The Intergenerational Report, released on 5 March 2015, is an Australian social mirror between generations: parents, grandparents, children, grandchildren and each other. This social mirror reflects around demographic, productivity and economic growth aspects of our lives.
It is the Will of Allah SWT that Australians including Muslims will live longer and continue to have one of the longest life expectancies in the world. This projected long life is an opportunity for Australian Muslims to perform good deeds and accomplish great goals for social and economic well-being of all Australians.
The Intergenerational report is a projection of Australian population, employment participation, productivity, economic outlook and implications for Federal budgets over the next 40 years to 30 June 2055. It sets out what we need to do if we are to maintain and improve our standard of living for all Australians.
Population and Life Expectancy
In 2054-55, the life expectancy is projected to be 95.1 years for men and 96.6 years for women, compared to the current 91.5 years and 93.6 years respectively. In the same year, there will be 40,000 Australians aged over 100, compared to only 122 people of this age group in 1974-75. The proportion of population aged 65 and over is projected to be more than double in 2054-55, compared to the current level of people in this age. In 1974-75, less than 1% or 80,000 of the population was aged 85 and over which will grow to 4.9% of the population or nearly 2 million people in 2054-55. Australian fertility rate is assumed to be 1.9 births per woman in 2054-55 which remained to be relatively steady since 1970s. Taking into consideration the patterns of migration, fertility and mortality, Australian population is projected to grow at 1.3% per year in the next 40 years. On the migration front, this assumes a net overseas migration of 215,000 per year in the next 40 years. With this trend, Australian population is projected to grow to almost 40 million in 2054-55, compared to 23.9 million in 2014-15.
Participation in Workforce
Participation refers to the proportion of the population aged 15 and over who are actively engaged in the workforce. Due to ageing population, the rate of the participation will decline in the next 40 years which will result in a lower rate of economic growth in Australia. By the financial year to be ended 30 June 2055, the participation rate for Australians aged 15 and over is projected to fall to 62.4%, compared to 64.6% in 2014-15. Female participation rate will increase strongly, to around 70% in 2054-55. In 174-75, only 46% of women aged 15 and over were employed, compared to around 66% in 2014-15. As the population ages, the participation rate for older Australians will grow rapidly to 17.3% in 2054-55 which is 12.9% today.
Productivity of Australian Workforce
Productivity is defined as working more efficiently or producing more or better quality of goods or services with the same level of resources. The level of productivity has been high in Australia which contributed to growth in incomes and high living standards for all Australians. Today average Australians produce twice as many goods and services in every hour they work compared to early 1970s which has broadly doubled the average income per person during this period. Technology is the prime driver in improving productivity which is changing the face of business, markets, governments and social media in Australia. During 1990s, Australia experienced relatively high productivity growth, estimated to be 2.2% per year which is widely attributed to microeconomic reforms undertaken during 1980s and 1990s. The level of productivity has declined in 2000s, estimated to be an average of 1.5% per year. Australia needs to harness future opportunities to support innovation, adopt new technologies, facilitate foreign trade and foster competition to uplift productivity. The average productivity is also projected to be 1.5% in the next 40 years.
Economic Growth and Growth in Personal Incomes
Due to declining participation rate and slightly lower population growth, Australian economic growth is projected to be lower over the next 40 years than over the past 40 years. The annual growth of real gross domestic product (GDP) is expected to be 2.8% over the next 40 years, compared to 3.1% over the past 40 years. The share of GDP per person is projected to be 1.5% over the next 40 years, compared to 1.7% over the past 40 years. In terms of personal share of national income, the real gross national income (GNI) is projected to grow at 1.4% over the next 40 years, compared to 1.9% over the past 40 years. This presents an evidence that Australians in the next 40 years will be poorer than those in the past 40 years.
There are significant changes occurring over the next 40 years and beyond. Economic events and business cycles in real time may impact on the current projections but trends in the Intergenerational Report are expected to remain on the ball. An ongoing improvement in the Australian living standards over the next 40 years will be contingent on continuous improvements around population growth, rate of workforce participation and productivity.