This is surely going to happen with people now living longer and increasing pressures on Govt budgets due to increasing health care costs etc.
"Pension age may need to rise: Productivity Commission."
"Raising the eligibility for age pensions to 70 could be necessary to avoid a budgetary crisis due to Australia’s ageing population, according to the Productivity Commission.
The warning from the government advisory body was backed by Treasury’s top economic forecaster, David Gruen, who said Australia faces a sharp slowdown in the growth of national income, a surge in age-related government spending demands, and a squeeze in revenue from the high dollar and lower commodity prices.
Tough decisions would have to be made about spending and taxes, they said, highlighting the difficult task facing Treasurer Joe Hockey to fulfil his promise of a budget surplus of 1 per cent of gross domestic product within a decade.
Even “if we achieve productivity that is similar to its long-run average, the next decade will see the slowest income growth in Australia in half a century, by a lot. It will halve,” said Dr Gruen, the head of the macro-economic group at the federal Treasury.
Launching a major study into the policy effects of Australia’s ageing population, Productivity Commission chairman Peter Harris said state and federal government budgets faced “inexorable and major impacts” without major changes to policy.
The commission has proposed increasing the eligibility of the age pension to 70 years, as well as finding productivity savings in the health sector and allowing retirees to draw on home equity to help fund aged care costs.
While there was no doubt Australia had a structural budget deficit and needed to act to fix the problem before it became serious, Dr Gruen rejected a theory from prominent economist Ross Garnaut that living standards would likely fall, although he predicted they would grow more slowly.
“There are always risks but I don’t see any need for there to be absolute declines in living standards over the next decade,” Dr Gruen told a business economists’ conference in Sydney.
“But to the extent that living standards grow at roughly half over that period compared to the past five decades .?.?. that is still a significant transition. You are dealing with a world in which your living standards are going to grow significantly slower than at any time you’ve seen in your lifetime.”
$90BN BLOWOUT BY 2060 Reinforcing Dr Gruen’s predictions, the Productivity Commission’s report found that the demands of an ageing population would add an extra 6 per cent of gross domestic product to government budgets by 2060 if not dealt with. In today’s terms, that amounts to $90 billion.
Changing the eligibility age of the age pension to 70 years would reap $150 billion in savings over the period from 2025-26 to 2059-60 and increase participation rates among older workers by around 3 to 10 per cent, the report found."
