The latest Intergenerational Report has revealed our ageing population will likely cause Australia’s top five spending pressures – including aged care and disability services – to occupy one-half of all Commonwealth spending within the next four decades.
The fifth Intergenerational Report suggests the annual cost increases of the ”big five” – the National Disability Insurance Scheme (NDIS), interest payments on debt, defence, aged care and health – will cost about $140 billion in today’s dollars. They already account for one-third of all Commonwealth spending currently.
The Report has not been released yet, but early excerpts have shown the Federal Government will likely make “difficult” budget decisions to deal with the potential pressures, amid warnings the ageing population will place a greater burden on taxpayers.
“The projected growth in spending reflects growing cost pressures and demand for public services as the population ages as well as improvements in the quality of care, including from new health technologies and treatments,” it says.
“Ageing and a growing population are driving strong growth in health and aged care spending. Other factors, such as new technologies, treatments, and other improvements in care quality, are also projected to drive Government spending growth.”
While the previous Report was released only two years ago under the Coalition Government, Treasurer Jim Chalmers commissioned this one to help establish a basis for reform, productivity-enhancing and revenue measures to try and maintain budget sustainability.
The budget is currently back in surplus but risks falling back into deficit if spending pressures balloon.
“We’re getting the budget in much better nick, but what the Intergenerational Report reveals is after this year, the pressure on the budget intensifies,” Mr Chalmers told the media.
“Whether it’s essential spending on health, aged care, defence and the NDIS or the interest costs on the eye-watering debt left behind by the Liberals, the budget is under pressure in the long term.”
To help wrangle these spending challenges, the Government and the Aged Care Taskforce are also working on changes to aged care funding that will be announced at the end of the year, likely to involve greater means testing and will make wealthier older Australians pay more for their aged care.
