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This papers ‘s topic is decease and revenue enhancements. Simply put, it deals with the mortality rate of Australians over the coming 40 old ages and the impact this will hold on the Australian public assistance province, which is supported by revenue enhancement and governed by financial policy. Since mortality can non be said to be policy issue we must concentrate on revenue enhancements.

Tax comes mostly in two signifiers, direct and indirect, harmonizing to standard economic theory, the Federal Government commissioned this study to measure how best to roll up revenue enhancements from an ageing population who are no longer paying direct revenue enhancements, because they are, or no longer will be, working. Some figures will give us an improved apprehension:

  • One one-fourth of Australia ‘s population will be over 65 by 2045.
  • Peoples aged over 55 old ages have significantly lower labour force engagement rates, with overall rates projected to drop from around 63.5 % in 2004 to 56.3 % by 2045.
  • The aggregative financial spread is projected to be about $ 2200 billion by 2045.

These three statistics all point towards financial policy being the underlying policy issue, non any other country of societal policy, although there are complementary country which could be relevant, such as wellness policy, which would concentrate more on the wellness of the ageing population ; or engineering policy, which would concentrate more on the impact of engineering at maintaining the population immature ; or in-migration policy, which could import a immature population from abroad. None of these policy countries is the focal point of this study, nevertheless. An extra benefit of concentrating on financial policy is that it is clear and mensurable, intending that we can analyze the truth behind its policy claims with simple computation, although we will non suggest so to make.

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As a policy papers it is strictly analytical ; it is positive, non normative, taking description over prescription. The premises behind this papers are economic, with accent on limited factors of production, and the demand for benefit payments. Benefits are strongly age-related, with about 80 per cent of the population aged over 65 old ages having an Ago or Service Pension ; as age increases the figure of people having a Disability Support Pension additions. The bulk of kids aged between 0 and 15 old ages are covered by Family Tax Benefit.

Age Pension is intended as a safety cyberspace for persons who have limited chance or capacity to salvage for retirement. The age of making is 65 old ages for males and for females it is being bit by bit increased to 65 old ages. This is clearly an illustration of current sex favoritism which is being addressed. Qualification is besides capable to the income and assets trials. In 2003 – 2004, Age Pension spendings were $ 19.5 billion, stand foring 2.4 per cent of GDP. Presently there are over 1.8 million receivers of the Age Pension. Family Tax Benefit has two constituents, portion A and portion B. Family Tax Benefit Part A is paid to low and in-between income households with dependent kids up to the age of 21, and / or older kids between the ages of 21 and 24 who are analyzing full-time and non having Youth Allowance or any other Commonwealth payments.

Family Tax Benefit Part B provides excess aid ( over portion A ) for households with merely one chief income earner, peculiarly for those with kids under five old ages. It is paid to households with dependent kids up to the age of 16, and dependent kids aged between 16 and 18 old ages who are analyzing full clip. In 2003 – 2004, Family Tax Benefit spendings were 12.9 billion or 1.6 per cent of GDP. Other public assistance province payments strongly related to ageing are Disability Support Pension, ( 0.9 per cent of GDP ) , unemployment allowances ( 0.7 per cent of GDP ) and Rearing Payment Single ( 0.6 per cent of GDP ) .

The Commission ‘s analysis suggest that the demographic passage will be big, with the population of the over 65s turning from 2.6 million to merely under 7 million by 2045 ( this is about one in every four Australians ) , a projection in line with other estimations ( Australian Institute of Health and Welfare 2002, Borowski and Jing 1992, Commonwealth of Australia 2002, Jackson and Felmingham 2002, Kinsella and Velkoff 2001, United Nations 2000 ) . Besides, the Myer Foundation has a important involvement in the ripening Australian population, associating it with several cardinal policy countries such as community attention, lodging, disposal, funding and industry planning. The Myer Foundation has a significantly different policy remit from the Productivity Commission.

Its research, entitled2020: A Vision for Aged Care in Australia,is much more notional, speech production of attitudes in a manner the Commonwealth authorities commissioned study would non ; for case the Foundation has set out on its ain journey, inspired by a Vision that the best possible attention should be provided for ageing Australians, who need it. The commissioners of this text, Mr Baillieu Myer and Sir Arvi Parbo, aged altruists both, have produced a societal policy papers which is extremely normative.

The methodological analysis of the Myer Foundation is to utilize case-studies as suggested by Bridgman and Davis ( Bridgman and Davis 2004 ) , but I suggest that the fanciful nature of these instance surveies is beyond belief. [ I ] For illustration, the Myer Foundation is a concern that relies on other concerns, generates biased figures and is unable to implement public policy ; its papers on speaks of confer withing houses such as Allen Consulting.

Returning to the Australian Government ‘s societal policy, farther cogent evidence of the financial preoccupation of the Commonwealth Governments is the National Aged Care Workforce Strategy, announced by moving Minister for Health and Ageing and Minister for Ageing Julie Bishop, on the 21stMarch 2005. This is portion of the Minister ‘s National Strategy for an Ageing Australia, but it is chiefly about the economic impact of the ageing work force ‘s incapacity to work, which increases the Government ‘s financial hazard.

The reasoning subdivision of theEconomic Impact of an Ageing Australiascreens the perpendicular financial instability and financial force per unit areas ( Productivity Commission 2005, pp. 385 – 401 ) . The Australian Government raises more gross straight than it spends. Its major gross beginnings are income revenue enhancements, the Goods and Service Tax ( explicitly collected on behalf of State authoritiess ) and excises.

Income revenue enhancements levied on concerns and persons comprise 55 % of the entire revenue enhancement gross raised by all grades of Australian authoritiess, GST comprises 13 % and excises 9 % , but State authoritiess rely on the Federal authorities for income associating to their outgo on those countries required by the ageing public, chiefly health care. Therefore there is increasing financial instability between the demands of the ageing population and the ability of the State authoritiess to supply for those demands. An appropriate solution is non, nevertheless, suggested by the Productivity Commission ‘s paper because of its positive nature.

On an international degree, the economic impact of ageing population is having the attending of policy shapers. The United Nations ‘ Department of Economic and Social Affairs produced a studyCharting the Advancement of Populations( United Nations 2000 ) which has a much more valued attack to pull offing ageing populations, with many more normative premises, taking to a much more valuable papers. Certainly it is more interesting.

For illustration, the financial premises behind the Productivity Commission ‘s paper might hold come approximately because its chief committee, the Treasurer Peter Costello, has financial duties, whereas the United Nations, by manner of comparing, has a much more historical position, and is non influenced by politicians such as Peter Costello. This historical method is shared by other taking demographists ( Hugo 2001, Khoo and Macdonald 2003, Shyrock and Siegel 1973, 1976 ) . In my sentiment, this historical attack could be incorporated into policy on ageing population, because it would do clear that the current province of population tendencies can non needfully be extrapolated 40 old ages in front. Certainly it can non be where strictly financial affairs are concerned.

The ground for this is that economic analysis is really good at depicting, but non needfully good for doing determinations, which require historical judgements, in my sentiment. Because all policy shapers must do determinations, it would look that economic analysis is hence non the best method for policy research, but an illustration would beef up this averment:

The 2002 Intergenerational Report examined the financial effects of an ageing population from an Australian Government position. Following a petition from the Council of Australian Governments, the Government asked the Productivity Commission to set about a research survey analyzing the productiveness, labour supply and financial deductions of likely demographic tendencies over the following 40 old ages for all degrees of authorities.( Productivity Commission, 2005, p. III )

Therefore, societal policy issues are non suitably dealt with utilizing economic projections into the hereafter However, since the study was commissioned by the Treasurer, Peter Costello, the Productivity Commission was non in a place to follow its inherent aptitudes to utilize strictly demographic values, as the United Nations was able to make, for illustration ( United Nations 2002 ) . The writer of the Productivity Commission study, Gary Banks, is kicking to Peter Costello about this double-bind, when he concludes that Timely action would avoid a demand for dearly-won or unjust ‘big knock ‘ intercessions subsequently.

Back to: Example Essaies…

Population ageing can merely be conceived as a crisis if we let it go one. ( Productivity Commission 2005, p. XII ) Big knock might be a historical mention to the rapid economic liberalization in the United Kingdom in the 1980s, which led to the worst post-war economic depression, but surely a financial policy based merely on projections of the hereafter can be improved with historical informations.

In decision, cut downing the policy issues raised by an ageing Australian population to financial issues or revenue enhancement, both direct and indirect, does non value cardinal societal work values of societal demand, equality or efficiency. ( Alcock, Erskine and May, 1998 ) Death and revenue enhancements is non an appropriate manner to research population issues, as we have arguedThe Economic Impact of an Ageing Australiaconcludes. Alternatively, an historical attack to demographics, taking into history broader societal values and influences, offers a much more international solution to a job which is non entirely Australian. The future success of societal policy is more likely with an historical attack.


Alcock Erskine, A. , May, M. , 1998.The pupil ‘s comrade to societal policyOxford, Blackwell.

Australian Institute of Health and Welfare.2002. Older Aussies at a Glance, Canberra: AIHW and The Commonwealth Department of Health and Ageing, 3rd edition.

Australian Treasury 2002,Intergenerational study 2002-03,Budget Paper No. 5, Canberra: Commonwealth of Australia.

Borowski, Allan and Jing Shu, 1991 and 1992.Australia ‘s Population Trends and Prospects,Australian capital: Australian Government Publishing Service.

Bridgman P & A ; Davis, G. ,( 2004 ) , The Australian Policy Handbook 2 ”vitamin DEdition,Naval special warfare: Allen & A ; Unwin.

Commonwealth of Australia, 2002.National Strategy for an Ageing Australia: An Older Australia, Challenges and Opportunities for AllCanberra, ACT: Commonwealth Government Printer.

Hugo, Graeme. 2001.A Century of Population Change in Australia.InYear BookAustralia 2001 Canberra: Commonwealth Government Printer.

Jackson, Natalie and Bruce Felmingham, 2002.As The Population Clock Winds Down: Indicative Effectss of Population Ageing in Australia ‘s States and DistrictsJournal of Population Research Vol 19, No 2, pp. 97-117.

Khoo, Siew-Ean and McDonald, Peter, editors, 2003.The Transformation of Australia ‘s Population 1970-2030. Sydney: University of New South Wales Press, pp. 238-265.

Kinsella, Kevin and Victoria A Velkoff, 2001.An Ageing Universe: 2001,Washington, DC: US Government Printing Office, US Census Bureau ( Series P95/Ol-1 ) .

The Myer Foundation, 2002,2020: A Vision for Aged Care in Australia,The Myer Foundation, Melbourne. Retrieved, 29ThursdayApril 2005, hypertext transfer protocol: //

Productivity Commission 2005,The Economic Implications of an Ageing Australia,Research Report, Canberra, Australia. Retrieved, 29ThursdayApril 2005, hypertext transfer protocol: //

Shyrock, Henry S and Jacob S Siegel. 1973.The Methods and Materials of Demography,( 2 volumes ) Washington, DC: US Bureau of the Census.

Shyrock, Henry S and Jacob S Siegel. 1976.The Methods and Materials of Demography,New York: Academic Press.

United Nations, 2000.Charting the Advancement of Populations( Report ST/ESA/SER.R/151 ) New York: Population Division, Department of Economic and Social Affairs, United Nations.

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