SYDNEY - Australia's rapidly ageing population is likely to take a heavy toll on the economy and has sparked controversial calls to raise the retirement age to 70 and tax elderly people who own expensive homes.
The warnings come in a federal government report on the ageing population which says a woman born in Australia today will live to 94.4, up from 84 for today's women, while men will live to 91.6, up from 80. The proportion of the nation's population aged 65 or older will go from 14 per cent to 25 per cent over the next 50 years.
According to the report released last week by the Productivity Commission, the government's independent advisory body, the ageing trend will slow economic growth and add A$90 billion (S$102 billion) - or 6 per cent of gross domestic product (GDP) - to government budgets by 2060. During this period, the proportion of people working would drop from 65 to 60 per cent, as health care costs jump from a current 4 per cent of GDP to 7 per cent.
One way to ease the burden is to raise Australia's retirement age of 65 - due to be 67 from 2023 - to 70, the commission said.
It also proposed that elderly people who own homes be forced to pay for their aged care costs as their property value increases. The measure would involve equity release schemes such as selling a share of the house or using a reverse mortgage. The money raised would offset public costs for aged care and could cut government spending by 30 per cent.
Commission chairman Peter Harris said the government needed to find ways to keep people in work, warning that "an ageing population will cost us".
"Plenty of people aged over 65 want to keep working so it's as much about convincing employers with this signal as it is about the employees," he told ABC Radio.
Economists and employer groups unanimously backed calls to lift the pension age, which would add an instant A$12 billion to the economy. Commentator Alan Kohler said modern medicine had boosted life expectancy but "ruined the budget".
"Governments are... cutting their own throats," he wrote on the Business Spectator website. "They are funding research into life-extending medicine, paying for the drugs and therapies that are discovered and then funding the living and maintenance costs of their increasingly aged citizens, without raising sufficient taxes to pay for any of it."
The proposal to lift the retirement age and access the booming property values of the elderly was backed by another report released last week by the Grattan Institute, a Melbourne-based think-tank. It said older Australians had benefited from a property boom in the past two decades and proposed that people in expensive houses who collect a pension should pay back money to the government when their house is sold.
"All it is doing is saying to households that are very well-off, 'you don't get to collect the pension just because you have put all your assets into a house'," the institute's chief executive, Mr John Daley, told AAP.
But the plans received a muted response from politicians. Treasurer Joe Hockey said the government was not planning to further lift the retirement age or access savings tied up in home values.
The nation's peak union body said it was unfair to make workers doing manual labour stay in their jobs until they were 70.
"How can construction workers be expected to haul concrete around a worksite, or a childcare worker keep up with a room full of kids until they're 70?" said Ms Ged Kearney, president of the Australian Council of Trade Unions.
Said Mr Bruce Welch, in a letter to the Sydney Morning Herald: "What sort of jobs can we expect to be able to do when we are 69? Who is going to provide these jobs?"
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