INTRODUCTION
The commissioning of this paper has been prompted by increasing reference recently in overseas journals to the problems being encountered around the world by ageing populations. (An American report predicted recently that the aged will surpass energy as the U.S.A.'s major problem area within a decade or so.)
What, then, is likely to be the situation in Australia at and beyond the end of the century? This is the basic question that I discuss in the paper.
Should such problems concern you? If some way off retirement age, you may be tempted to concentrate on overcoming rather more immediate problems. However, remember that the elderly are ultimately -- everyone; they are "our future selves".
There can be no doubt that a marked shift in age patterns is taking place throughout the world population; people are living longer, birthrates are down. Changes of this sort can have an unsettling effect on people because, for instance, the social security systems which operate, in most Western countries at least, have been generally supported in the widespread belief that today's payments assure tomorrow's benefits; unfortunately such a belief will become increasingly less tenable.
Undoubtedly the elderly in many countries have experienced a marked improvement in their economic status in recent decades; in fact this has been due to the political power they wield, brought about by their voting strength, and by their time availability to espouse the issues of the aged. This, coupled with the community's natural sympathy for the care and well-being of the elderly, probably ensures that their status will be maintained, and even possibly enhanced.
So, given the prospect of a substantial increase in the aged population, set against numbers of working age that are declining proportionately, how is it to be paid for?
I believe that the problems highlighted in this paper can be resolved, but it is important that they are not ignored just because they are not immediate. The solutions will be the more painful the later they are left.
Questions that need the widest possible public debate are:
- How much responsibility should government assume for the elderly?
- What, if any, standard of living should government guarantee?
- How much should government provide in services for the elderly, and how much should be provided by family and friends?
- How much should government do to assure a retirement income, and how much should it be left to people to provide for themselves?
In short,
- What is the division between collective and individual responsibility?
February 1991
Just as a cricket player on 65 runs is likely to make a higher score, so too most people attaining the age of 65 can look forward to an extended "innings". Contrary to stereotypes of the aged as isolated and debilitated -- onlookers from the pavilion -- the majority of the elderly are active and healthy, often making important contributions to family and community life. Because of norms about "retirement age" and "pensionable age", increases in the numbers of the elderly inevitably occasion heightened outlays on social security payments, income maintenance for the healthy aged being the largest single component of Australian social security expenditure.
Nevertheless, an ageing population also brings the prospect of increasing numbers of the elderly with failing health, thus necessitating greater spending on medical care -- in a period of rising per capita costs for such services. This paper explores the theme of growth in relation to the aged in Australia, focussing on issues pertaining to the increasing proportions over 65 years of age, the increasing numbers of the elderly and the related growth of expenditure on age pensions and health.
DEMOGRAPHIC AGEING
Since the 1880s, Australia's population has been experiencing demographic ageing, entailing rises both in the average age of people and in the proportions over 65 years. This trend is illustrated in Figure 1, which depicts the median age of the population -- the age which half are above and half are below. In 1881, the median age was 20.1 years and each subsequent census until 1947 recorded an increase in this figure, the 1947 peak being 30.7. Ensuing years brought an interruption to the trend towards an older population, but in the 1970s the ageing of the population resumed and is expected to continue into the twenty-first century. Two questions arise from Figure 1: Why has there been an historical trend towards an ageing of the population? And why was this trend interrupted between 1947 and 1971?
Figure 1: Recorded and Projected Median Age of the Population of Australia, 1881-2001
Note: The projected figures from 1978 assume a net reproduction rate of unity, constant mortality and net immigration at 50,000 per annum.
Answering the former question, demographic ageing has been due mainly to the decline in family size which commenced in Australia during the 1880s. Women who had completed child-bearing by that decade had an average of six or more children, but since the 1940s married women have borne an average of only two or three children (Table 1). Falling family size reduced the proportion of children aged 0-14 in the population from 39 per cent in 1881 to 25 per cent in 1947 (Figure 2).
TABLE 1: Average Issue from Existing Marriage of Married Women aged 45-49 Years
| Year | Average Issue |
| 1881 | 6.4 |
| 1891 | 6.5 |
| 1901 | 6.1 |
| 1911 | 5.1 |
| 1921 | 4.0 |
| 1932 | 3.6 |
| 1942 | 3.0 |
| 1947 | 2.8 |
| 1954 | 2.4 |
| 1961 | 2.5 |
| 1966 | 2.7 |
| 1973 | 2.9 |
Source: National Population Inquiry (1975:46)
Figure 2: Recorded and Projected Changes in the Age
Structure of the Total Population of Austraia, 1881-2001
AGE DISTRIBUTION 1881-2001
Note: The projected figures from 1978 assume a net reproduction rate of unity, constant mortality and net immigration at 50,000 per annum.
Changes in mortality have contributed little to the ageing of the population. Indeed, declining mortality has tended to raise the proportions of children and young adults rather than older people, because improvements in health and medicine have extended the lives of the young rather than of the old. For example, between 1881 and 1971, life expectancy at birth increased by 21 years for males and 23 years for females, while at age 65 the corresponding gain was one year for males and four years for females (Table 2). Children have benefited from improvements in child care, nutrition and standards of living, together with control over diseases such as diptheria, typhus, typhoid and poliomyelitis (Young, 1976). Among young adults, improvements in living conditions and medical procedures have appreciably reduced mortality from childbirth and infectious diseases, including tuberculosis. At middle age and above tuberculosis has ceased to be a major cause of death but heart disease and cancer have taken a greater toll, thereby preventing substantial improvements in life expectancy. Because mortality declines have favoured the young, falling death rates have been a force for lowering the median age of the population, but the much stronger ageing force of declining fertility has obscured this effect (Coale, 1964).
TABLE 2: Expectation of Life at Selected Ages in Australia (Years)
| Age | Males | Females | ||||
| 1881-90 | 1970-72 | 1978 | 1881-90 | 1970-72 | 1978 | |
| 0 | 47 | 68 | 70 | 51 | 74 | 77 |
| 10 | 49 | 60 | 62 | 52 | 66 | 68 |
| 20 | 40 | 50 | 52 | 43 | 56 | 58 |
| 30 | 34 | 4] | 43 | 36 | 47 | 49 |
| 40 | 26 | 32 | 33 | 29 | 37 | 39 |
| 50 | 20 | 23 | 24 | 22 | 28 | 30 |
| 60 | 14 | 15 | 17 | 15 | 20 | 21 |
| 65 | II | 12 | 13 | 12 | 16 | 17 |
| 70 | 9 | 10 | 10 | 10 | 12 | 14 |
| 75 | 7 | 7 | 8 | 7 | 9 | 10 |
| 80 | 5 | 6 | 6 | 5 | 7 | 8 |
Sources:
1881-90: 1911 Census. Vol.3, pp.1209-11
1970-72: A.B.S. Australian Life Tables 1970-72 Ref. No. 4.31.
1978: A.B.S. Deaths, 1978, Cat. No. 3302.0, pp.24-25.
What then broke the upward trend in the median age after the Second World War? Especially influential here was the so-called "baby boom" which spanned the years from 1946 to 1961 and was a period when unexpectedly large numbers of births occurred. A clue to the nature of the "baby boom" is provided by the figures in Table 1, which show that average family size has fluctuated within a narrow range since the Second World War. In fact the "baby boom" -- and the consequent rejuvenation of the population -- was mainly due to more women marrying and having children rather than to women having larger families. Thus a marriage revolution raised the proportion of children in the population and contributed to the fall in the median age. Yet the rejuvenation of the population continued beyond the "baby boom" years, principally because post-war immigration was also augmenting the numbers of younger people. Ageing of Australia's population resumed in the 1970's as births and net immigration declined and further interruptions to the ageing process seem remote because there is no likelihood of another sustained "baby boom" (National Population Inquiry, 1978:39-46).
A further measure of demographic ageing is the expansion of the percentage of people 65 and over. This proportion has more than doubled over the last hundred years from 4 per cent in 1881 to 9 percent in 1976 (Figure 2). The future will bring further increases in this proportion, but only very gradually. The percentage aged 65+ is expected to be about 10 in 2001, possibly rising to 14 in the twenty-first century as the "baby boom" generation reaches old age (National Population Inquiry, 1978:105). This century, the greatest changes in the age distribution will occur among persons of older working age, signalling an ageing of the labour force (Figure 2).
THE FOURTH GENERATION
Although the proportion of elderly people in Australia will change only slowly during the next two decades, demographic ageing has probably contributed to changes in family life having major implications for the provision of care for the aged. In the nineteenth century, when life expectancy at birth was less than 50 years, families consisting of three or four generations of surviving relatives were a rarity in Western societies (Townsend, 1968:168-9). According to Australia's mortality pattern of the 1880s, only 27 per cent of males and 35 per cent of females could expect to celebrate their 70th birthday. Now control over mortality has enabled more to obtain the biblical span of "three score years and ten", and 55 per cent of males and 73 per cent of females can expect to become septuagenarians. Thus the expanding proportion of the elderly has increased the relative size of the third (grandparent) and fourth (great-grandparent) generations, although earlier child-bearing has had a similar effect. The contribution of the increase in the number of surviving generations is probably the greatest impact that ageing has had upon the family; it implies that a higher proportion of families have aged relatives to care for, and that social policies may be needed to assist families in this supportive role (United Nations, 1975:25-25), even though the majority of the elderly remain independent except for a reliance on the age pension.
Multi-generation households have probably never been the norm in Western societies (Treas, 1977). Although the generations have preferred to live apart they have maintained contact and assisted each other: a form of "modified extended family" is believed to be typical permitting "intimacy at a distance" between the generations (Stehouwer, 1968:180). Thus in considering support for the aged, the relevant definition of the "family" transcends the dwelling unit and includes the group of relatives with whom the elderly person has frequent contact (Stehouwer, 1968:182). It is popularly believed in Australia, as well as in other industrialised countries, that the elderly are lonely or isolated from family life (Australian Catholic Social Welfare Commission, 1980). Yet overseas studies have found that family support for the frail aged is more pervasive than support from formal organisations (Brody, 1979:515), more disabled people being bedfast or house-bound at home than in institutions (Shanas, 1968:45).
In the future, families could face increasing difficulties in continuing this care without public assistance. Some have even suggested that governments will have to assume many of the functions of the family in providing social supports for the aged, and more will be living alone or in institutions (Shanas and Hauser, 1974). While such statements are more relevant to countries with demographically "older" populations than Australia's (Table 3), the changes provoking these views are evident here.
TABLE 3: Percentages Aged 65 Years and Over in Major Areas of the World 1960, 1975, 2000
| 1960 | 1975 | 2000 | |
| Europe | 9.7 | 12.3 | 12.5 |
| Northern America | 9.1 | 10.2 | 9.3 |
| USSR | 6.8 | 9.1 | 11.8 |
| Oceania | 7.4 | 7.4 | 8.6 |
| East Asia | 5.0 | 6.1 | 7.0 |
| Latin America | 3.4 | 3.8 | 4.4 |
| South Asia | 3.4 | 3.0 | 4.2 |
| Africa | 2.7 | 2.9 | 3.3 |
| World | 5.3 | 5.7 | 6.1 |
Sources: United Nations (1979:129), Mauser (1976:74)
Daughters rather than sons customarily have borne the responsibility of caring for aged parents, spinsters perhaps being especially important here: for instance, in the United States in 1900, 42 per cent of married old people lived in the same household with one or more of their unmarried children, compared with 10 per cent in 1975; one force of change was declining age at child-bearing, lessening the likelihood of there being an unmarried child still at home (Dahlin, 1980:105). More universal marriage has reduced the relative number of spinsters in the population while, at the same time, the rising labour force participation of women has presumably functioned also to decrease the proportion of women able to care for an aged parent. For example, in July 1980, 48 per cent of women aged 45-54 years were members of the labour force, 4 out of every 10 of them being part-time workers (ABS, 1980b:15). Part-time employment or withdrawal from the labour force may enable many women to become carers when necessary, but rising labour force participation, like the growth in the demand for child-minding services, is a symptom of change in women's traditional roles within the family.
Declining family size, as illustrated in Table 1, is often cited as a further force diminishing potential family support. However, the generations which produced the largest families are now deceased, and the present and future elderly belong to generations which have borne small families. Figure 3 shows that the principal change in the total issue of cohorts of women aged 45 years or more in 1976 was the decline in the proportions having no children or one only, the shift in the percentage bearing five or more children being slight. Moreover, falling death rates at young ages have brought improved survival to adulthood, so that large families are no longer necessary to ensure that parents in their old age will still have some offspring surviving. At the same time, more universal marriage, together with more universal child-bearing, as depicted in Figure 3, suggest that higher proportions of the elderly are living their lives in a family context.
Figure 3: Total Issue of Ever Married Women Aged 45 and Over, 1976.
Thus the issue appears to be not so much whether the number of potential family supporters is falling, but whether other changes are reducing the availability of sons and daughters to serve as carers. Important here are changes in family roles and attitudes, early child-bearing -- which results in elderly parents having elderly progeny -- and residential mobility which can separate younger and older generations. Although there are many changes operating, in the context of an unprecedented expansion of the numbers of three and four generation families, the outcome is probably an erosion rather than a maintenance of support from younger generations for the disabled elderly.
GROWING NUMBERS
While only a small proportion of the elderly are dependent on others for the needs of daily living, this group, together with the aged suffering chronic illnesses, are major users of health and welfare services. The expansion of their numbers, as well as of the numbers of the healthy aged receiving income maintenance, are having an immediate impact upon government expenditure. In 1976, persons aged 65+ in Australia numbered 1.2 million, a figure expected to reach about 1.9 million by 2001.
Expansion of the numbers of the aged is largely the result of the "momentum of growth" (Keyfitz, 1971) inherent in the transition from a "young" triangular age distribution to an "old" rectangular one, wherein there are similar proportions in each age group up to those at which mortality is most pronounced. Comparison of the 1881 and 1976 population pyramids in Figure 4 illustrates the effects of demographic ageing on the proportions in each age group. The 1881 pyramid -- representing the population before fertility decline began -- is triangular in form with progressively lower proportions at each older age. By 1976, the profile had become rectangular below age 30, and a continuation of the small family system, together with the survival of high proportions to older ages, should result in the rectangularity extending eventually to all age groups below 65 years. Thus the momentum of growth will be sustained until an "old" rectangular profile is achieved -- a process which could take 60 years or more (Ruzicka, 1977:88) -- and without immigration from overseas would cause the total population to increase by 40 per cent (National Population Inquiry, 1975:249). The absolute numbers of the elderly have grown substantially over time and the ratio of males aged 65+ to women of the same age has shifted from a predominance of males to a predominance of females (Figure 5). Mainly responsible for the changes in the sex ratio have been the increasing representation of females in immigration and the improvement in female life expectancy, which has exceeded that for males (Table 2).
Figure 4: Age Structures of the Population of Australia, 1881 and 1976
Figure 5: Numbers Aged 65 Years and Over, 1881-1976
Yet although women have greater longevity, men have benefited as much if not more from the effect of improved survivorship on the prolongation of married life. In 1901, approximately 54 per cent of males aged 65+ were currently married and 27 per cent were widowers, while in 1976 the corresponding proportions were 71 and 17 per cent. It appears not only that more men are marrying, but also that more have a wife to care for them in their old age. For elderly women (65+), the proportions currently married have changed little this century -- the figure being around 36 per cent in 1901 and in 1976 -- while the proportion widowed -- 52 per cent in 1976 -- has hardly varied since the 1930s. The outcome has been that the mean duration of widower-hood has decreased substantially while the mean duration of widowhood has remained fairly constant (Young, 1977:283). In the growing elderly population, therefore, there has been no dampening of the expansion of the numbers of aged widows, the dominant group among the aged in need of support (Treas, 1977:487). They represent the majority of the "problem" elderly because they attain ages at which infirmities are most prevalent, they are necessarily dependent on persons other than a spouse and their incomes are often limited. Expansion of the proportion of elderly women is the leading mechanism in the gradual ageing of the aged population, which is raising the relative numbers of the "old-old" (age 75+ years). At the 1976 Census the "old-old" comprised 36 per cent of the elderly and by 2001 the proportion should be at least 41 per cent.
PROJECTIONS
The future numbers of the elderly can be projected with more assurance than younger age groups where unpredictable changes in fertility and net immigration have an immediate impact. The future net immigration of elderly persons is uncertain but this source of population change would add only about 48,000 to the total between 1978 and 2001 if immigration continued on the average pattern for 1972-76. The Series "A" projection of the Australian Bureau of Statistics -- which assumes constant mortality at adult ages -- yields an elderly population numbering nearly 1.9 million in 2001 (Table 4).
TABLE 4: Projected Population Aged 65 Years and Over ('000)
| Males | Series 'A' Females | Total | Males | Series 'D' Females | Total | |
| 1981 | 591 | 821 | 1,412 | 593 | 823 | 1,416 |
| 1986 | 649 | 909 | 1,558 | 665 | 925 | 1,590 |
| 1991 | 720 | 1,008 | 1,729 | 765 | 1,051 | 1,815 |
| 1996 | 769 | 1,077 | 1,846 | 853 | 1,157 | 2,010 |
| 2001 | 782 | 1,109 | 1,891 | 914 | 1,236 | 2,150 |
| 2006 | 814 | 1,159 | 1,973 | 1,002 | 1,340 | 2,342 |
| 2011 | 892 | 1,258 | 2,149 | 1,146 | 1,501 | 2,647 |
Notes:
(a) 197S was the base year for these projections.
(b) The figures include the effects of net overseas migration at an illustrative level of 50,000 p.a.
(c) Series 'A' projections assume adult mortality to be constant at the level for 1975-76.
(d) Series 'D' projections assume a decline of 1.5 per cent a year in the 1975-76 mortality rates.
Source: Australian Bureau of Statistics, 1979: Projections of the Population
of the States and Territories of Australia, 1978-2011, Catalogue No. 3214.0.
In the 1980s, the age group 65+ could be the fastest growing segment of the Australian population with a projected average annual growth rate almost double the national one (Table 5). In the 1990s, the rate of growth of the elderly population should fall temporarily as the small cohorts born during the "birth dearth" of the 1930s reach old age, but in the first three decades of the next century, the growth rate of the elderly population will rise again as the large cohorts born in the "baby boom" pass age 65 -- between the years 2011 and 2026. The figures in Table 5 are most tentative for the two youngest age groups because of the difficulties of anticipating annual births and net immigration, although some might regard the statistics for the two oldest age groups as conservative estimates in view of recent mortality changes. Nevertheless, the projections demonstrate that in Australia, where the small family system prevails and the proportion marrying is unlikely to rise significantly, the greatest potential for growth inherent in the age structure is in the numbers of the middle aged and the elderly.
TABLE 5: Projected Annual Average Growth Rates* of Major Age Groups in Australia, 1981-2011
| Period | ||||
| Age | 1981-91 | 1991-2011 | 2001-2011 | |
| 0-14 | 0.4 | 0.9 | O.1 | |
| 15-44 | 1.3 | 0.4 | 0.4 | |
| 45-64 | i.l | 2.3 | 1.8 | |
| 65+ | 2.0 | 0.9 | 1.3 | |
| Total | 1.1 | 1.0 | 0.8 | |
*exponential growth rates.
Note: These are Series 'A' projections, inclusive of migration.
Source: Calculated from Australian Bureau of Statistics, Projections of the Population
of the States and Territories of Australia, 1978-2011, Catalogue No. 3214.0, p.14.
Those who view the Series "A" projections (Table 4) as overly conservative, draw attention to recent changes in age-specific mortality in Australia and in other industrialised countries (Myers, 1979). Until the 1970s, it appeared that a plateau had been reached in mortality rates at middle and later ages, but during that decade the rates declined (Table 6). Various explanations have been offered, including improved survival from diseases of the heart, healthier lifestyles, and a lessening of life stresses, since for example only a small proportion of surviving adults were affected by the First World War. None of the arguments are conclusive and it is unknown how long the improvements shown in Table 6 will continue, and whether those who have had better survival in one period will subsequently have poorer survival rates.
TABLE 6: Age-Specific Death Rates (a)
| Age | 1921-25 (b) | 1972 | 1978 | |
| Males | 60-64 | 28.1 | 27.1 | 22.5 |
| 65-69 | 41.5 | 41.1 | 35.7 | |
| 70-74 | 63.5 | 64.9 | 53.4 | |
| 75-79 | 101.1 | 100.3 | 87.3 | |
| 80-84 | 160.0 | 147.1 | 122.6 | |
| 85+ | 305.2 | 238.6 | 212.6 | |
| Females | 60-64 | 19.3 | 12.7 | 11.2 |
| 65-69 | 30.3 | 20.3 | 17.0 | |
| 70-74 | 49.0 | 34.6 | 28.2 | |
| 75-79 | 83.4 | 59.6 | 48.0 | |
| 80-84 | 138.6 | 102.3 | 80.7 | |
| 85+ | 264.7 | 188.8 | 177.2 |
Notes:
(a) Rates per thousand population of the same age and sex.
(b) Average annual rate.
Source: A.B.S. Deaths, 1978, Cat No. 3302.0, p.7.
The Series "D" projections in Table 4 assume a continuing decline in adult mortality, yielding a population of over 2.1 million elderly at the turn of the century. The Series "D" figure for 2001 exceeds the Series "A" projection by nearly 260,000, and the realisation of Series "D" would necessarily entail a much greater cost in providing for the aged. However, the continuous improvement in survival assumed in Series "D" is unlikely to be realised because of an expected drop in the rate of mortality decline (Young and Ruzicka, 1980:10). The two sets of projections in Table 4 might be taken as defining the range within which the numbers of the elderly will fall. Evidence presented to the United States Select Committee on Population (1978) emphasised the need for a range of projections of the elderly to reflect the uncertainty surrounding future changes in mortality. This observation is equally applicable to Australia, and planning for the elderly will need to be flexible enough to meet variations within the projected range: there is not enough evidence to adopt any one projection as a prediction.
Changes in life expectancy, as shown in Table 2, reflect that greater proportions of people are surviving to older ages, rather than an extension of the "normal" life span (Borrie, 1979:18). The best guide to future life expectancy are estimates based on the experience of birth cohorts, and these confirm an absence of a substantial extension of life at older ages. Young and Ruzicka (1980) demonstrated that the life expectancy at age 60 of males born in 1900 was 15.4 years, and they estimated that the corresponding figure for males born in 1960 will be 17.3 years. Life expectancy of females does show an improvement at age 60 from, 19.8 years (1900 birth cohort) to 23.8 years (1960 birth cohort), and although the changes are gradual any prolongation of life necessarily heightens government expenditure on pensions and benefits.
Differences in the life expectancy of men and women are one of the major causes of concern, as well as of hope for future improvement, since these differences, compounded by age differences between husbands and wives, result in the loss of support from the spouse, prolonged widowhood and heightened dependency on other family members and organisations. The higher mortality of elderly males is due to their greater susceptibility to the "degenerative" diseases of later life, although there is debate over the relative effects of lifestyles -- including smoking habits -- and biological factors in causing this susceptibility (Lopez and Ruzicka, 1977:82-88).
INCOME MAINTENANCE
Despite uncertainty about the future numbers of the elderly, it is clear that the next two decades hold the prospect of major increases in expenditure upon them. This situation is due to a combination of factors including the greater relative size of the fourth generation, the increasing numbers over 65 years old, and changes in the composition of the elderly population. In addition to these demographic forces prompting heightened expenditure, future policy changes could add greatly to the costs of providing for the aged, particularly in view of the existing latitude for improvement. Indeed, during the 1970s policy changes, especially increases in pension rates and a relaxation of the means test on age pensions, outweighed the contribution of demographic factors to the real growth of expenditure; for example, the population of pensionable age grew by 2.6 per cent per annum 1971-79 while the number of age pensioners grew by 6 per cent per annum (Dixon and Foster, 1980:10-11).
Extension of eligibility, however, is only one dimension of improved provision for the aged, another being increases in the value of pensions in relation to prevailing living standards. While "poverty lines" provide guidance on the maintenance of pension payments to subsistence level, they are an "austere standard" above which an affluent country could aspire to rise. Some have argued that social integration is a desirable goal in policy formulation concerning the aged, providing maximum opportunity for the aged to participate in and contribute to society (United Nations, 1975:25 and 51). The National Superannuation Committee of Inquiry (1976:20-21) echoed this view in their reference to "belonging" as an objective:
We regard the distinction between subsistence and belonging as a useful characterisation of alternative sets of attitudes to social welfare policy. Support for the present austere and means-tested age pension seems to us to accord more nearly with the goal of subsistence then with the goal of belonging, whereas the emphasis of the recommended National Superannuation Scheme is the reverse. Because of the imprecision of the concepts, this distinction does not carry the argument very far. Nevertheless it can be said that the income levels envisaged for the National Superannuation Scheme will enable Australia's elderly citizens to "belong" more fully than they can at present or are likely to do unless the available funds are augmented by contributions. Their opportunities to "take a moderate part in those activities which the ordinary (Australian) takes part in as a matter of course" will be significantly enhanced.
The means of financing such a goal is a subject of debate, but it is at least clear that in demographic terms the opportunities for the provision of improved income security, as well as saving for future needs, are more favourable now than they will be in the future (National Superannuation Committee, 1976:40). This is because for the rest of the century Australia will have a relatively small elderly population compared with the number of working age, but the "economic dependency ratio" will almost certainly deteriorate in the next century, reducing the number of potential contributors per potential recipient of welfare payments.
Dependency ratios, calculated from the Series "A" projections, confirm the relatively favourable demographic context for increased financial provision for the aged; between 1981 and 2001 the ratio of aged persons to persons in the working ages (15-64 years) are projected to rise only slightly from 15 to 16 per hundred, while the ratio of children (0-14 years) to working aged persons will fall from 38 to 35. The overall demographic dependency ratio (the ratio of persons 0-14 and 65+ to persons 15-64) is likely to remain between 53 and 51 dependants per hundred non-dependants until 2001. Thus Australia faces a respite during which savings could be accumulated before the "burden of the aged" rises in the next century. Demographic dependency ratios are only a crude measure of the ratio of dependants to supporters since they ignore, for example, that many in the working ages are not economically active -- including housewives, students, the unemployed and the sick. Nevertheless, a refinement of this ratio to include only labour force members also reveals little change in the levels of age dependency this century (National Superannuation Committee, 1976:44).
Demographic ageing introduces the prospect of a diversion of resources from the young to the old, thereby potentially avoiding heightened expenditure on dependent age groups. Yet this outlook is uncertain because, on the one hand, some believe the costs of children are smaller than those of the old, and that the family bears the majority of the costs of children (Sauvy, 1969:311). Jones (1980:80) quoted American estimates that average per capita public expenditure on the aged is about three times greater than expenditure on a child. On the other hand, the per capita costs of age dependency could fall if future generations of the elderly are healthier, if retirement ages increase as they have in other ageing populations, if the pensionable age of women is raised from 60 to 65 -- as advocated both in the Poverty Inquiry and in the National Superannuation Inquiry, and if more opportunities are created enabling the elderly to do part-time work. Part-time work for the elderly has been advocated as a way of supplementing subsistence level pensions (Commission of Inquiry into Poverty, 1975:236) and as a means of enabling those who wish to work to maintain a sense of participation in society -- at the same time making retirement a less abrupt transition, with consequent benefits for morale and health as well as for income.
Supplementation of income from pensions, or higher pensions, are necessary since the elderly who depend solely for their income on social security payments are among the poorest in society. The Poverty Inquiry found that the elderly comprise the largest group in poverty in Australia in 1973, although the aged married couples and home owners had greater economic security than single pensioners and renters (Commission of Inquiry into Poverty, 1975:234-5). The aged in economic jeopardy generally include those who lack the foresight or the financial means to prepare for their own old age by purchasing a home, contributing to a superannuation scheme or saving through investments which keep pace with inflation: poverty or a subsistence existence has commonly been the lot of the elderly who have not provided for themselves or who did not expect to live so long.
From the Australian Bureau of Statistics income survey of 1973, Henderson calculated that 7.6 per cent of the non-institutionalised elderly were below the poverty line, although he noted that a further 8 to 9 per cent of institutionalised elderly "income units" included "many frail but alert elderly people who hand over their entire income in return for somewhat less than the bare necessities of life" (Commission of Inquiry into Poverty, 1975:240). Government action following the Poverty Inquiry's recommendation that pensions for the aged be raised has resulted in an improvement in pension rates (Table 7). Yet further substantial increases in the age pension would be needed to reach the rate of 30 per cent of average weekly earnings, advocated in the report of the National Superannuation Committee, to achieve the goal of "belonging" as opposed to subsistence.
TABLE 7: Age and Invalid Pension as a Percentage of Average Weekly Earnings
| Standard Rate | Married Rate | |
| 1970 | 19.0 | 16.8 |
| 1971 | 18.2 | 16.2 |
| 1972 | 19.1 | 16.7 |
| 1973 | 20.1 | 17.5 |
| 1974 | 20.6 | 18.0 |
| 1975 | 23.4 | 19.5 |
| 1976 | 23.0 | 19.1 |
| 1977 | 23.7 | 19.8 |
| 1978 | 23.9 | 19.9 |
| 1979 | 23.0 | 19.2 |
| 1980* | 24.1 | 20.1 |
* projected
Note: In May 1980 the standard age pension rate was $61.05 per week while the married rate (per partner) was $50.85. The pension for widows (without dependant children) was the same as the standard age pension.
Source: Dixon and Foster (1980: Tables 8 and 9)
Many of the elderly, however, have already achieved this goal in economic terms because of their other sources of income, as illustrated by the statistics in Table 8. Although these figures are dated, they indicate relativity between groups, showing for instance that those most reliant on pensions -- which included 85 per cent of elderly females -- had the lowest median incomes, amounting to far less than half the median income of persons receiving superannuation. Occupational superannuation clearly provides greater financial security after retirement but its coverage is most uneven, being especially biased towards persons in stable employment. In 1974, superannuation cover extended to 36 per cent of employed men compared with 15 per cent of employed women, and 58 per cent of government employees compared with 24 per cent of employees in the private sector (National Superannuation Committee, 1976:46). Thus arises a major dilemma in income maintenance for the aged: whether to make universal provision for the aged at a higher level or to adopt a selective approach focusing on the most disadvantaged.
TABLE 8: Sources of Income of the Non-Institutionalised Population Aged 65 and Over, 1973-74
| Principle Source of Income | Numbers ('000) | Median Annual Income ($) | ||
| Males | Females | Males | Females | |
| Wages or salary | 66.3 | 13.8 | 4,810 | 3,980 |
| Own business, trade or profession | 15.7 | * | 5,320 | * |
| Share in partnership | 15.7 | 9.7 | 4,350 | 3,050 |
| Government social service benefits | 280.9 | 493.6 | 1,260 | 1,280 |
| Superannuation or annuity | 29.4 | 10.3 | 4,200 | 3,090 |
| Interest, rent, dividends, etc. | 33.8 | 44.5 | 3,430 | 2,260 |
| Other income | * | 4.6 | * | 3,850 |
| Total | 444.0 | 579.9 | 1,500 | 1,300 |
| Median Income of total population aged 15+ | 5,380 | 1,370 | ||
| Median income of wage and salary earners aged 15+ | 5,760 | 3,080 | ||
* Figures subject to high sampling variability
Source: Australian Bureau of Statistics, 1976: Income Distribution, 1973-74, Part 1, pp.20-21
Despite the low value of age pensions in comparison with average weekly earnings, government expenditure on age pensions and supplementary benefits totalled more than 63 million dollars per week at 30 June 1979 (Department of Social Security, 1980:8) and represented 10.9 per cent of total Commonwealth budget outlays for 1978-79, compared with 7.2 per cent in 1970-71 (Dixon and Foster, 1980: Table 5). Since the numbers entitled to age pensions under existing arrangements will have increased by approximately 28 per cent by the end of the century (Dixon and Foster, 1980: Table 5), dramatic increases in government outlays on income maintenance for the aged may be expected, even without an improvement in the purchasing power of the pension.
HEALTH
Income support for the aged is the largest component of social security expenditure in Australia but the aged also account for a high proportion of other welfare costs, especially in the provision of health services (Jones, 1980:80). The proportion of the total health budget spent on the aged in Australia is unknown, although in the United States one estimate is that the elderly, who comprised 11 per cent of the total population, accounted for 29 per cent of health care costs (Kane et. al., 1980:1327). Increasing numbers of the elderly augur heightened expenditure on health, not only because of the greater prevalence of illnesses of older ages, but also because increasing numbers are in the last year of life, the period when hospital and medical services are probably used most intensively. Australian life tables show, for example, that the proportion of men likely to die before their next birthday rises from 1.4 per cent at age 55 to 3.5 per cent at 65 and 8.3 per cent at 75 years. Overall, approximately 36 per cent of Australian male residents aged 65 and over in 1971 had died by 1976. Hospitalisation rates increase with age, and at ages 70 and over they are generally two or three times higher than for persons in their fifties (ABS, 1978:38). In Queensland, in 1978, males aged 65+ comprised 4.2 per cent of the total male population but accounted for 19.7 per cent of hospital discharges, transfers and deaths of males, although repeated admissions complicate these data (ABS, 1980a:18-19).
The 1976 Census recorded that a quarter of all people aged 65 years or more reported that they were "handicapped" in one or more ways, compared with 9 per cent of the total population, a handicap being defined as "a serious long-term illness or physical or mental condition". While this information is subjective and imprecise, limiting illnesses are more prevalent at advanced ages, often necessitating increased dependence on others for support. Statistics in Table 9 indicate the greater incidence of handicaps and chronic conditions among the "old-old" compared with the "young-old" (65-74 years). Yet the figures suggest that although around two-thirds of the non-institutionalised elderly suffer from a chronic illness, injury or impairment, the great majority are able to maintain their independence. Those living in institutions -- hospitals, nursing homes and homes for the aged -- comprise about 3.4 per cent of the "young-old", 15.6 per cent of the "old-old" and 7.8 per cent of the total population 65 years and over. The main chronic conditions affecting the elderly as a whole are impairments of vision and hearing (12 per cent affected), circulatory diseases (32 per cent), respiratory diseases (10 per cent), and diseases of the musculoskeletal system and connective tissue (22 per cent); within the last group arthritis was reported to have affected 16 per cent of the elderly. Given the need for a continuous increase in the provision of health services to the aged during the next 50 years, the issue awaiting resolution is how best to meet this need without undue expense and without undue emotional stress for the aged.
TABLE 9: Percentages of Non-Institutionalised Population Handicapped
Because of Chronic Illnesses, Injuries and Impairments, 1974
| Handicap | Males | Females | 65-74 | 75+ | 65-74 | 75+ |
| In social or recreational activities | 19 | 29 | 16 | 26 |
| In acts of daily living | 4 | 8 | 2 | 8 |
| In getting about alone | 6 | 15 | 8 | 20 |
| In ability to do housework | 4 | 4 | 10 | 20 |
| Total with a chronic illness, etc. | 56 | 68 | 58 | 67 |
| Total with a chronic limiting illness, etc. | 29 | 41 | 26 | 43 |
Source: Australian Bureau of Statistics, 1976: Chronic
Illnesses, Injuries and Impairments, May 1974, Ref. No. 17.3.
The problems of the aged in Australia are under-researched and the current level of professional training in gerontology and geriatrics is probably insufficient for future needs. One consideration in determining future manpower requirements in geriatrics should be the extent to which domiciliary care is adopted where feasible as an alternative to institutionalisation. The literature stresses the importance of family members in supporting aged relatives and policies to assist the family in continuing this role are widely advocated (Howe, 1979). For some, institutionalisation can be a traumatic and even fatal experience and may be unnecessary if adequate provision is made to maintain the elderly in their own homes.
Many have argued that domiciliary care should be the focus of programmes for the care of the aged, pointing out the potential cost savings and personal advantages of this approach (Australian Government Social Welfare Commission, 1975; Committee on the Care of the Aged and the Infirm, 1977). The relative costs of domiciliary and institutional care vary according to the degree of residential concentration of the elderly population, the quality of care provided, the patient's level of disability and his or her living arrangements, so great being the potential variation in these that costs cannot be compared for patients in general (Committee on the Care of the Aged and Infirm, 1977:41; Doobov, 1980).
... for the great majority of patients for whom the choice is home care or nursing home care the cost of providing home care services (i.e. not including the cost of housing, food, fuel, etc.) is less than the fee homes. The resource cost of home care (i.e. including the cost of housing, food and fuel) is less than the nursing home charge for a smaller proportion of patients. If the measure of the cost of home care were to include, in addition to the resource cost, a notional cost for the time spent by family and friends in caring for the patient, then home care so measured would cost less than the nursing home charge for a still smaller proportion of patients (Doobov, 1980:4-5).
Doobov (1980:3) suggested, from evidence in the literature, that about 25 per cent of patients in nursing homes and 10-33 per cent of patients in hospitals could be treated satisfactorily in their homes if suitable domiciliary care services were available. Moreover, although the relative costs of home, nursing home and hospital care vary from person to person, he observed that the "resource cost" of home care is always much less than that of hospitals, and less than that for nursing homes for the majority of patients living with a spouse or other family members. For patients who lived alone, however, the resource cost of domiciliary care was likely to exceed that of nursing home care.
These findings emphasise the need for flexibility in care provision, providing alternatives to suit individual circumstances, but attempting where possible to meet the wishes of the patient. A greater emphasis on domiciliary care might result in some savings in expenditure on health, although the main criterion in determining the type of care should be not cost or convenience but the well-being of the patient. Extension of home care for the disabled elderly entails the development of community-based, rather than centralised, services and programme development along such lines requires more information than is currently available about the distribution of services, the changing distribution of the elderly, the needs of those who care for elderly relatives, and the preferences of the elderly concerning domiciliary and institutional care.
CONCLUSION
Some of the main issues in the ageing of Australia's population arise from the growing numbers and percentages of the elderly and from the associated increasing cost of health and welfare. Questions needing further inquiry include: How to fund future cost increases. Whether to advocate selective income maintenance programmes for the disadvantaged or programmes for all the aged. How to assess the requirements of the aged and lessen the emphasis on institutional care in favour of domiciliary care. And how to provide better support for family members looking after elderly relatives. Yet in addition to these there are many other unanswered questions about the diverse and changing characteristics of the aged, essentially reflecting that the the scientific study of the old is very young in Australia. Above all, there is a need to dispel misconceptions about the elderly and their families because public and private action based on inadequate information is unlikely to serve people's best interests. The contribution of the elderly is often under-rated while their problems are often over-rated: It is important to recognise that the majority of the elderly are not spectators on the sidelines, rather they are sixty-five not out.
ACKNOWLEDGEMENT
I am grateful to D.M. Gibson and H.L. Kendig for their comments on a draft of this paper. The final version, however, is my own responsibility.
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Postscript by D.A. Dixon, Policy Co-ordinator,
Social Welfare Policy Secretariat, Canberra
This postscript has been prepared in response to a request for the views of the Secretariat on the issues raised by Mr. Wood.
The Secretariat welcomes the paper as a significant contribution to the public debate on social welfare policy, and agrees with the general conclusion that the next two decades hold the prospect of substantial increases in outlays on the aged.
In some important respects, the prospective financing problem is seen as being substantially greater than that described by Mr. Wood. Key factors are:
- The fact that women (who have a substantially longer life expectancy than men) become eligible for an age pension five years earlier at age 60 compared with age 65 for men. (Mr. Wood's discussion is in terms of population aged 65 or more);
- Compared with earlier years an increasing proportion of aged person are receiving the income tested pension. (This is due to an easing of the means test over a number of years and the greater ease since 1976 when the means test was converted to an income test for people with substantial assets to receive an age pension); and
- The fact that at least to date Australian demographers have understated the significance of the reduction in mortality rates that has been occurring in recent years.
Mr. Wood has referred to the work of Myers (1979) about recent changes in age specific mortality in Australia. The Secretariat has commissioned further research by Professor Myers and on the basis of that research and other information on recent trends in mortality has reached the conclusion that if anything even the ABS Series D projections (see page 9) are likely to provide conservative estimates of the growth of the numbers of aged persons in Australia over the next twenty years.
The following Table shows the implications of Series D projections for the growth in the numbers of the aged in Australia over that period. Of particular importance is what can only be described as a phenomenal increase in the numbers of the aged, particularly those aged over 85 years, which will occur. The incidence of use of nursing home and hospital care by this segment of the population is, as emphasised by Mr. Wood, particularly high.
Projections (a) of the Composition of Aged Population (b)
| Age | 1980 | 2000 | Percentage Increase |
| No. | No. | % | |
| Under 75 | 1,200,000 | 1,565,000 | + 30.4 |
| 75-84 | 400,000 | 715.000 | + 78.7 |
| 85 and over | 94,000 | 220,000 | +134.0 |
| Total | 1,694,000 | 2,500,000 | + 47.5 |
(a) ABS Series D Population Projection
(b) Females 60 and over and Males 65 and over.
One final comment is also relevant. Compared to many Western countries, Australia is still fortunate in having a relatively young population, which has to date reduced the financial burden of dependency. Nevertheless there are still some 2.5 million adults and 500,000 children reliant on the Commonwealth for income support payments. Of the adults, 1.2 million are of working age but in receipt of unemployment, or sickness benefit, invalid pension, or special benefit. Future trends in the numbers of such pensioners and beneficiaries are difficult to predict but it is quite possible failing a major improvement in the employment situation that pressures from this quarter will add to the problems discussed by Mr. Wood.
December 1990
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