Is there really a crisis?

The data indicates that levels of spending on the youth and the aged are comparable. He also points out retirees remain independent and active consumers in a way the youth cannot. As a result he concludes the trick for policy makers is not to be drawn into the mirage of increasing fertility as a solution to ageing. Rather, it is to effectively transfer the savings made on decreased youth expenditure due to declining fertility rates, and use those savings to accommodate the increased spending needed for the aged. Other options that could help alleviate the financial burden of an ageing population include:

• Policies that encourage people to work longer into their lives (e.g., tax incentives for elderly part time work).
• Greater tax incentives for superannuation contributions. This would have the dual benefit of encouraging people to top up their super, whilst also leaving more in the kitty for access in retirement.
• Improved efficiency in the health care system. Given that aged health care expenses are a core component of the predicted doom and gloom, creating ‘best practice’ standards in the health system would most certainly reduce the financial burden predicted for government.
• Exploration of the radical Menzies Research Centre plan to reform our system of housing finance. The Caplin Joye proposal has the potential to greatly improve the financial position of many aged Australians, and is worthy of serious if cautious consideration.

There is little doubt the ageing of Australia’s population is a public policy concern that must be met with action and interest. Nevertheless, the stock argument that increasing the fertility rate is the answer is misdirected. Raising family fertility will only serve to exacerbate the problems expressed above.

At a recent Sydney Institute lecture Wayne Swan, hung his hat on the need to increase fertility rates. He did so without the understanding of the policy problems such a course of action could create. Solutions to the ageing concerns of the future will come about through innovative thinking – not on the back of asking families and the taxpayer to incur the additional burden of more children.

Where ageing is concerned, the raising of fertility rates is not the whole answer. However, interest in increasing the fertility rate in Australia as a means of securing the family, satisfying couples penchant for children, or simply as part of a social agenda is a different debate entirely, and one perhaps worthy of consideration on its own merits.