AUSTRALIA - An ageing population remains "the biggest economic challenge for Australia over the medium and long term", affirmed treasurer Peter Costello.
The announcement was made as the federal government published its second Intergenerational Report (IGR).
Speaking in an interview with Philip Clark, Costello said: “On our current estimates the additional spending required to look after the aged population by 2047 would be such that the difference between spending and revenue would be about A$35bn per annum unless we take measures to stop it.”
The report showed spending on pensions is expected to be over 4% of GDP by the year 2047, as opposed to the under 3% of GDP it is now.
However, Costello, claimed the situation had improved since the first IGR in 2002: “The good news is that this is better than we projected in our last Intergenerational Report so we have improved, but we have got a long way to go.”
He said the establishment of the Future Fund was one of two financial measures that had aided progress since the last IGR, adding that without it future generations would have to meet the costs of liabilities that were being incurred currently.
The Intergenerational Report was set up by the ruling Liberal Party under its ‘Charter of Budget Honesty’ to report “honestly and openly” every five years on the effect the current generation will have on the one that follows.
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