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3  Demography

Population ageing refers to a fall in the proportion of children in the population and a rise in the proportion of older people. It reflects the transition from relatively high fertility and mortality rates to relatively low fertility and mortality rates. These changes lead to a rise in the median age of the population - the age which splits the population into equal numbers of people younger and older.

Population ageing is likely to accelerate after 2011 as the large numbers of people born during the two decades after the Second World War turn 65 (which is a standard defining point for the older population). In 1950, the median age was 30 years. In 2009, the median age had climbed to 37 years. Statistics New Zealand medium population projection (2008-base) has a median age of 44 years in 2060.

In Figure 3.1, the bulge of the post-World War II baby boom can be seen moving up through the age groups. The role of the baby boom in reducing the median age (the age at the 0.5 proportion in the figure) can be clearly seen from 1945 (or a few years earlier) to 1965 (or a few years later). The generally rising median ages are shown in Table 3.1

Figure 3.1 - Proportions of population in each 5-year age group
Figure 3.1 - Proportions of population in each 5-year age group.
Source: Statistics New Zealand
Table 3.1 - Changes in population age structure
Age group 1900 1920 1940 1960 2005 2025 2045 2060
  Percentage distribution
Under 15 33 30 27 33 21 19 17 16
15-64 63 65 64 59 67 63 59 58
65 and older 4 5 9 8 12 19 24 26
Ratio of under 15 to 65+ 8:1 6:1 3:1 4:1 1.7:1 1.0:1 0.7:1 0.6:1
Median age (years) 23 26 30 26 36 42 43 44

Source: Statistics New Zealand, Series 5 projection

Another way to depict population ageing is by using population pyramids (Figure 3.2). Here, the bottom-heavy pyramids show the effect of the post-war baby boom in 1950, giving way to more balance in 2000. The older age groups fill out as we move further into the 21st century.

Figure 3.2 - The changing shape of New Zealand’s population (% of the total)
Figure 3.2 - The changing shape of New Zealand’s population (% of the total).
Source: Statistics New Zealand, Series 5 projection

The reason the population is ageing is that families have become smaller and people are living longer. The trend of falling fertility was reversed for two decades or so from the end of World War II. During this baby boom, the total fertility rate peaked at 4.3 births per woman in 1961. This baby boom tended to make the population younger than it would otherwise have been in the latter half of the 20th century. It will also accelerate ageing over the coming two decades of the 21st century. After that, the population is likely to revert to trend ageing. In other words, the baby boomers are not the cause of population ageing (it will continue after they are gone), but they will speed it up over the next two decades. The first of the post-war baby boomers start turning 65 in 2011 and these numbers grow until 2030.

This shift towards relatively more old people and relatively fewer young people has implications for economic growth, for government revenue and spending and the public debt position, for internal migration, housing, family structures and the care of the elderly.

The 2009 Statement deals with the implications of ageing on tax, spending and net debt. These fiscal indicators depend crucially on Statistics New Zealand's population projections. This part of the paper deals with how these are calculated, how the assumptions are set, and how sensitive the projections are to assumption changes.

The population projections used in the 2009 Statement, as in the 2006 Statement, are in aggregate form and do not break out various ethnic groups. Ethnic projections do exist (albeit over a shorter horizon), but were not used in the 2009 Statement. The latest period life tables have a Māori/non-Māori difference of life expectancy at birth of 8.6 years for males and 7.9 years for females.[4] Māori life expectancy has been lower than European life expectancy since our statistics agency has been collecting the numbers. Māori have been catching up in terms of longevity and the gap between death rates over most of the life span is no longer widening. Poverty, unemployment, and lifestyle choices all play a part in maintaining the gap. A steadily growing economy and low unemployment will help to close this gap.[5]

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