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Population Ageing and Projections of Government Social Outlays in Australia

Author

Listed:
  • Guest, R.S.
  • McDonald, I.M.

Abstract

This paper makes new projections of government social outlays for Australia. The calculations suggest that government social outlays will increase considerably as a percent of GDP over the next 50 years, by 7.3 percent of GDP in the base case. This is a greater increase than that found by previous investigators. Over 60 percent of this increase will occur between 2011 and 2031, the years when the baby boom generation retires. The major contribution to this increase will have come from increased government outlays on social security. Lower rates of net immigration are shown to yield an even larger increase in the percentage of government social outlays in GDP. The paper also considers the disincentive effect of taxation and the effect of increasing the age of retirement. However, notwithstanding the trends suggested by the projections, the paper argues that there are a number of reasons to be sanguine about the implications of ageing on the share of government outlays in GDP.

Suggested Citation

  • Guest, R.S. & McDonald, I.M., 1999. "Population Ageing and Projections of Government Social Outlays in Australia," Department of Economics - Working Papers Series 689, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:689
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    Cited by:

    1. repec:acb:cbeeco:2014-616 is not listed on IDEAS
    2. Ross Guest, 2013. "Population Ageing and Productivity: Implications and Policy Options for New Zealand," Treasury Working Paper Series 13/21, New Zealand Treasury.
    3. Tran, Chung, 2018. "Temptation and taxation with elastic labor," Economic Modelling, Elsevier, vol. 70(C), pages 351-369.
    4. John Janssen, 2002. "Long-term fiscal projections and their relationship with the intertemporal budget constraint: An application to New Zealand," Treasury Working Paper Series 02/05, New Zealand Treasury.
    5. John Creedy & Grant M Scobie, 2002. "Population Ageing and Social Expenditure in New Zealand: Stochastic Projections," Treasury Working Paper Series 02/28, New Zealand Treasury.
    6. Ian M. McDonald, 2016. "The Economics of Ageing: Introduction," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(4), pages 471-473, December.
    7. Paul Gerrans & Marilyn Clark‐Murphy & Craig Speelman, 2010. "Asset allocation and age effects in retirement savings choices," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(2), pages 301-319, June.
    8. Ross Guest & Ian McDonald, 2001. "National Saving and Population Ageing," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 8(3), pages 235-246.
    9. Bruce Chapman & Glenn Withers, 2002. "Human Capital Accumulation: Education and Immigration," CEPR Discussion Papers 452, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    10. Ross S. Ross S. & Ian M. McDonald, 2002. "Would a Decrease in Fertility Be a Threat to Living Standards in Australia?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(1), pages 29-44, March.
    11. Bell, William Paul, 2005. "An evaluation of policies to reduce fiscal pressure induced by population ageing in Australia," MPRA Paper 38286, University Library of Munich, Germany.
    12. O'Brien, Martin, 2004. "Hidden Unemployment and Older Male Workers," Economics Working Papers wp04-02, School of Economics, University of Wollongong, NSW, Australia.
    13. Marilyn Clark-Murphy & Craig P. Speelman, 2007. "Decision Making Clusters in Retirement Savings: Preliminary Findings," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 10(2), pages 115-127.
    14. Ian M. McDonald, 2017. "‘We Will End Up Being a Third Rate Economy … A Banana Republic’: How Behavioural Economics Can Improve Macroeconomic Outcomes," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 50(2), pages 137-151, June.
    15. Kudrna, George & Tran, Chung & Woodland, Alan, 2015. "The dynamic fiscal effects of demographic shift: The case of Australia," Economic Modelling, Elsevier, vol. 50(C), pages 105-122.

    More about this item

    Keywords

    SOCIAL WELFARE ; PUBLIC POLICY ; AGED;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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