Kestrel Bay: Ageing, Care Capacity and the Dependency Ratio
Kestrel Bay is a coastal municipality of 186,000 people. In 2025, 22% of residents were aged 65 or older, and the council projects this will reach 31% by 2040. The working-age population is shrinking by about 0.8% a year. Care-home places are 94% occupied, the hospital reports rising delayed discharges, and the council's adult social care budget is projected to overspend by 7% next year. The council has three proposals: (A) raise the local retirement age for municipal staff and expand home-care technology, saving an estimated 4% of the care budget but facing union opposition; (B) offer relocation grants and language training to attract 5,000 working-age migrants over five years, costing $18 million upfront; (C) build a 120-bed assisted-living complex with private partners, costing $60 million and taking four years. The council has a capital budget of $25 million and a legal duty to balance its annual budget. Local residents express concerns about migration and about age segregation.
1. Using the data, evaluate which proposal is most likely to improve the municipality's old-age dependency ratio by 2040. [10]
Read the worked answer
Define the indicator. Old-age dependency ratio = (population aged 65+ / population aged 15-64) x 100. It measures the relative size of the older population to the working-age population, not the actual cost of care.
Apply to the options. Proposal B is the only one that directly changes the denominator: attracting 5,000 working-age migrants raises the working-age population. If the working-age population is roughly 110,000, a 5,000 increase is about 4.5%, which lowers the ratio modestly, not dramatically. It also depends on migrants' ages, skills and retention; if they leave within five years, the effect is temporary. Proposal A may reduce municipal care costs but does not alter the ratio; raising the retirement age for municipal staff affects only a small group. Proposal C adds care capacity but not working-age people, so it does not improve the ratio and may raise the fiscal burden.
Judgement. B is most likely to improve the old-age dependency ratio by 2040, but the effect is modest and uncertain. A and C are stronger on care capacity and fiscal risk. Therefore B should be judged against the council's wider goals, not just the ratio.
2. Explain why the old-age dependency ratio alone is insufficient for planning care services in Kestrel Bay. [6]
Read the worked answer
What the ratio misses: health and disability status; unpaid family care; household composition; income and housing; the difference between 'old' and 'old-old'; care-home occupancy; hospital delayed discharges; migration and commuting. In Kestrel Bay, 94% occupancy and delayed discharges show that the demand for care is not captured by age alone. A population with 22% over 65 may have different needs from one with the same ratio but better health. The ratio also ignores the dependency of children and the fact that many people over 65 work or care for others. Planning needs indicators such as disability-adjusted life expectancy, prevalence of dementia, number of unpaid carers, waiting times, and projected need for assisted living. The ratio is a crude starting point for fiscal planning, not a needs assessment.
3. Recommend one proposal, with justification, for a council that must balance fiscal, social and political sustainability. [10]
Read the worked answer
Recommendation: A, with a monitored pilot of B, because the council must balance fiscal, social and political sustainability. A is the only option within the $25m capital budget, delivers savings quickly, and reduces immediate pressure on care homes. But it relies on technology and unpaid carers and may worsen workforce shortages. B addresses the dependency ratio in the long run and could fill labour shortages, but $18m upfront and political opposition make it risky. C is attractive for care capacity but $60m and four years is unaffordable and too slow. A hybrid A+B is more sustainable than any single option: use A to stabilise the budget and B at a smaller scale (e.g., 1,500 migrants) with retention targets. If forced to choose one, A is the best fiscal and political fit, provided the council invests in carer support and revisits B if the dependency ratio worsens. This is a judgement, not a calculation: the ratio alone would favour B, but the budget and legitimacy favour A.