 1.76 babies per woman in 2003, could also be expected.

Senator Patterson said the report would require policy responses from all levels of government.

"There are welcome indications that the Howard government is already on the right track with its strong economic management and unprecedented support for Australian families," she said in a statement.

"I am very encouraged that the commission report has forecast stability in the total fertility rate at 1.8 babies per woman, which is a slightly higher level than the current rate.

"While it is too early to determine whether the commission's forecasts are a stable long-term trend, it is still a welcome sign that the decline in the fertility rate may have been arrested and possibly even reversed."

Senator Patterson said government initiatives such as the maternity payment and increased child care support for parents and grandparents were creating a climate in which Australian families could be confident about their future.

"I believe the issues of ageing and fertility rates addressed by the commission are of fundamental importance to all Australians," she said.
 

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Discussion Starter · #3 ·
wow 1 in 4 over 65! thats very nasty news isnt it, i dont see how thats possible, what about 0-10, 10-20, 20-30,30-40,40-50,50-65 ... only 3 ppl in all those groups ..wow. too many old people i recon !
 

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Discussion Starter · #4 ·
Australia, like much of the developed world, is experiencing a serious decline in fertility. While the average replacement rate is 2.1 children per woman, Australia's has dropped to 1.7. In 1961, the rate was 3.6.

If this rate is sustained long term, and combined with present immigration levels, Australia should manage to retain a workable mix of old and young.

The experiences of the rest of the world do not bode well for Australia. While the US and France have stemmed the loss, Europe's average birth rate is 1.4, Japan's even lower, while Germany, Italy, Spain and Greece have dropped to levels described as precariously low.

By 2040, the proportion of the Australian population aged over 65 will have risen from 12 per cent now to nearly 25 per cent. The population of working-age people will have fallen from 67 per cent to about 60 per cent. It is this proportion - between young tax-paying workers and non-working old people - that worries the experts most as the nation's primary tax base shrinks at the same time that costs, like health, balloon.
 

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I'll get shot down for this, but does anyone have any idea how much of a saviour lung cancer/heart disease would've been to this country if the government didn't jump on the politically correct anti smoknig bandwagon?
 

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lol. They should just force all the oldie's into jobs, or get rid of the pension. Something I thought they were doing, and make the oldie's live of there superanunation. But obviously that wouldnt work because some might have a measly super.
 

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jacobsian said:
I'll get shot down for this, but does anyone have any idea how much of a saviour lung cancer/heart disease would've been to this country if the government didn't jump on the politically correct anti smoknig bandwagon?
No, the burden on the health system to cope with the higher amount of ill persons would quite effectively ruin that "saviour". There would still be a huge problem, sure on average maybe people would not live as long because they smoke more, etc... so aged pension decrease... but then we still have to pay for the hospital beds to treat so many more cases. Problem transfer.

Stu
 

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^ what about someone dying from something non related because all the hospitals are packed up???
 

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Six months worth of anti cancer drugs probably cost more than dogfood for pensioners for several years.
 

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That first story: I've read it before: about a year or 18 months ago. Don't tell me News Corp/the Terrorgraph is recycling stories again...
 

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time to start poppin those sprogs guys!
 

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Be careful to read behind the lines. Some of these stroies are nothing more than propaganda.
 

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Discussion Starter · #15 ·
waustralia said:
lol. They should just force all the oldie's into jobs, or get rid of the pension. Something I thought they were doing, and make the oldie's live of there superanunation. But obviously that wouldnt work because some might have a measly super.
i can guarantee you that you'll be thinking differently when this time comes and you're an aging guy your self, i dought you'll agree with some youth saying the tired already worked out old you should keep working and not get a pension ..
 

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This is part of the course for Year 11 Economics. So it's nothing new.


Re: super - that's why 9% of all your earnings now have to go to super, if you do that for the duration of your working life, you'll have enough money to not be living off a pension. Saving 10% and putting it into a good fund will make someone on an average income a millionaire by the time they retire.

So hopefully, the ones of us that are young enough to have started saving at a young age won't have to be living off a pension. But for most of the people, they won't have enough savings to survive because the 9% requirement never existed back when they started working.
 

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Discussion Starter · #17 ·
^ actualy no, say you werea high school teacher, lets say you began working right after uni, so 21, you'd start of with about 35000 or so, than say about the age of 30 or so you earn about 50,000. Soo, 9 years x 35,000 = 315000; age 30 to 55? - 25x 50,000 = 1,250,000. Soo, as you can see a rather good job, only gives an individual 1.5 million or so for their whole life!!!! And you think 9% of that sums up to millions hahah!

So say it was 10%, so at the tetirement age you'd have $150,000. I dought thats enough to live of for the next say 25 years>?
 

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No Goran. The comment wasnt meant to be taken serious. And the 'or' in the first sentance, indicate's two different ideas.

Goran you might wanna check invincible's post. You might get a better understanding of what he meant.
 

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'We will be able to live to 1,000'
By Dr Aubrey de Grey
University of Cambridge

Life expectancy is increasing in the developed world. But Cambridge University geneticist Aubrey de Grey believes it will soon extend dramatically to 1,000. Here, he explains why.
Ageing is a physical phenomenon happening to our bodies, so at some point in the future, as medicine becomes more and more powerful, we will inevitably be able to address ageing just as effectively as we address many diseases today.

I claim that we are close to that point because of the SENS (Strategies for Engineered Negligible Senescence) project to prevent and cure ageing.

It is not just an idea: it's a very detailed plan to repair all the types of molecular and cellular damage that happen to us over time.

And each method to do this is either already working in a preliminary form (in clinical trials) or is based on technologies that already exist and just need to be combined.

This means that all parts of the project should be fully working in mice within just 10 years and we might take only another 10 years to get them all working in humans.
When we get these therapies, we will no longer all get frail and decrepit and dependent as we get older, and eventually succumb to the innumerable ghastly progressive diseases of old age.

We will still die, of course - from crossing the road carelessly, being bitten by snakes, catching a new flu variant etcetera - but not in the drawn-out way in which most of us die at present.

So, will this happen in time for some people alive today? Probably. Since these therapies repair accumulated damage, they are applicable to people in middle age or older who have a fair amount of that damage.

I think the first person to live to 1,000 might be 60 already.

It is very complicated, because ageing is. There are seven major types of molecular and cellular damage that eventually become bad for us - including cells being lost without replacement and mutations in our chromosomes.

Each of these things is potentially fixable by technology that either already exists or is in active development.

'Youthful not frail'

The length of life will be much more variable than now, when most people die at a narrow range of ages (65 to 90 or so), because people won't be getting frailer as time passes.


There is no difference between saving lives and extending lives, because in both cases we are giving people the chance of more life


The average age will be in the region of a few thousand years. These numbers are guesses, of course, but they're guided by the rate at which the young die these days.
If you are a reasonably risk-aware teenager today in an affluent, non-violent neighbourhood, you have a risk of dying in the next year of well under one in 1,000, which means that if you stayed that way forever you would have a 50/50 chance of living to over 1,000.

And remember, none of that time would be lived in frailty and debility and dependence - you would be youthful, both physically and mentally, right up to the day you mis-time the speed of that oncoming lorry.

Should we cure ageing?

Curing ageing will change society in innumerable ways. Some people are so scared of this that they think we should accept ageing as it is.

I think that is diabolical - it says we should deny people the right to life.

The right to choose to live or to die is the most fundamental right there is; conversely, the duty to give others that opportunity to the best of our ability is the most fundamental duty there is.

There is no difference between saving lives and extending lives, because in both cases we are giving people the chance of more life. To say that we shouldn't cure ageing is ageism, saying that old people are unworthy of medical care.

Playing God?

People also say we will get terribly bored but I say we will have the resources to improve everyone's ability to get the most out of life.

People with a good education and the time to use it never get bored today and can't imagine ever running out of new things they'd like to do.

And finally some people are worried that it would mean playing God and going against nature. But it's unnatural for us to accept the world as we find it.

Ever since we invented fire and the wheel, we've been demonstrating both our ability and our inherent desire to fix things that we don't like about ourselves and our environment.

We would be going against that most fundamental aspect of what it is to be human if we decided that something so horrible as everyone getting frail and decrepit and dependent was something we should live with forever.

If changing our world is playing God, it is just one more way in which God made us in His image.

Aubrey de Grey leads the SENS project at Cambridge University and also runs the Methuselah Mouse prize for extending age in mice.

http://news.bbc.co.uk/1/hi/uk/4003063.stm

http://www.methuselahmouse.org/



http://news.bbc.co.uk/1/hi/world/south_asia/3050017.stm

"Habib Miyan has been drawing pension money since he retired in 1938, and says he is 132. According to his pension book he is a mere 125. If correct, that makes the world's oldest living person 10 years his junior."
(Now he would be closer to 2 years older than the 125 or 132 figures.)
 

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Discussion Starter · #20 ·
waustralia said:
No Goran. The comment wasnt meant to be taken serious. And the 'or' in the first sentance, indicate's two different ideas.

Goran you might wanna check invincible's post. You might get a better understanding of what he meant.
it was his post i was responding to thank you very much, i do know what he was saying too, something along the lines of that with 10% contribution to a person's super that person can be a millionare and live of it once he or she retires. This is totaly untrue and no, a person cannot live of their super.
 
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