Population ageing and the public purse: Australia in comparative perspective

A comparative analysis of three decades of OECD public spending change is used to test propositions concerning the likely consequences of population ageing for public expenditure development in coming years. The World Bank and the OECD Secretariat suggest that population ageing has a direct impact on public expenditure through increased spending on pensions, health care and services for the elderly; and an indirect impact through increasing levels of public indebtedness. The analysis here suggests that only the pensions effect is supported by available comparative evidence and that, even here, the relationship is weaker than often implied in the population ageing literature. The vulnerability of different nations to problems arising from population ageing varies widely, with Australia among the least vulnerable.