Australia is underestimating the future number of people over 85. The forecast for 2031 is 660 000, but should be 845 000—a difference of 180 000. This could mean supporting older citizens in 20 to 40 years than the government has provided for. Some hard decisions need to be made about the funding of services for the aged over the next 20 years. Mortality and fertility do not fall or rise smoothly. In the late 1980s the mortality rate for people between 18 and 25 increased due to AIDS, suicides and road deaths but has now started dropping. For the first time we can put probability limits around the population for different ages and rate how certain we are that it will be correct. This methodology could supply vital information to determine the future cost of pensions. The Federal Treasury is running the new methodology with their existing methodology to compare them. The forecasting has been used successfully to predict budgetary requirements for the Pharmaceutical Benefits Scheme and has developed commercial software for automatic forecasting that is sold in Australia and overseas.
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