Taking responsible decisions today

Challenges

This year’s budget, for the first time, incorporates projections that employment and economic growth will be lower this decade as a result of the ageing population. The need to address the ageing issue is becoming more urgent.

Opportunity

We are in a good position to address challenges because our economy is in good shape. The budget remains in a very strong position, with a forecast surplus of $8.9 billion in 2005‑06, building on the Government’s good management over the past nine years.

All the developed economies are going to have to come to grips with an ageing population. But Australia is better placed to deal with the challenge because we are ahead of other OECD countries in our fiscal performance.

Addressing the medium-term fiscal challenge

It would be easy to put decisions off until another day. The Government does not consider this an option.

This year’s budget tackles head-on the need to ensure greater labour force participation and productivity in the economy. This will provide benefits now and into the future.

Tax cuts for all Australians will increase the rewards from work and saving, and heighten incentives to work.

Welfare to work initiatives will encourage people on income support payments who have the capacity to work part-time to do so. This will help boost our labour force, a key to sustained economic growth.

The Government will bank surpluses in the Future Fund to provide for current liabilities which will fall due in the future.

Making necessary adjustments to health spending now will help ensure our health system remains sustainable.

By taking these decisions today, the Government will help sustain Australia’s prosperity over the decades ahead.