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We need less 'boomer bashing' and more stories of better futures for all

By Monika Merkes - posted Tuesday, 20 January 2004


The sociologist Ulrich Beck commented that it is cultural perception and definition that constitutes risk, and that:

believed risks are the whip used to keep the present-day moving along at a gallop. The more threatening the shadows that fall on the present day from a terrible future looming in the distance, the more compelling the shock that can be provoked by dramatizing risk today.

The Australian media are at present whipping up a supposedly looming intergenerational conflict. The story goes like this: As the baby boomers start rushing into retirement, generations X and Y will resent the heavy tax burden imposed on them to pay for pensions and health expenditure. Or, alternatively, the baby boomers will hold on to their paid work, thus depriving younger people of job opportunities. The Reserve Bank governor Ian MacFarlane suggested that the resentment will be particularly great if the baby boomers are seen as owning most of the community’s assets.

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This discourse of intergenerational warfare is ill-informed and divisive. It is a media fabrication that merely seeks to divide us. Rather than addressing the many generalisations and accusations that have been directed at the baby boom generation, I only wish to make two points: First, there is no looming ageing crisis, and second, baby boomers – like the generations before them – are likely to continue making significant contributions to their families and communities as they age.

The ageing crisis myth

Population ageing is frequently discussed in the media and among policy makers as representing a crisis for industrialised countries. The underlying assumptions are that older people are a social and economic burden, that population ageing will result in a serious dependency ratio imbalance, and that there is a close correspondence between the size of the aged population and increased public expenditure. However, there are many indications that an ageing population is unlikely to create significant problems in the future.

In the overseas literature, Australia has been singled out as a positive example for good public policy where public retirement costs as a share of GDP are anticipated to rise only slightly. The expenditure on public pensions in Australia is expected to rise from currently 3 per cent of GDP to 4.5 per cent of GDP in 2040. It is already much higher in most OECD countries where public old age pension spending averages currently 7.5 per cent.

Further, a recent OECD report asserted that in Australia the growth in the dependency ratio is lower than the OECD average and will create somewhat less pressure than in other countries. The age dependency ratio is the share of those aged 65 and over to those aged between 18 (or 15, in some calculations) and 64. In Australia, it has been projected to grow from approximately 20 per cent currently to close to 40 per cent by 2051. Most of this increase is expected to occur between 2010 and 2030. Similar increases are expected for other OECD countries. Some OECD countries, for example Austria, Germany, Italy, Finland, Spain and Sweden, already have dependency ratios of approximately 30 per cent. Concerns about the changing age dependency ratio focus on the question of whether a smaller proportion of taxpayers will be able to provide sufficient financial support to an increasing population of people who have retired from the workforce.

Public expenditure in health and aged care is also unlikely to rise to an alarming level. Gibson and Goss from the Australian Institute of Health and Welfare explored projections of the likely future consequences of population ageing for health and aged care expenditure and concluded that alarmist views are not justified.

How have other countries responded to the challenges of an ageing population? Notable changes have taken place in policies that affect the work-retirement transition and the structure of retirement income financing. These policies have been aimed at slowing and eventually reversing early retirement and achieving a better balance among private and public pensions, taxation and especially earnings. In other words, policies in OECD countries are aiming to shift the risks away from the state to the individual.

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Smaller reforms in OECD countries have supported the employability of older workers, responded to the health and care needs of an older population, and introduced changes to the operation of financial markets dealing with large increases in private pension savings. Most OECD countries were found to assume that markets and health care systems are largely capable of adapting to the needs of an ageing society – with incremental help from policy reform.

Little change is projected in the proportion of older people in Australia who will receive government benefits. At present, this is approximately 80 per cent and is projected to decrease to 75 per cent due to increased superannuation savings. Further, an increasing number of people will receive a partial rather than the full age pension (pdf, 254 Kb).

Baby boomers’ contributions to families and communities

Recent ABS data and research (pdf, 130Kb) suggest that Australian women are generously providing unpaid work for the benefit of their families and communities, and that it is likely that this will continue into the future. This prediction is supported by findings from the focus group research and analysis of survey data that I undertook as part of my PhD.

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Foresight – the journal of future studies, strategic thinking and policy has recently dedicated a whole issue (Volume 5, Number 6, 2003) to the topic of ageing futures. Monika Merkes has contributed the article Women's working futures - views, policies and choices to this issue (pp. 53-60).



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About the Author

Monika Merkes is a social researcher and policy consultant who has worked in state and local governments, the community sector and academia.

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