Increasing productivity is the only answer to problems Australia is sure to face on account of an ageing population, Prime Minister Kevin Rudd says.
The population would explode to 36 million by 2050, while the participation rate in the workforce would decline from 65 per cent to 60 per cent, it is projected.
That means more expenditure on aged pensions when tax generated will go down. A way out for ensuring a decent life for all - improved productivity and greater investments, argues Mr.Rudd.
The government will soon release a new intergenerational report, "Australia to 2050: Future Challenges," examining the impact of rapidly changing demographics on the sparsely populated continent.
Heading the list of reforms is a need to build energy and transport infrastructure, boost skills in the workforce and lift productivity through microeconomic reforms, Rudd said.
"Unless we can achieve higher levels of productivity growth and workforce participation, we face either generating large, unsustainable budget deficits into the second quarter of the century, or needing to reduce government services," Rudd said in a speech delivered Saturday.
He cited multi-million dollar investments in a national broadband network, road and rail construction, education and health as examples where the federal government would spend heavily over the next few years.
"It's not just talking about infrastructure, it's not just talking about skills, it's doing stuff about infrastructure, it's doing stuff about skills," Mr Rudd said.
Meantime Minister for Ageing Justine Elliot, has announced that more than 12,000 new aged care places throughout Australia, worth more than $477 million in annual funding, will be on offer as part of the 2009-10 Aged Care Approvals Round (ACAR).
Increasing the number of aged care places is essential to meeting the challenge of Australia's ageing population. The Government is committed to a sustainable aged care sector and is providing more funding, for more services, to more older Australians than ever before, it was stated.