Council on the Ageing (Australia)
THE NATURE OF AGEING IN THE NEXT DECADE
What needs to be considered if healthy ageing is to be successfully encouraged.
by Denys Correll
Ageing at Home and Community Care Conference
20th March 2002
National Executive Director
Council on the Ageing (Australia)
Level 2, 3 Bowen Crescent
Melbourne, Vic, 3004
Ph: 03 9820 2655 Fax: 03 9820 9886
Population ageing – a context
Ten years ago ageing was of little interest to anyone outside those experiencing it and those in direct care. In 1997, ageing, in the context of residential care, became a national focus due to the aged care reforms. The International Year of Older Persons of 1999 put a more positive spin on ageing. There were the first glimmers that an ageing society meant more than walking sticks and dependency. Last year, the Prime Minister, in a major pre-election speech spoke of employment into later years.
Over the decade, we have seen ageing emerge as a central policy issue. It is no longer just the butt of Alzheimer-type jokes. Older people are a force to be reckoned with in the community and politically. In this paper, I explore the emerging of this new power. I will not devote much time to the statistics of ageing. This audience knows enough of the overall facts for me to release you from viewing bar charts, graphs and population tables. I will, however, give you some less known perspectives on our ageing population.
Australia’s population is ageing unevenly across the states and territories. This presents stronger challenges to the states with older populations. South Australia and Tasmania have the oldest populations (ABS 2001) and coincidentally, those two states are experiencing greater economic challenges than other states. Consequently, both states have less Government resources to expend, per capita on services.
The English weekly publication, the Economist, has, over the last year or so given considerable attention to ageing issues. This magazine is famous for its in-depth journalism. It is heartening that such a prestigious publication is providing a forum for thought and discussion on ageing.
In its leading editorial in December 2000 (Economist, 23 December 2000), it predicted that a potential clash between youth and age would be the defining issue of the 21st century. The writer referred to the increasing older population, many of whom will be "benefit consumers" and the younger population who will be taxpayers. This is a description of the developed world. In developing countries there will be a similar pattern by mid 21st Century. A complexity will be in those developing countries where AIDS has devastated the middle generation. The developing world’s issues will be more exaggerated as to a large extent, the infrastructures for an ageing population do not exist.
The Economist quite correctly points to changing work force requirements where older people will be encouraged to remain in employment until even their 80’s.
In late 2001, the Economist ran a supplement entitled "The Next Society". The eminent futurist, Peter Drucker argues that the society of the 21st Century "will be quite different from the society of the late 20th century" (The Economist, 1st November 2001). Included in Peter Drucker’s arguments are the impossibility of sustaining existing pension systems and the inevitability of people "working into their mid 70s, health permitting". On this note however, Drucker predicts that workforce participation by the over 50’s will be different. There will be more temporary and part time work. Already this is happening in Australia.
Mature age employment
In our own work COTA has been advocating for a new approach to mature age employment. The Department of Family & Community Services has estimated that 46% of the age group 50 – 64 is not in employment and 33% of the age group are receiving some form of Government benefit or pension. It is pleasing that following the COTA 1999 Congress and numerous COTA papers on the subject of mature age employment, Government has recognised it as a major priority. Yet to come is a business awakening to future labour market shortages.
Already we are well aware of critical shortages in some professions. Immigration is not the answer. For example, there is a worldwide shortage of nurses and it is hardly a solution for rich countries to plunder the human resources of less affluent countries. In the next 10 years, Government, business and the community need to work together to plan labour market solutions for the next decades. Declining birth rates in all developed countries is changing the nature of society. Since the Second World War, markets have been largely determined by youth. Markets are now moving to being determined by middle age and in a few decades older people will become the market determinants.
Drucker in his examination of immigration produced an OECD graph that surprised me. Of nine developed countries (Australia, Switzerland, Canada, USA, Germany, France, Denmark, Italy & Japan), Australia had, by far, the highest proportion of foreign born population in 1998. Australia’s foreign-born population was 23.4%; Switzerland was next at just over 18%, Canada 17% and USA next at about 9.5%.
I would argue that Australia, with such a high proportion of foreign-born population and a declining birth rate, has no alternative but to look to the mature age population for our labour market growth in the next decades.
In examining the future of employment Drucker referred to the changing nature of business. Companies have much shorter life spans than a few decades ago thus requiring workers to move between employers.
Younger people (those under 50) in the future will require steady full time employment or a succession of full time positions. After 50, people may move to second careers with different types of employment including part time or casual work.
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The knowledge society and globalisation
Drucker refers to the next society being a knowledge society. Globalisation is thrown around as an expression, usually in the context of business. But, we are experiencing globalisation in many ways. There has been the extraordinary expansion of knowledge through the World Wide Web. Education is becoming more global with universities both importing students and exporting courses. Health care is crossing national boundaries but mainly for the rich.
The knowledge society has particular implications for older people. Manual work is declining, except in the service industries. "Knowledge work" is the fastest growing part of the workforce.
Knowledge work will reinforce the trend for higher female participation in the labour force. Over the last three decades in the USA, female labour participation has risen from about 50% to over 70% (The Economist 1st November 2001). In Australia, the participation rate for females aged 45 to 54 has risen from 46.8% in 1978 to 67.8% in 2000 (House of Representatives 2000). Knowledge workers require not only education but re-education. Knowledge becomes obsolete. Our current education system is far from geared towards re-education and contributes to the high redundancy rates for older workers. If we are to maintain our workforce and not lose talent, governments and employers will need to look to access to re-education and upgrading knowledge.
What I have described is a developed world picture. On the other hand, we have the developing world and particularly Africa, sinking into the abyss of HIV/AIDS and poverty. The last estimate I have heard for HIV/AIDS in Africa is 25 million people with the disease. A social consequence of this is the grandparents, as the survivors, are left to provide for the children as the parents have died.
Politics of Ageing
Already the ageing population is having a considerable influence on the political environment. We saw in 1997 the Prime Minister canceling the policy for accommodation bonds in nursing homes because of the community outcry. Seniors organisations are growing and in some countries of the developed world they are the largest lobby groups.
In the 2001 Federal Budget there were indications of the power of the seniors lobby. Entitlement to the Health Concession card was widened. A $300 bonus was paid to all pensioners.
At the 2001 Australian Council of Social Service congress there was a session on demography. Professor Graeme Hugo in his keynote paper "Demographic perspectives on social policy and intergenerational equity" (Hugo 2001) referred to the estimate that, per head, older dependent Australians incur three times the level of public spending as younger dependent Australians. Further, that the incidence of poverty among children in Australia is substantially greater than the incidence of poverty among adults. Professor Hugo outlined the impact of changing family construction. Increasing divorce and separation have led to split households and greater pressure on services to keep people in their own homes. Currently 22.8% of households are people living alone. In the session on demographics, speakers, including one from the youth lobby, spoke with concern regarding the growing power of the aged lobby. There is a widespread belief that older people are receiving more than their fair share of Government largesse.
This raises a fundamental issue for the aged lobby. In my own paper (Correll 2001) to the ACOSS Congress, I indicated that COTA, along with other seniors’ lobby groups, needs to examine all policies in a community context. It makes little sense for seniors to attract a disproportionate share of resources to the disadvantage of their children and grandchildren. In the next decade, I expect the seniors’ lobby to become much more involved in policies beyond the traditional areas of pensions, aged care services, health care and employment.
On the narrower front of aged care, since the 1997 nursing home debacle, the two major seniors organisations (National Seniors Associations and COTA) have been involved in all major Government working groups that are molding the current workings or future of aged care. Government knows that major policies that impact on seniors cannot be introduced without consultation with our two organisations. This I expect to become even more the case in the next decade.
The National Centre for Social and Economic Modelling (Harding et al 2001) has estimated that in 1998 the total wealth of Australians in the age group 65-74 had risen 115% from 1986. In dollar terms, their wealth had grown from $103,000 in 1986 to $221,000 in 1998. These figures are in constant 1998 dollars meaning they reflect real growth in wealth. Of the generation aged between 65 and 74, 76.1% owned their home in 1998. The rapid rise in house prices has meant the wealth of the baby boomer and older generation has increased.
Not so fortunate is the next generation which is not saving and is not buying homes. There is a shrinking proportion of those aged under 44 who own their own home. Baby boomers have the reputation of living well. They will inherit considerable wealth from their parents but will the next generation be so lucky? Probably not as the baby boomer generation will live on until ripe old ages and will use their wealth and their inherited wealth.
For the next decade, we can expect governments to look covetously at the wealth of the retired generation and wonder how it can be used to provide for their income, health care and long term care.
The attractiveness to Government of plundering older people’s wealth flies in the face of the savage lesson of 1997 when the Government implicitly attacked the ownership of family homes to pay for nursing home bonds. The message is even more mixed when I reflect on the "give aways" to higher income retirees in the 2001 Federal Budget. Political parties on one hand want to attract the older vote but on the other hand want to find ways for older people to pay for their needs in retirement.
Barrie Dunstan in the Australian Financial Review (Dunstan 2001) drew attention to the future liability of the old age pension. He quoted actuary, Michael Rice who has estimated the age pension liability at $193 billion. The Government and Opposition are committed to occupational superannuation as a way to reduce the Government liability but at this stage, the average superannuation payout is only $70,000 – hardly enough to live on for 20 years of retirement. The current retirement incomes provision consisting of the old age pension, superannuation and private savings is flawed. Government claims it will have trouble maintaining the old age pension, superannuation has structural faults that will not generate sufficient retirement savings for most Australians and private savings have been moving to private debt.
In a study carried out by the Association of Superannuation Funds of Australia and COTA (ASFA 2000), retirees thought they needed a minimum of $20,000 per year to maintain a decent life-style. Super payouts of $70,000 or a pension of $10,500 fall far short of these aspirations.
To date the contradiction between the ownership of wealth and the paying for retirement is unresolved. The Government will no doubt move within this decade to find agreements with seniors lobbies on the unlocking of assets. We will be unlikely to agree to governments accessing older people’s wealth without a review of retirement incomes.
Ageing and Care
In the last part of this paper, I will speculate on ageing and care needs. A decade ago some service providers and owners advised me that baby boomers would change directions in aged care. They had in mind the boomers in 20-30 years time. What the service providers failed to predict was the boomers’ influence on current aged care. It is this generation that has a major say in the care provided to their parents.
In residential aged care, owners and service providers thought current building stock with multiple bedrooms would survive for a few decades. As has eventuated, 2008 is now the deadline for new building standards including privacy requirements. The baby boomer children are insisting on more privacy and better facilities for their parents. There is a problem with bed shortage with a high degree of discontent by baby boomers of having to use residential services that do not meet their expected standards of privacy and amenity.
The community has become far more aware of the standards of care and building amenity that should be expected. Media has played a large role in highlighting the deficiencies that should not be tolerated. Five years ago, this would not have occurred. At the present there is a lull in media interest in aged care. Terrorism, refugees and other assorted crises have absorbed media interest. The stories are still there but are not rating media coverage. I expect, once the international crises have settled down, the media will once again refocus their attention on domestic issues including the implications of an ageing society.
The dissatisfaction with residential care is placing more pressure on community services and post acute care. The lack of convalescent and rehabilitation services has been highlighted particularly with the bed shortage in residential care.
The system is severely out of balance and COTA is giving this considerable attention. The starting point for many is access to acute care. Fear exists in many seniors’ minds, that they will not get access to health care either in an emergency or for waiting list surgery. Consequently, over 50% of our membership (average age 70) have taken out private health insurance. This is a scandal given that 75% of the eligible population receive government pensions as their principal source of income (ABS 2001). Late last year the AMA publicised the problem their GP members were having in having privately insured patients admitted to private hospitals.
Following acute care, the access to rehabilitation and convalescent care is poor, particularly in rural and remote Australia. COTA is advocating that in the State Health Care Agreements, being negotiated over the next year, convalescent and rehabilitation benchmarks be set. Without adequate access to rehabilitation and convalescence older people can be admitted unnecessarily and prematurely to residential care.
Home and Community Care (HACC) as everyone knows, is under resourced. For years our members have complained that they cannot access low-level HACC services. So, we have the absurd situation of an older person seeking hostel care because they cannot maintain the garden and house anymore and cannot receive regular nursing assistance.
HACC has been one of the most reviewed programmes in aged care. There has been very slow progress in moving to better targeting. The Australian National Audit Office in its 2002 follow-up audit on HACC (ANAO 2002) advised that the Targeting Working Group of HACC Officials has been reconvened. The Working Group is developing a tiered approach to targeting based on levels of dependency and methods of funding for HACC targeting. Progress is slow. This, in part, reflects the structural problem of a programme funded and administered by two or three levels of government.
Residential care requires considerable re-thinking regarding the capital investment required and adequate staffing levels. There is sector-wide recognition that these shortcomings need exploration and resolution. Fortunately the sector, consisting of service providers, unions, professionals and consumers now meet regularly as the National Aged Care Alliance. Already the Alliance has, as a result of a commissioned paper, persuaded the Government that there is a shortfall in indexation for residential aged care. Other policies have and will be developed.
Since the last election, the Minister, the Hon Kevin Andrews has committed himself to dialogue with the sector. This we welcome and look forward to resolving problems and developing new directions over the coming decade.
The Association of Superannuation Funds of Australia (ASFA) (2000) Looking forward to retirement … Is this as good as it gets? Canberra, ASFA, December 2000. http://www.superannuation.asn.au/
Australian Bureau of Statistics (2001) Population by Age and Sex, Australian States and Territories, Cat No 3201.0. Canberra, December 2001
Australian Bureau of Statistics (2001) Income distribution 1999-2000, Cat no. 6523.0. Canberra, February 2001
Australian National Audit Office (2002) Home and Community Care Follow-up Audit, Audit report No 32. Canberra, Department of Health & Ageing, 2002, page 19. http://www.anao.gov.au/
Economist (2000) "Tales of youth and age" The Economist, 23 December 2000
Economist (2001) "The next society", The Economist, 1st November 2001
Correll, D E J (2001) Equity in policy responses to population ageing. Paper presented to ACOSS National Congress Melbourne, 25 October 2001. (Published in Impact, Dec 2001, p8)
Dunstan B (2001) "Time to discuss this old problem", Australian Financial Review, 29 October 2001
Harding, A, A King & S Kelly (2001) Trends on the assets and incomes of older Australians. Paper presented to COTA National Congress, 13 November 2001. Canberra, National Centre for Social and Economic Modelling (NATSEM) 2001. http://www.natsem.canberra.edu.au/
House of Representatives Standing Committee on Employment, Education and Workplace Relations (2000) Age counts: an inquiry into issues specific to mature-age workers. Canberra, June 2000
Hugo, G J (2001) Demographic perspectives on social policy and intergenerational inequity. Paper presented to ACOSS National Congress, 25-26 October 2001 (Extract published in Impact, Dec 2001, p4-6)