Intergenerational Report – seniors body perspectives

The fourth Intergenerational Report (IGR), released today by Treasurer Joe Hockey, reveals an outlook of optimism, opportunity and challenge, says National Seniors.


In particular, the report reveals:

  • Biggest spending growth will be in health from 4.2% of GDP in 2014-2015 to 5.5% in 2054-55. 80% of the projected increase in real expenditure per person is the result of non-demographic factors.

  • Age and service pension costs are expected to stabilise - from 2.9% of GDP in 2014-2015 to 2.7% in 2054-55

  • Mature age (65-plus) participation rates, already steadily increasing, will rise from 12.9% in 2014-15 to 17.3% in 2054-55

National Seniors chief executive, Michael O'Neill, says the report provides a foundation for policymakers to put to bed the doom and gloom outlook pushed in recent years.


O'Neill described the positive progress of workforce participation as encouraging and indicative of what older Australians could contribute to the economy.


"People are choosing to work longer and that's great, but more needs to be done.


"The reality remains that, once unemployed, people in their 50s will spend two-and-a-half times longer out of work than a younger person - and many will never get a job again".


"The challenge is productivity across the whole community.


"For Australians of all ages it needs to be about employment prospects - whether you are 20 or 65 - and removing the barriers to meaningful work," he said.


O'Neill also identified the IGR assessment of health costs, migration and the performance of business and Government as significant.


"The bulk of projected new spending will be in health, and 80% of that growth is attributed to non-demographic factors.


"This puts paid to a decade of hysteria around population ageing," he said.


COTA Australia Chief Executive Ian Yates said the Intergenerational Report confirms the government’s continued intention to cut the age pension, highlights the need for more focus on combatting age discrimination and having a more dynamic workforce participation policy, and reaffirms the need for a comprehensive retirement incomes review.


Population and demographic changes heralded ‘the age of the senior’ which should be celebrated.


“The ageing population means we are going to be forced to better value older people in our society as we will need to rely on them to balance future budgets. A productive future of Australia will need to be a productive older Australia,” Mr Yates said.


“The Intergenerational Report acknowledges the economic benefit of harnessing the wisdom and experience of older people through greater participation in the workforce.


“To go down this path though, there are a range of considerations which the government will need to look at, absent from the report, including the ability of many older people to do physically-intensive jobs into their sixties and seventies and the prevalence of age discrimination in the workforce.


“Right now a quarter of people on the Newstart job seeking allowance are over 50 – one third of the long term unemployed - and despite best efforts many of them simply can’t find employment. Many languish for years on Newstart and move straight onto the age pension.


“If we need older Australians to work longer, there will need to be more sophisticated measures and incentives put in place to break down discrimination against older people and encourage employers to keep them on.


“Also we will need to look at ways to make workforce participation in later life more attractive for older people like increasing part time and more flexible arrangements, and assisting people make transitions to new skills in growth areas of the economy.”


Mr Yates said the Report clearly outlined the effective cut to the age pension proposed in the last Budget and yet to pass the Senate.


“Despite Government assurances that the proposed changes to the age pension will not adversely effect older people, the Report clearly names reducing pension indexation rates to CPI only as a key budget saving.


“It forecasts changing it back to Average Weekly Earnings once achieved a Budget surplus is achieved in 2029-29.


“This is an admission of the negative effect of this policy on pensioners - on Commission of Audit estimates at least $80 a week less for the pensioner over the long term in today’s dollars. Pensions actually fall as a proportion of GDP if the indexation cut is implemented.


“What is glaringly missing from the Report is any quantification of the cost to revenue of continuing the existing generous superannuation tax concessions – the bulk of which go to the top twenty per cent of income earners, the majority of whom would not be eligible for the pension when they retire anyhow.


“These tax-payer funded concessions also encourage more well off workers to access their savings and retire at 60 (or earlier at present) rather than staying in the workforce longer.


“In effect government is using taxpayer funds to subsidise the financially well-off to leave the workforce early – contrary to the message that we should all work longer.


“These concessions are in fact worth the same value as the whole cost of the Age Pension and are going up rapidly. They could either be reduced and save the budget substantially, or be redirected so that they do achieve real income retirement improvements for more older Australians and save pension costs.”


Mr Yates reiterated his call for an independent, comprehensive retirement incomes review, which the Business Council of Australia also recently supported.


“What is clear from the Intergenerational Report today is the need to take a holistic view at why people retire, what incentives can be used to keep them working, how superannuation can be improved to increase the number of people who can fully or part fund their own retirement and the best way to tackle age discrimination.


“All these issues will impact on the ability of governments to deliver a surplus in the future.”


Mr Yates also said that cuts to the rate of growth of the Commonwealth Home Support Program from 2017 would be quite dramatic over time (0.4% of GDP). These are the basic services needed to keep people at home and in the community and out of nursing homes, and reducing them is counterproductive.


Mr Yates said COTA welcomes the Government saying it is open to alternative measures to bring the Budget back to surplus.


“We look forward to a constructive dialogue with the government on doing just that in a productive, fair and equitable way.”


The 2015 Intergenerational Report Australia 2055 is available at


5 March 2015.