We won’t take more:Treasurer

The Federal Treasurer, Wayne Swan, says the Labor government’s future tax take won’t be bigger than that of its predecessor, the Howard government.

“We remain committed to keeping taxation as a share of GDP below the level the Government inherited,” Mr Swan said.

“And that’s 23.6 per cent of GDP in 2007-2008,” he told an ABC radio interviewer.

The commitment is important, because the Treasury Chief, Ken Henry, said last night that the government’s need for money would rise over the years ahead, as Australia’s population aged.

That was taken as a sign that the government might be planning to raise taxes.

Especially as Mr Henry headed a committee which has just completed a major review of Australia’s entire, ramshackle, taxation system.

The committee’s report, which runs to more than 1,000 pages, was handed to the government just before Christmas.

But it has not yet been released to the public.

Mr Swan admitted, though, that the rapid ageing of the Australian population would put pressure on the nation’s finances.

“Well, I think it’s very clear – and you’ll see this in the Inter-Generational Report which I will release in a short period of time – that the ageing of the population will put pressure on the Budget, and on the economy over the next 40 years.,” the Treasurer said.

“There are currently something like five people of working age for every person aged 65 and over,” he added.

“And in 2050 that will be 2.7.”

“That’s why the Prime Minister has been talking about increasing productivity,” Mr Swan said.

He said that’s what Australians must do to offset the ageing of the nation’s population.

” That’s the way to solve the problem of the ageing population, along with increasing participation,” Mr Swan said.

” It’s making sure that we pay attention to that critical issue of productivity, so we increase our wealth and increase our capacity to support an ageing population, and also make sure we have the right policy settings in place in health and retirement income policy which will support an ageing population,”

Mr Swan said, though, that increasing productivity meant working smarter, not harder.

Older Australians might be encouraged to work longer. But those who wanted to retire would still be able to do so.