The Intergenerational Report: Myths and Solutions

This paper challenges the conventional view espoused in the 2002 Australian Treasury Intergenerational Report that the ageing population will place unsustainable demands on the Federal budget. The paper explains how the budget is calculated, the role of net spending in the macroeconomy and why debt is issued. It demonstrates that any compositional changes in spending pose political choices rather than economic burdens. It concludes that by ensuring full employment is achieved now, the Government provides the best path to guaranteeing an effective health care system in the future.