KPMG demographer Bernard Salt said it signalled the start of a landmark shift in Australia’s population – one that would deliver a “double whammy” to Federal Government finances.
“Not only will the baby boomers demand more from the tax base, but they will also be coming out of the workforce and will stop paying tax,” Mr Salt said.
Apart from a surge in demand for age pensions, leading Australian demographers said ageing baby boomers would increase pressure on already stretched health budgets.
“They are the most obese generation we’ve ever had, so reducing their obesity is really crucial if they are going to have healthy older years,” said Adelaide University Geography professor Graeme Hugo.
Professor Martin Bell, from the University of Queensland’s Centre for Population Research, said the retirement of the baby boomers would also exacerbate skilled labour shortages in Australia and create planning issues for growing cities such as Brisbane.
“This is an intriguing transition,” Prof Bell said.
“I’d rank it alongside the Industrial Revolution.
“It’s that kind of transition in the nature of Western society – from a young, rapidly growing population, which is broad at the bottom and thin at the top, to one that is almost the other way round.”
In response to some of those emerging challenges, the Federal Government last year announced it would push out the pension eligibility age to 67 by 2023.
But as the Federal Government considers the Henry tax review – expected to deliver the most sweeping reform of Australia’s tax system since the GST was introduced in July 2000 – CommSec chief economist Craig James said the pension qualifying age might have to be revisited.
“I think we may see further shifts over the next couple of years,” he said.
“Perhaps even pushing that pension age out further.”
The high cost of Australia’s rapidly greying population
“Perhaps it requires more incentives for employers to take on more senior workers,” Mr James said.
Mr Salt said the problem should be met with a big rise in migration levels, targeting young skilled workers, to boost the tax base.
“We either lift migration or we can ask Gen Y and Gen X to pay more tax per capita, and I don’t think that’s going to be popular,” he said.
Latest figures from the Australian Bureau of Statistics indicate around 107,000 Australian women will turn 64 next year.
By 2047, a quarter of all Australians will be aged over 65 years, almost double the current 13 per cent.
In the last financial year, the Government supported 2.12million seniors with age pensions, at a cost of $28 billion.
In the previous year, $24.6 billion was spent providing age pensions for 2.04 million Australians.