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The Stats Guy: The aged care crisis will worsen

The aged care crisis will worsen as large numbers of Baby Boomers age.

The aged care crisis will worsen as large numbers of Baby Boomers age. Photo: TND

Regular readers of this column will know me to be very optimistic about the future of Australia.

There are, however, a few things I am pessimistic about. As things stand right now, we are heading towards an aged care catastrophe. It will take a massive overhaul of the way we deliver aged care, a bucketload of skilled migrants, strategically utilised technology, and a collectively much healthier elderly population to ensure our nation ages in dignity and good health.

We will explore the issue of aged care over two weeks. Today we will understand just how much the demand for aged care will increase and next week we take a very sobering look at the aged care workforce.

The older we get, the more medical and care services we require. As a rule of thumb, half of the population aged over 84 currently needs assistance with core activities. They need care.

This care can be delivered by family members or professionals. In either case, it’s labour intensive to grow old as a nation. I explained in a previous column that we are running out of workers, and that our prolonged skills shortage all but guarantees a continuation of our high migration approach.

I would argue that in the future we can’t rely as much on family members to provide aged care since the share of retirees without children is going up.

Also, more elderly people live geographically segregated from their families. Sure, some families will make arrangements to ensure they can provide care, but a shrinking number of spare bedrooms, and backyards too small to squeeze in a granny flat, suggest professional care workers will be needed more than today.

Neither I, nor you, nor Australia is getting any younger. In fact, we are growing our 85+ cohort by 68 per cent in the next 10 years (from 580,000 to 974,000 people).

Not all these folks will need care, but around 524,000 people will (that’s an increase of 65 per cent compared to today’s 318,000 people).

Predicting the number of elderly Australians is incredibly easy, because they all already live in the country. We are not importing them from overseas.

In 14 years (only four years further than the chart below displays), we will have doubled the number of elderly people needing care. At least if we assume that the elderly population in 14 years needs roughly the same level of care as today’s elderly.

If we assume the same care needs for the elderly population in 2024 and 2034 as we’ve seen during the 2021 Census, the coming decade suggests a growth in care needs by well over 60 per cent (see table below).

You could argue that is great news for aged care providers. Their market grows at an insanely high rate. What a wonderful business opportunity!

Only problem is that the aged care system is already woefully understaffed, and it is not clear at all how the sector can service the very predictable future demand for aged care workers.

Aged care providers will certainly amp up their fees to focus on the richer half of society. If you have money in old age, you will be OK. If you don’t, you won’t.

Maybe the cohort of elderly Australians will be healthier than previous generations. In 10 years, almost half of the big Baby Boomer cohort (born 1946-63) will be aged over 80 and make up a big share of the aged care recipients. Boomers reinvented every stage of the lifecycle they lived through so far.

Why wouldn’t they drive a re-imagination of the aged care system too?

Boomers so far show little appetite for downsizing and appear to prefer to continue ageing in their own home. This suggests a massive expansion of in-home care offerings – maybe these can drive down the demand for labour?

It is also plausible to expect Boomers, most of whom own their home and who as a generation own 80 per cent of the cash savings in this country, to modify their homes to prolong their independent living journey. Simple things like an Apple Watch (starting at $600) with in-built fall detection, might allow people to live by themselves for a few months longer.

That doesn’t sound like much but multiply this by a few hundred thousand people and we arrive at significant labour savings.

In the coming decade, Baby Boomers will also modify their homes like no generation before them. Expect a boom in residential lifts (not just stair lifts), bathroom modifications, and the installation of ramps (that will very much not look like ramps).

We know that the need for care is generally associated with poorer mental health outcomes. If we decrease the share of the (elderly) population needing care, we not only decrease the need for aged care workers, but we also improve the mental health (and therefore arguably the quality of life) of our elderly population.

Baby Boomers will certainly drive a re-imagination of the whole aged care system in the coming decade. However, they will face an uphill battle against an insane shortage of aged carers.

It is this shortage that we will explore in next week’s column – stay tuned for the real shocking charts. In the meantime, please do your stretches, stay active, and eat your veggies to make sure you minimise our collective need for aged care workers.

Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His latest book aims to awaken the love of maps and data in young readers. Follow Simon on Twitter (X), Facebook, LinkedIn for daily data insights in short format.

Topics: Aged Care
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