It is a pleasure to be here today and to join you for this session on active ageing and its economic potential.
Apart from the fact it is a topic that I have strong personal interest in – it is a topic that is vital to our nation’s future.
This session is very timely given the release of the Intergenerational Report by the Treasurer last week.
As I am sure you appreciate - the structural ageing of our population is one of the key policy challenges for our country because it affects so many aspects of our daily lives.
It impacts on our economy; our labour market; our superannuation system; and our health and welfare systems.
It also highlights issues of opportunity and fairness across the generations.
In 2002 - the first Intergenerational Report was released under the Howard Government’s Charter of Budget Honesty Act.
That Report highlighted for the first time - in no uncertain terms - the implications of the structural ageing of our population on our public finances.
It was a great wake-up call about the need to live within our means over the longer term.
The Report released by the Treasurer last week is the fourth in the series and looks at how our economy and our population will evolve up to 2055.
The message in this latest report remains as loud and clear as the first – now is the time to get our policy settings right if we are to improve our standard of living into the future.
Today, I would like to run through the key demographic changes highlighted in the Report and outline why encouraging active ageing and increasing workforce participation is vital for our nation’s future.
One of the key projections of the Intergenerational Report is that the number of people aged over 65 will double in the next 40 years.
At the same time, the number of people aged between 15 and 65 will halve as a proportion of the population.
This represents a profound change within our economy and our society.
Let me run you through some figures to show how this change is already underway and will only accelerate into the future.
In 1975 - there were 7.3 people aged between 15 and 65 for every person aged 65 and over.
In 2015 - there are 4.5 people aged between 15 and 65 for every person aged 65 and over.
In 2055 - we expect there to be 2.7 people aged between 15 and 65 for every person aged 65 and over.
This shift in labour force demographics raises a number of key policy questions such as:
- How do we continue to grow economically as a country?
- Who is going to be in the workforce of the future?
- How are we going to pay for the range of public services we may need and want in the future?
- And how do we ensure it is fair to future generations?
Boosting workforce participation
To answer these questions, the Intergenerational Report talks to the three Ps: Population, Participation and Productivity.
Today I would like to focus my remarks on the ‘participation’ side of the equation.
Participation refers to the proportion of the population aged 15 years and over who are actively engaged in the workforce.
Over the past 40 years there have been some very positive changes in workforce participation amongst particular groups which has helped to drive economic growth.
For instance, in 1975 only 46 per cent of women aged 15 to 64 had a job.
Today, around 66 per cent of women aged 15 to 64 are employed.
Similarly, in 1979 around 46 per cent of people aged 55 to 64 had a job.
Today around 64 per cent of people aged 55 to 64 are employed.
However – looking ahead over the next 40 years – the Report tells us that the overall proportion of the population in the workforce is expected to decline.
The participation rate for people aged over 15 years is projected to fall from 64.6 per cent in 2014-15 to 62.4 per cent in 2055.
While a 2 percentage point decline may not for some look like much – it will act as a drag on economic growth and threaten our standard of living.
Even if productivity levels remain constant at today’s rate of 1.5% - economic growth will reduce from 3.1% now to 2.8% in 2055 due to population ageing and slightly lower population growth.
And lower economic growth combined with greater pressure on our health and welfare systems could easily become a vicious cycle for future generations.
A collective effort
The economic and social challenges of population ageing cannot be addressed by any one sector alone.
It is a field in which employers, workers and government each have a role to play - and must work constructively with one another.
From the Government’s perspective, the very best thing we can do for current and future generations is to manage our public finances well so as to lay the foundations for a strong economy.
The Intergenerational Report shows that if we had not made any changes to the policies of the previous Labor Government then the deficit would reach $533 billion and net debt would have been almost $5.6 trillion in today’s terms by 2055.
That is not the legacy the Coalition Government wants to bequeath to future generations.
The Report shows that the Government has already made significant progress in repairing the damage Labor did to the budget and the economy.
Through measures already legislated, the projected budget deficit and net debt levels in 2055 have been halved.
While there is more work to do, there are also new signs of economic growth beginning to emerge.
The latest National Accounts show that the Australian economy grew by a solid 0.5 per cent in the December quarter of 2014 to be 2.5 per cent higher over the previous year.
The ANZ Job ads series shows that job ads are up 10.2% over the year to February.
And in 2014, more than 213,000 jobs were created across Australia – that is treble the pace of growth under Labor in 2013.
And projections by my Department show that total employment will increase by more than 1.15 million in the five years to 2019.
Retail trade numbers are showing positive signs having risen for eight consecutive months.
The figure for January 2015 – which came out last Thursday – shows that retail trade grew by 3.1 per cent in the previous 12 months.
Related to those retail numbers is consumer sentiment, and that’s in pretty good shape, too.
The Westpac-Melbourne Institute Index of Consumer Sentiment rose by 8 per cent in February 2015.
In 2014, a record 223,000 new companies were registered in Australia.
Almost 21,000 more companies were created in 2014 than in 2013 – a 10 per cent increase.
This is a very good figure given that the private sector accounts for about 85 per cent of jobs in this country.
The 2014 figure is the highest since ASIC company registration records started in 1999.
In addition to our reforms to re-boot the economy and get the Budget back under control we also have specific programmes to boost workforce participation amongst older workers.
Under our new Restart programme, employers can receive up to $10,000 if they hire and retain a job seeker aged 50 or older – provided that person has been unemployed and on income support for six months.
That money can be used by employers to help pay for training, reskilling or other workplace development.
And I think the programme is especially well suited to small to medium-sized businesses.
If any of you are interested in hiring a mature-age person, I urge you to look closely at Restart and see what it can do for your business.
The Government also offers the Corporate Champions programme.
This provides practical and tailored assistance to organisations that make a commitment to move towards better practice in employing people aged 45 or older.
That assistance is provided by an industry expert and is worth up to $20,000.
Almost 500 employers have taken advantage of the scheme – including panellist Ross Miller’s company, Westpac.
And the Government’s new Relocation Assistance programme can help older job seekers to move to take up work.
The programme provides up to $9,000 to help a person with the costs of moving – such as removalists fees, bond and rent during the initial period of relocation.
Practical measures such as these are helping older job seekers to take up new work opportunities around the country.
If we are to have the workforce we need in the future, then it is important that we are also helping older job seekers to be as competitive as possible for the jobs on offer.
Last week, my department published some interesting research as part of its ongoing survey of employers.
Just over 900 employers were asked what could be done to improve the employment prospects of mature age job seekers.
While there was a range of responses by employers – the most common suggestion was that employers themselves need to improve their attitude towards employing mature age workers.
Employers acknowledged that they could be more flexible with their workplace arrangements - such as the hours of work offered to mature aged people.
This is very encouraging because many older workers want to remain in the workforce – but not necessarily on a full-time basis.
Many employers also talked about the importance of practical measures – such as wage subsidies like Restart – in helping them to employ mature age workers.
The survey also offered some interesting insights for older workers looking to find a job or change jobs.
The employers surveyed clearly acknowledged the skills, experience, reliability and strong work and communication skills that mature age people bring to the workforce.
They also said that regardless of age, people need to have the relevant skills, experience and physical fitness required of any employee for the job.
Employers also said that people needed to ensure their skills were up to date – especially computer skills.
Employers also said that mature age job seekers need to better match their skills and experiences to the job on offer and to sell themselves with more confidence.
These are important messages for older job seekers.
Like everyone else in the labour market these days, workers aged 50 or older must be agile and competitive.
People need to plan their careers and create options for themselves.
It’s a simple fact that the old days of training for a particular job and staying in that job for 30 or 40 years are over.
It is in people’s best interests now and into the future to be updating their skills and broadening their experience at regular intervals to ensure they have as many options as possible in the labour markets of the future.
Ladies and gentlemen.
I have appreciated the chance to speak with you today about the importance of active ageing and the implications for workforce participation.
The prosperity we enjoy today has come about through Australia’s historical ability to read the economic signs, to accept the imperative for change and to adjust to new realities.
The demographic changes occurring right now – and that will continue to occur over the coming 40 years – are the latest test of that ability to succeed in an ever-changing world.
I’m confident that we – collectively – can pass the test and bestow upon future generations the wealth, jobs and opportunity that we have enjoyed.
And I am confident that we can fully realise the undoubted economic potential of those who are actively ageing.