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Population Ageing and Projections of Government Social Outlays in Australia

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  • 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. Chung Tran, 2014. "Temptation and Taxation with Elastic Labor," ANU Working Papers in Economics and Econometrics 2014-617, Australian National University, College of Business and Economics, School of Economics.
    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. 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.
    7. 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.
    8. O'Brien, Martin, 2004. "Hidden Unemployment and Older Male Workers," Economics Working Papers wp04-02, School of Economics, University of Wollongong, NSW, Australia.
    9. 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;

    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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