George Magazine

population KEY FINDINGS • By 2050, nearly a quarter of Australia's population will be aged over 65—nearly double that of 2010. • By 2050 there will be too few workers paying tax to support the ageing population. • New business opportunities will emerge as older consumers demand different goods and services from the market. • Public- private sector partnerships will increase as the government looks to private enterprise to fill the funding gap. he says. "And it captures income from travellers and others—not just from people based in Australia who are of working age." The federal government is examining how to address the huge funding gap that is forecast to result from demographic change—using policy and tax measures. But what can businesses do? The following are some suggestions from a range of experts in their fields. Long-term planning The main issue in addressing workforce change is "sensible long-term planning", says Professor John Buchanan, director of Sydney University Business School's Workplace Research Centre. "If employers are serious about raising productivity, they have to get serious about investing in workplace development. This can be part of their risk-management regime." Productivity has already doubled, with the average Australian worker now producing twice as much now as they did 25 years ago, Buchanan says. But 80 per cent of this productivity gain has gone to business and only 20 per cent to wage rises. "The obsession with shareholder value in the short run is probably the greatest barrier to productivity in Australia," Buchanan says. "There will be benefits for companies now that think long term, including capacity to respond to new opportunities as they emerge." The answer is not necessarily to raise wages but to keep staffing levels up, he says. "That's what gives you the space for innovation. If everyone is absolutely flat out, they don't have time to think and reflect." Offering flexible work options to older workers, such as part-time or work-from-home roles, could be one way for companies to find new sources of labour, he says. Companies could also schedule work shifts to appeal to mothers, such as those offered by an abattoir in Dubbo. Business is already addressing demographic change, Buchanan says. "You are seeing that with rising female participation and some phased retirement, to keep people working longer. But while employers all say they are worried about the ageing workforce, there is still significant age discrimination." Picking a winner—new growth sectors As the population ages, the spending habits of older consumers will define growth markets in the years to come. Older consumers like to spend locally but they are also increasingly using e-commerce. As a result, there may be increased demand for investment products, pharmaceuticals, medical products, insurance and financial planning services. The private sector may find more opportunities to offer aged care and health services. Gallagher says business should be marketing to older Australians. "It's no surprise that most of the wealth is owned by people who are older. So business will be interested in providing goods and services to older people. There could be large untapped markets out there in selling to the older generation." As many Australians may outlive their retirement savings, Gallagher says superannuation and investment strategies will assume more importance and that the 12 per cent employer super contribution will not be enough for most workers. Calls have been made to raise the age at which Australians can claim super. Workers retiring this year can cash in their superannuation at age 60 and start receiving the age pension at 65, although this will rise to 67 over the next two decades. Financial Services Council Chief Executive John Brogden says raising the preservation age from 60 to 62 could cut $400 billion from the estimated superannuation savings gap—the difference between super savings and the money needed for a comfortable retirement. Nationally, that gap stands at $836 billion. Public-private sector partnerships As pressure mounts on governments to fund expensive infrastructure renewal projects, many have turned to public-private sector partnerships. In 2011, the federal government set up the Infrastructure Finance Working Group to encourage greater private-sector investment in infrastructure. "The Australian government is facing significant fiscal pressures in light of future demographic AS THE POPULATION AGES, THE SPENDING HABITS OF OLDER CONSUMERS WILL DEFINE GROWTH MARKETS IN THE YEARS TO COME. george.population 34

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