Demographic and Social Change:
Implications for Education Funding.
Part I
An Ageing Population
Australia is projected to have a more middle aged and older
population over the next twenty five years. The major factors driving
changes in the population and demographic structure over this period are
declining fertility and mortality rates[1].
In the past 20 years the demographic structure has shifted
away from younger age groups to middle-aged and older age groups (Figure
1). Over the next 25 years, the age distribution of the population shifts
towards older age groups at the expense of younger age groups with little
change in the relative size of middle-aged cohorts.
A way of highlighting the impact of the changing age
distribution for future education and social expenditures is to consider
the dependency ratio (Figure 2), that is the number of younger (0-14
year-olds) and older (65+ year-olds) persons expressed as a percentage of
persons of workforce age (15-64 year-olds). The dependency ratio is shown
for the period 1976-2021. The total ratio broadly declines until around
2010 and then increases. However, the decomposition between ‘young’
and the ‘old’ suggests that governments are likely to focus
increasingly on the social expenditures relating to the elderly relative
to education expenditures.
Figure 1: Age
distribution of the population, 1976, 1996 and 2021
Figure 2:
Dependency ratio, 1976 - 2021
The change in the demographic structure implies education
expenditures are likely to fall, all other factors held constant, given
the present age profile of students enrolled in education institutions.
Figure 3 below shows students are largely drawn from younger age groups,
though this is less the case for TAFE students. School students are
obviously concentrated in younger age groups while the majority of higher
education students, 59 per cent, are aged under 25. The majority of TAFE
students, 53 per cent, are under 30 years of age.
Figure 3: Age distribution of students, 1996
Changes in the regional distribution of population
represent a further pressure on education expenditures. The extent of
population change over the next twenty five years will vary by State and
Territory. For instance, between 1996 and 2021 population growth is
expected to be fastest in Queensland (2.0 cent annual average growth),
followed by Western Australia (1.7 cent) and the Northern Territory (1.5
cent)[2]. Other States will experience slower than average
population growth (1.1 per cent) with Tasmania projected to show very low
growth (0.2 per cent), compared to 0.4 per cent in South Australia and 0.6
per cent in Victoria. While the growth projections are all positive,
projections of higher education student demand (that is, an age weighted
projection) are negative in Victoria, South Australia, the Australian
Capital Territory and Tasmania (Figure 4).
Figure 4: Projected demographic impact on demand for
undergraduate places by State/Territory (Index 1995=100)
Figure 4:
Projected demographic impact on demand for undergraduate places by
State/Territory (Index 1995=100)
In
the past, differential population growth has led to increases in education
funding because States with higher than average population growth have not
had resources redirected to them from other States with low or negative
growth. Rather, additional resources have been provided to those States.
In that way, government policy response to differential population growth
between States has had the effect of ‘ratcheting-up’ government
expenditure on higher education. Thus over the longer term, the variation
across States in the increase in the student feeder group will be a source
of upward pressure on the higher education budget.
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