We need to plan for the future
Australia is an increasingly prosperous nation. We have had 13 years of continued economic expansion, with strong productivity improvements.
Australians today have higher incomes and brighter employment prospects. We have better standards of health, and have greater flexibility to manage our work, study and leisure time.
Responsible economic management has delivered a strong economy and strong budget outcomes. The Government has reduced its debt to among the lowest levels in the OECD.
While our prospects are also good, we cannot afford to rest on our past success. As the Intergenerational Report identified in 2002, and the Productivity Commission’s report on the Economic Implications of an Ageing Australia recently confirmed, Australia today faces a range of economic challenges.
Foremost among these is Australia’s ageing population.
The number of people in Australia aged over 65 will more than double over the next 40 years. This will lead to higher pension, aged care and health payments.
This demographic shift will also produce a marked slowing in the growth of average incomes.
We can reduce the effect that ageing will have on our living standards by maintaining high rates of productivity growth, further increasing rates of workforce participation, and investing wisely to address future pressures on the budget.
The reality is that we cannot halt the ageing of the population. So we need to take steps now to prevent an unsustainable burden falling on future generations, while striving to enhance the wellbeing of today’s generation. Improving productivity and participation can achieve both goals.
2 2005-06 Budget Overview