The Ageing of Australia: Fiscal Sustainability, Intergenerational Equity and Inter-temporal Fiscal Balance

Abstract

Australian public policy makers are presently confronted with significant demographic changes that will profoundly affect the formulation of rational economic and social policy over the long term. This paper seeks to outline the potential impact of this demographic change and place it in historical perspective. The challenges posed by an ageing population for fiscal policy are explored and it is stressed that policy inertia will invite severe costs in future. It is argued that an appropriate policy stance should be developed in the context of a framework for inter-temporal fiscal balance not only to focus on long-run fiscal sustainability, but also to include considerations of intergenerational equity.