Archive for December, 2009

Aging population and how it is effecting Australia.

Monday, December 21st, 2009

Australia is a country of geographical paradoxes. One particular point foreigners note about Australia is its sheer size. It boasts an area the size of North America – minus Alaska – yet its population is a mere 21 million. One of Australia’s biggest problems these days is its declining farming industry, yet the area of its agricultural land alone is greater than the combined land area of France and Japan. While it is the driest continent in the world, its renewable water resources per head are twice as large as those of the United States – a country with a population ten-fold greater.

It seems strange, that an entire continent with (according to its National Anthem) ‘boundless plains to share’ has a population comparable to that of a Pacific Island. Economists argue that our country’s underpopulation is hampering Australia’s becoming a major economic power in the global market.

A significantly large population can benefit a country in a variety of (ways – to) be taken more seriously in the councils of the world, to resist outside threats more successfully( especially with the current terrorism situation), and improve its financial situation. Many economists contend that increasing the size of companies, industries and cities can initiate a dramatic change in output and productivity, as well as facilitating technological change and innovation. Larger economies are more diversified, less vulnerable and have a better chance of being successful.

However, the major demographic issues pertinent to Australia’s economic development are quite specific. These are its ageing population and the decentralisation of its population. If these particular weaknesses, currently (stifling?) our country’s economic growth, can be rectified, we may witness unprecedented economic growth.

Australia’s current population can be represented on this diagram – an age-sex distribution pyramid. It shows the proportions of various age groups for each sex. It also reveals that we have an emerging problem with (a?) population which is growing older, on average. Although the problem is not entirely obvious on this diagram, let me explain. It lies in this bulge near the centre of the graph.

At the end of World War II, confidence levels of the general population soared. As a consequence, the post war period between 1946 and 1965 were marked by a period of high birth rates – close to 3.6 babies per woman. This new generation of babies created a ‘boom’ in the population, and so were dubbed the ‘baby boomers’. However, the members of this cohort themselves had a very low fertility rate, and so created a significant disproportion in the population’s composition. The ‘baby-boomer’ generation is represented by that bulge in the centre of the graph.

You can see that large bulge in this area of the graph. As time passes, and the population ages, this bulge shifts higher up the graph.

To date, these low fertility rates continue. (Refer to model) In the foreseeable future, Australia is forecast to be in stage 5 of the demographic transition model. This means that soon our population will level – then fall. The replacement birth rate, which is required to sustain the population, is 2.1 %. Australia’s replacement birth rate is approximately 1.75% (refer to diagram). It is anticipated that our population will reach approximately 25 million by 2050, when it will stabilise, then gradually decline.

**(Mr Garret says something is wrong with this sentence, that I can’t say ‘to be’ after the dash)**As the baby boomer generation retires from the workforce, a greater proportion of the public exits that work force and requires support from the labour force. Moreover, our dwindling birth rate exacerbates this already dire situation. It equates to a decrease in the growth rate of the labour force; the only support for the retirees. It places increasing financial pressure on the labour force, and if current trends continue, by 2050 we can expect to see only 2.5 people in the work force for every 1 person in retirement.

On the pyramid graph, this will be represented by a pinch in the lower portion of the graph (representing the work force), with a bulge at the top (representing the ageing ‘baby boomer’ generation.

You see, our problem with the ageing population is that it is an insidious process. Although the problem is not yet a major crisis, calculations by Access Economics predicts a loss of $42.8 billion dollars in tax-payers revenue to support our ageing population; equivalent to 20 times the entire budget of Brisbane City Council (the third largest city council in the world)[should I use digits or words for the numbers?] This increase in the dependency ratio of tax-payer to retiree will lead inevitably to shortages of labour, higher health and welfare costs, crumbling of industries such as real estate, and ultimately, economic regression. In order to prevent the inexorable impacts of this process (does this sound right?), something needs to be done.

Another major issue confronting Australia today is the decentralisation of its population. Decentralisation is the term used to describe a population that is disproportionately spread around the land area. Half of the Australian continent contains 0.3% of the population, and the most densely populated 1% of the continent contains 84% of the population. This diagram illustrates this point, with the clusters of dots representing the population density in Australia. (Show diagram). Having a disproportionately high population in the main cities (called Primacy) creates many problems. It puts additional pressure on infrastructure, and makes competition for employment worse more intense. It also causes depopulation of rural areas. To relieve this stress, we need repopulation of the rural centres by reallocating population from the major urban centres like Sydney, Melbourne and Brisbane to rural areas.

However, this is not easy to do, due to the lack of infrastructure. Our low rural population can be attributed to the lack of scope for employment and infrastructure there. Even in major towns like Alice Springs, each day’s newspaper arrives 24 hours later. Rural customers regularly register complaints about service to the telecommunication giant Telstra. Due to lack of competition, large companies maintain a monopoly in the region, and so have no competition to contend with. Subsequently, their services are a bare minimum when compared to ones the more profitable provided to mainstream Australia. The reason why more companies don’t invest in rural Australia is that they seek a larger target group; one that is not present in rural areas.

So, as you can see, the whole process is a vicious cycle. (Show diagram). People don’t want to move to rural areas due to the lack of employment and infrastructure provided by business, and businesses don’t want to invest there because of the employment and customers. If we were to somehow intentionally increase the population in these areas, then we would see companies investing in Australia, and simultaneously relive pressure on the infrastructure in our large cities. (Does this sound right?)This would alleviate the financial ramifications experienced by people both in the cities and in rural areas.

Clearly, – Australia’s low population is creating problems for our economy. This campaign aims to resolve this predicament by informing the public of the situation, and influencing them to indirectly effect changes in our population policies. In short, the objective of this campaign is to attenuate the economic repercussions resulting from Australia’s demographic composition and constitution.

The primary target audience for this campaign will be the general Australian public. We intend to raise awareness of the matter of Australia’s underpopulation, as people are more likely to actively respond to issues that they understand. But although our primary target is the general population, our secondary, but most important, target is the Australian Federal Government. Ultimately, the government is the only body which could effect the changes our campaign requires, but in order for it to take action, concern from the public may be needed to bring about swift response.

Our campaign will be implemented near election time, and due attention/special will be paid to regions of by-elections and borderline seats for parties. We will make the campaign more intense in these areas during election times. (I’ll talk some more about this)