2015 Intergenerational Report and the three P's (edited extract from executive summary)

Fill the gaps in this heavily edited extract from the executive summary of the 2015 Intergenerational Report. The focus is on the importance of the three P's: population, participation and productivity

  
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Chapter 1 of this report outlines projections of the three long-run drivers of economic in Australia: our population, in the workforce and improved py. Understanding how these drivers of economic growth are likely to change over the next 40 years will inform the action governments must take to build , growth and opportunity.

Australia’s population is projected to change and over the next 40 years. The changing and structure of our population is important as it influences how quickly our economy and our grow, and therefore the rate at which our future living will increase. A greater proportion of the will be aged 65 and over. The number of Australians in this age group is projected to more than double by 2054-55 compared with today. Not only will Australians live longer, but improvements in mean they are more likely to remain active for longer. This has important implications for the demand for health and care services and retirement . A lower proportion of Australians working will mean lower economic growth over the projection period.

Participation refers to the of the population aged 15 years and over who are actively engaged in the . Over the next 40 years, the proportion of the population participating in the labour is expected to decline as a result of population ageing. A lower proportion of Australians working will mean lower growth over time. By 2054-55, the participation rate is projected to fall to 62.4 per cent in 2054-55, compared with 64.6 per cent in 2014-15.

Of the three key drivers of economic growth, has historically been the most important to Australia’s performance. Put simply, productivity is about working more or producing more or better goods and services with the same level of . Australia has enjoyed periods of high productivity growth, which have contributed to growth in and high living standards. For every average Australians work today, they produce twice as many and as they did in the early 1970s. It is no coincidence that average per person has also broadly doubled in this period. Technological advances, such as advanced robotics, 3D printing and self-navigating vehicles have the potential to unlock of life improvements. Harnessing future opportunities to support in, adopt new technologies, facilitate foreign trade and investment and foster cn can boost future productivity growth and living standards.

With an population, economic growth is projected to be slightly over the next 40 years than over the past 40 years. Slower growth is due to slightly lower projected population growth and declining rates. The average annual growth of real is projected to be 2.8 per cent over the next 40 years compared with 3.1 per cent over the past 40 years. Average annual growth in real GDP is projected to be 1.5 per cent over the next 40 years compared with 1.7 per cent over the past 40 years. This report illustrates why, over the next 40 years, ongoing improvements in Australian will remain primarily contingent upon continually improving our , and require us to take every opportunity to increase rates.