Australia’s Demographic Challenges

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Board Of Taxation Appointments
February 24, 2004
Superannuation changes; Australia’s Demographic Challenges – Interview with John Laws, 2UE Radio
February 26, 2004
Board Of Taxation Appointments
February 24, 2004
Superannuation changes; Australia’s Demographic Challenges – Interview with John Laws, 2UE Radio
February 26, 2004

Australia’s Demographic Challenges


Doorstop Interview

Marriott Hotel, Sydney

Wednesday, 25 February 2004


SUBJECTS: Australia’s Demographic Challenges


The nature of our society is changing. We are going to have more older people

compared to people of workforce age over the next 20, 30 and 40 years. This

is partly because people are living longer, but also because in advanced industrial

societies people are having fewer children. And we need to start preparing for

that now. We need to put in place measures which will encourage workforce participation,

not just by older people, but by others in our society that we want to get into

the workforce, because people who are not part of the workforce are also going

to have this problem of retirement incomes, as they come up to retirement. And

I am releasing today, a paper which is putting all of these issues squarely

before the Australian people, and it is asking them to become part of this debate,

and to participate in this debate and to give us feedback on some of the ideas

that we are putting out. This is the challenge for the next 10, 20, 30 and 40

years. The nature of our society is changing. Demography is destiny. The changes

which have already occurred are working themselves out now and will affect us

profoundly, and that is why we need the policy responses to work out over the

same period of time, and I would encourage all Australians to have a look at

this paper and to get involved in this debate.


What are employer groups, what discussion have you had with employer groups

so far, because they are going to be a big part of this, aren’t they?


Employers have to be encouraged to keep mature workers in the workforce. Now,

they may not be working full-time, and doing what they were doing say in their

forties or fifties, but they may be able to stay in the workforce, maybe working

part-time, maybe with more supervisory duties to help some of the younger workers,

and we need to encourage employers to look at older and mature workers as a

great asset. The studies show that the skills of mature workers don’t

decline with time. They may want to work more on a part-time basis, and I am

announcing today that if they want to take some superannuation and continue

with some part-time work, they will be able to do it. But this will involve

many employers changing their attitudes as well.


Do you think that will make a very swift change, do you think, in employer

attitudes to employing older people?


Well, the other thing that employers are going to realise is as their businesses

grow, there aren’t going to be as many young people they can actually

employ. The growth of the workforce, of working age that is between 15 and 65

is going to be zero – it is not going to grow. So, many of these employers

are going to have to look to the older workers to actually find people that

they can usefully employ to keep their businesses going.


Will there be incentives for employer groups?


I think the incentive is the skill and the experience of those more mature

workers, and the other incentive for the mature workers is as I have announced

today to enable them to take part of their superannuation while they continue

in the workforce.


There have been proposals from employer groups that older workers should be

allowed to stay on, on reduced rates of pay in a part-time mentoring role. Would

you support changes to the industrial system that would allow older workers

to stay on, on rates and conditions that undercut present award conditions?


Well, what I would support is maximum flexibility. Flexibility to come to agreements

which are mutually beneficial, and that’s one I am arguing for here, and

I would encourage the Senate to pass our legislation to allow flexibility so

that people can come to agreements. The nature of work for older people is going

to change. It may not be 40 hours a week or 50 hours a week, you may not be

in a, in the kind of duties that they previously had, but it may be two days

a week, it may be helping somebody train for their job, and we don’t want

to discourage that, in fact the reverse, we want to encourage it.


There is a lot of talk about…


(inaudible) might be to, or to balance up as a long-term measure, to balance

up fertility rates maybe, or to balance participation rates maybe to increase

fertility rates, would the Government consider making provisions to mothers

to enhance that, rather than to keep older workers in the workforce for longer?


Well, far be it from me to discourage fertility. But the experience shows us

that in industrialised societies all around the world, in the developed economies,

whether it is Britain or New Zealand or Japan or Europe, that fertility rates

are dropping. This is not unique to Australia, this is the western industrialised

world. Where fertility rates are high are in undeveloped countries, Africa and

other economies which are not as advanced in an industrial sense as ours. And

I don’t think you are going to change it. That is a global phenomena,

and it has been happening. The other thing I would say is that this is not a

new thing. This happened in Australia in the 1970s, it happened thirty years

ago. We have had 30 years now, where our fertility rate has been below replacement

level. It didn’t happen yesterday, it didn’t happen last week, it

didn’t happen eight years ago, it happened 30 years ago with some of the

social changes that occurred in the sixties and the seventies, and I don’t

think it is real life to say that you can reverse what is a trend right around

the world.


What about paid maternity leave and tax deductibility of childcare proposals

that have been put, do you think that they could make any difference?


Well, I don’t think they are answers to fertility. As I said, you can

look around the world and you will see this in every advanced affluent western

society, that the fertility rates have declined, and it is something that happened

30 years ago. They may have and they may be policy prescriptions that are useful

for other objectives but they are not useful for fertility issues.


Couldn’t they stop women dropping out of the workforce when they have

children and encourage more women to work and return to jobs?


As I said, these are not measures in relation to fertility.


Given the challenges that you have outlined that lie ahead for our budget,

would it be inconsistent for either you or the opposition to go to this years

election promising tax cuts which will lower the Government’s revenue



We will do what we have been trying to do for the last eight years which is

to run a strong economy, that’s what we will do. And our economy has been

growing over the last eight years at 3.6 per cent on average which would be

amongst the industrialised countries of the world, one of the best, if not the

best. And the measures that I will be laying down in the Budget are designed

to keep our economy growing, because I will tell you this thing, a growing economy

will be better placed to cope with the ageing of the population than one that

is sluggish. What would be worse with an ageing population would be an economy

in recession, and what would be better is an economy growing. Thanks.