Australia’s ageing population won’t weigh too much on the country’s economy as long as everyone works a bit longer, RBA Assistant Governor Chris Kent says.
In a speech delivered this morning titled Ageing and Australia’s Economic Outlook Kent covered the challenges and opportunities that come with the country’s ageing population.
But it was in his conclusion where he didn’t gild the lily on the impact of ageing on the economy.
Kent said that ageing will “tend to weigh on growth of economic activity, labour force participation and the public purse. It may weigh on productivity growth to the extent that it leads to less risk-taking and innovation.”
But Kent says that by maintaining price stability the RBA can foster an economic backdrop which can alleviate some of these challenges and set the backdrop for the benefits that can flow from ageing.
But his prescription comes at a social cost which many Australian need to understand but may not like.
Kent says that, “Rising longevity will provide us with the ability and willingness to work later into life, without necessarily implying a change in the share of our lifetimes we spend in retirement. This will allow us to bolster participation, savings and reduce the burden on the public purse.”
So there you have it – ageing won’t hurt us if we all work longer.