Australia has been experiencing declining birth rates as the economy matures, with it being forecast

The life expectancy of a child born in the year 2012 has been predicted to be well over 90 years old, and these figures are likely to increase as medical breakthroughs are made and living standards continue to rise. In comparison to the 1900s, people have been living longer with more comfortable and convenient lives; however, this could place a serious strain on governments economic ability to support a large aging population – a problem that has begun plaguing developed countries only in the recent few decades.
In the $400 billion Australia budget, over $40 billion is expected to be paid out as an aged pension in the year 2014, remaining as one of the government s biggest omx tallinn expenses. Over the years, various schemes have been proposed to combat the aging population problem, such as an asset test, income test, and, importantly, increasing the retirement age.
The retirement age set in 1910 was 65, which was about the average male life expectancy. As life expectancy increased due to improvements in areas such as sanitation, housing, and education, a retirement age of 65 has appeared to be no longer compatible in the current socioeconomic context.
Australia has been experiencing declining birth rates as the economy matures, with it being forecasted that the ratio of working Australians to those aged over 65 could decline from 5:1 to 2.7:1 by 2050, further contributed by an exponential increase in the age 65+ bracket of the population (having increased from 11.6% to 14.4% of the population in recent years). Generally speaking, baby boomers and an increase in life expectancy have resulted in the pension becoming more and more unaffordable.
The Intergenerational Report 2010 (IGR) predicted that Australia would run out of steam in less than forty years, with the country spending more than it receives in revenue by 2.75% by 2050. According to the Productivity Commission, Australia is expected to have to spend an extra 6 per cent of national income to support an ageing population over the next 50 years.
As revealed in the Productivity Commission s report, taxes would need to rise 21 per cent in order to pay for the extra health and aged care costs of a population that will have more 100-year-olds than babies omx tallinn by the turn of the century. Ultimately, this means that it will become increasingly difficult to support the aging population without structural reform.
Whether or not a purely economic solution, lacking increased infrastructure and social support, is feasible is debateable. Since significant tax increases more or less are ruled out, and, with monetary and fiscal policy levers in poor condition, the only way for Australia to meet its growth targets and prospect of budget repair is through structural reforms that result in spending cuts; namely, raising the retirement age. Labor s previous decision to increase the retirement age to 67 by 2023 has already lead to a forecasted $6 billion in savings in the annual budget; but with no further omx tallinn upward pressure placed on the retirement age, government expenditure will not be reduced significantly enough and costs associated with the pension will only increase further. Without further increasing the retirement age it seems unlikely Australia will be able to diffuse the budget deficit bomb before it can balloon to unadaptable proportions. ARGUMENTS AGAINST
Some parties have argued that increasing the retirement age is the incorrect modus operandi; with the recent decline in job opportunities in the manufacturing industry, those aged 60 to 70 will be forced to compete with school leavers in an increasingly scarce job market. This means blue-collar workers will be hit hardest if they are forced to work longer. Furthermore, omx tallinn as Australia already has a relatively low level of expenditure per capita of welfare, it has been argued that more savings could be found by working out ways to tackle the rising costs of health care, that have essentially omx tallinn led to the average Australian s increased life expectancy. COMPARISONS
A myriad of economies are still in dire straits post GFC, and Spain may yet to have experienced the nadir of its woes. A plethora of factors, such as long-term loans, the building market crash, the bankruptcy of major companies and a violently sharp increase in unemployment (which rose to a maximum of 26.19 in mid-2013), crowned as the 2008 to 2014 Spain crisis, have backed the battered country into a corner. Interestingly, however, the Spanish government have aimed for a strategic comeback, increasing the retirement age to 67 (from 65) in order to save about 4 billion euros per year. This has already begun to be portrayed in Spain s budget with a significant reduction in their budget deficit omx tallinn from -10.6 in 2013 to -7.3% of GDP in 2014.
Whilst we are not in as a catastrophic position omx tallinn as Spain, another financial crisis could provide a slippery slope to immense budget deficits, and increasing the minimum retirement