Australia’s rapidly ageing population will make faster productivity growth a necessity, the Prime Minister Kevin Rudd says.

He made the declaration yesterday, in a pre-Australia Day speech, that he delivered in Melbourne.

Developing a theme he clearly means to take to the next Federal election, later this year, Mr Rudd said Australia had chalked up strong productivity growth in the time of the Hawke and Keating governments.

But that growth had eased in the time of the Howard government, Mr Rudd said.

He based much of his speech on a still to be released report, that is to be called Australia to 2050:Future Challenges.

Mr Rudd said the report, which his Treasurer Wayne Swan, will publish soon, would analyse the long term challenges Australia would face in the first half of the new Century.

He said the nation’s population would grow from its present 22 million, to 36 million by then.

Mr Rudd said, too, that in 1970, Australia had 7.5 people of working age for every person aged 65 or over.

But by 2050, there would be just 2.7 working people for every person of the present retirement age.

“Unless we make big changes, we will either generate large, unsustainable budget deficits into the second quarter of the century, or else we’ll need to reduce government services – including health services – as the needs of an ageing population become greater,” the Prime Minister said.

Australia must take decisive action to drive productivity growth forward – to improve living standards, to deliver better services while keeping the Budget on a sustainable footing, and to improve Australia’s international competitiveness.”

Mr Rudd said the Government had already begun investing in the key drivers of productivity in its first two years in office.

He said it had done that by:-

• investing in record levels of long-term nation-building economic infrastructure – more than $18 billion worth of investments, including in roads, rail and ports
• implementing an education revolution, doubling the investment in Australian schools over the next five years, and increasing overall real investment in education by over 50 per cent;
• investing in business innovation, including innovative manufacturing and helping businesses use technology to work smarter and faster wherever they are, through the high-speed National Broadband Network, and

• implementing microeconomic reforms to cut red tape for business and build a seamless national economy.