Population ageing and its regional opportunities

As part of the consultation on a new strategy for an ageing population, we've invited a range of experts and specialists to write on topics of their choice.  In the following article demography consultant Dr Natalie Jackson writes about regional opportunities arising from an ageing population.

It is very common to hear population ageing discussed in terms of the national proportion aged 65+ years (currently just over 15 percent) and its projected rise to around 23 percent within two decades. Looking ahead, this 'structural ageing' of the population conjures up a picture of somewhat greater numbers of older people and relatively fewer younger people. It generates images of spacious footpaths designed to take greater numbers of mobility scooters, more park benches, more disability parking spaces, busier hospitals – and relatively fewer playgrounds. To that we might add greater numbers of healthy retired people out on their bikes, walking in the bush, swimming laps at the local pool, lining up for lattes and smashed avocado (the future older population will include today’s smashed avocado eaters!) – and fewer cars on the road at school drop-off and pick-up times.

Clearly there is some work to be done around infrastructure, resources, services and facilities. But is it that simple? One regularly overlooked issue is that population ageing differs markedly across the country. Until we grapple with this situation we can’t even begin to imagine what it will look like 'on the ground'. Population ageing will be played out at the local level – in our suburbs, towns and rural centres. Already over 41 percent of towns and 29 percent of rural centres have greater than 20 percent aged 65+ years. It is at this level that 'readings' need to be taken and responses, especially local community level responses, developed, and resource allocation determined.

However, given that our local needs are often dependent on the ability of territorial authority areas to gather sufficient rate-revenue, focusing on them provides a useful starting point. The currently oldest territorial authority area, Thames-Coromandel, already has almost double the national proportion aged 65+ years, while one-third of New Zealand’s 67 territorial authority areas already have 20 percent or more. Looking ahead just 10 years, 55 territorial authority areas (82 percent) are projected to have greater than 20 percent aged 65+ years. Look out two decades, and only three territorial authority areas are projected to have less than 20 percent (Hamilton, Auckland and Wellington).

These demographic disparities mean that national-level figures are not very useful for policy development and funding considerations. But population ageing will affect even more than these deliberations. Passing the 20 percent milestone puts our regional councils, territorial authority areas, towns and rural centres in largely uncharted waters. From the international literature we know that once a population passes this milestone, it will typically lose its 'natural increase' – where births exceed deaths – within about a decade.

Despite our currently high levels of international migration, it is in fact natural increase that has been the primary cause of New Zealand’s population growth for the past century – true even for Auckland. As population ageing unfolds, deaths will slowly exceed births, and the previously 'invisible' role of natural increase driving population growth will be laid bare. The natural decrease that takes its place will cause many populations to shrink – not simply from the outmigration of the young as in the past, but from a new and intractable cause: hyper-population ageing.

While ultimately this shrinkage might be a good thing, shrinking populations will also have to deal with their increasing numbers at older ages. Among many other issues, substantially greater proportions living on fixed incomes will play havoc with our current reliance on local body rates to fund local services and facilities, and to replace infrastructure.

So, the above mental picture of generously sized mobility scooter paths in every town, busy hospitals full of attentive doctors and nurses in every region, and even someone to make the lattes and smashed avocado in every café, needs some thinking about. Increasingly, our ability to provide these trappings will come down to the portion of the population that is not well acknowledged under the rubric of population ageing – the young. It is actually the relative lack of young people in the population that drives structural ageing, not simply the absolute increase in the numbers at older ages. Increasing longevity means more older people living longer, but they would not also be a greater proportion of the population if it were not for the declining birth rates of their children.

With that in mind, imagining what our local world will look like in 20 years’ time also requires us to imagine how much our young and middle-aged people will by then be in demand. Already we are facing labour and skill shortages – especially in areas where the population is older than average. In these areas there are more people leaving the labour market to retirement than entering it at the younger ages. In just 10 years’ time, New Zealand’s prime working age population is projected to be 11 percent larger overall, but for 52 territorial authority areas (78 percent) it will be smaller than at present – both numerically and as a proportion.

Not only young people, but people of all ages will be in increasing demand in our local labour markets. Yes, some jobs will disappear, but many that will service the older population and cannot be shipped offshore will be created. And you can’t, on a daily basis, move an excess of young/working-age people from say, Auckland, to Southland, where they are sorely needed. A recent World Economic Forum report proposes that there will be little unemployment over the next few decades. Indeed, in New Zealand we are likely to return to a situation remarked on in the labour market literature: that in 1956 only 12 people were unemployed, and the government knew them by name.

Far from the current scenario of many young people not in employment, education, or training (NEET), we might envisage what a return to full employment could look like. A fully employed, and presumably better paid population (reflecting increased competition for labour), may well be the ultimate legacy of population ageing. Good for the regions, good for everyone. Getting from here to there, however, will require us to accept and engage with these statistics, and to develop an ageing strategy that recognises the subnational opportunities on offer.

Dr. Natalie Jackson is the Director of Natalie Jackson Demographics Ltd, one of Australasia's leading providers of demographic analysis and support. She is also a Research Associate at the National Institute of Demographic and Economic Analysis (NIDEA), University of Waikato.