AUSTRALIA - Population ageing will give rise to economic and fiscal impacts that pose significant policy challenges for the government, a new report by the productivity commission has warned.
According to the report, Economic Implications of an Ageing Australia, one quarter of Australians will be aged 65 years or more by 2044-45, roughly double the present population.
The study found that ageing pressures are about to accelerate as the baby boomer generation retires.
“Ageing will reduce economic growth at the same time that it intensifies demands for public services, such as health, aged care and the age pension,” the commission said.
“In the absence of other policy actions to reduce fiscal pressure, taxation levels would need to rise by 21% by 2044-45, or the debt burden of ageing would become twice as large as Australia’s GDP.”
Commission chairman Gary Banks said: “The very fact that ageing brings us longer, healthier lives shows why we shouldn’t just see it as a problem. Talk of intergenerational conflict also seems overplayed when you factor in the potential for higher incomes from continuing productivity growth. That said, the economic and fiscal challenges are real – the earlier the governments act, the less risk of crisis measures in the future.”
Treasurer Peter Costello said the report endorses the findings of the 2002 Intergenerational Report and updates its results.
Costello said the government would continue to encourage participation in paid work with income tax reforms: “The 2004-05 Budget put in place a package of major initiatives including by providing more help for families, cutting taxes further, boosting retirement savings and investing in Australia’s future,” he said.
“The government will continue to build on these policies by putting in place further measures to address the challenges faced due to population ageing.
“To encourage self funded retirement, we have made superannuation more attractive as a retirement savings vehicle by increasing the fully deductible amount for personal contributions by the self employed, providing a co-contribution to eligible people, and reducing maximum superannuation surcharge rates.”
Jonathan Stapleton asks whether newly-accredited professional trustees should be a statutory fixture on pension scheme boards.
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.