Australia’s successful economic performance over the last decade provides a sound basis for future national prosperity if the right decisions are made for the future. Importantly, that performance also provides valuable experience to help us determine what policy measures need to be implemented to expand opportunities for all Australians.
Over the next 40 years the number of people over the age of 65 is projected to double. However the number of people of traditional working age will hardly increase. This presents a challenge to the sustainability of economic growth. The demand for greater availability and higher quality aged care, and the rising cost of health care — only partly due to population ageing — will put pressure also on fiscal sustainability. Those concerns and others, such as maintaining the environment, will become more pressing over time. Solutions will require longer planning horizons than have been employed in the past.
Policy choices will have little effect on the numbers of people of traditional working age. Solutions will therefore need to focus on facilitating further productivity improvements and increasing labour force participation for those of working age. This will involve some difficult tradeoffs.
The task will be made easier if there is widespread understanding of policy drivers and an environment where firms and individuals are able to respond positively to the opportunities that sound policy can create.