First among the future challenges is the need for an ongoing
response to a change of historic proportions within our society –
the ageing of our population.
Australia is no different from most other developed countries in
facing an unprecedented ageing of its population. By the time today’s
toddlers are starting their own families, the ratio of working-age
Australians to retired Australians would have fallen from more than
five to one as it is today to less than three to one.
This development demands many responses.
Most critically, it requires a future revenue base that will not
only grow with the economy so that we can fund the services needed by
an ageing population but also in a way which does not impose an
incentive-sapping burden on working-age Australians through
ever-increasing income tax.
That is one of the major reasons why we introduced a goods and
services tax. That is why the GST’s maintenance is essential to our
economic and social future.
History will judge that the government’s introduction of the
goods and services tax has done more to prepare our economy for the
demands of an ageing population than any other single tool of public
We recognised the shortcomings of Australia’s old indirect tax
base. We understood that unless there was change, the retirement of
baby boomers in coming years meant that an ever-increasing tax burden
would fall on Australian workers through higher rates of personal
Those people who argue that the GST should be rolled back must be
held accountable – they are, in effect, arguing to consign our
children to ever higher rates of personal income tax.
The first step in ensuring the long-term viability of the health
system and its ability to cope with the demands of an ageing
population has been taken by our promotion of choice in health
care and greater usage of the private system. The health reforms have
enabled millions more Australians to take more responsibility for
their own health and medical care and, in doing so, eased the growing
pressure arising from an over-reliance on the public system.
Our vastly stronger fiscal position has increased our capacity not
only to support but also reinforce the social security safety net via
the pension system which is so crucial for retired Australians.
The massive repayment of Labor’s debt has provided $4 billion a
year in interest savings which can now be invested into areas of
The absence of the government from financial markets has helped
lower interest rates. The earlier repayment of mortgages which this
has facilitated will allow Australians to boost their capacity to save
more and build up their assets for retirement.
This is an edited extract from a National Press
Club Address given at the Great Hall, Parliament House on 1 August,
here to read the full text of the speech.
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