The imminent retirement of baby boomers will pose radical structural problems for the State Budget, squeezing governments' ability to fund major infrastructure amid soaring demand for services and dwindling revenue.
Under-Treasurer Tim Marney warned yesterday of a demographic "tipping point", revealing Treasury is working on a landmark intergenerational review of the Budget as officials grapple with the problem of an ageing population that will demand more from their government while paying less tax.
The concern is that as they get older and sicker, the boomers will draw more heavily on State government services.
At the same time, they will contribute less in payroll tax and stamp duty because they will retire and remain in family homes.
The review, the first of its kind in nine years, is unlikely to be complete before the State election in March.
Treasury's problems are compounded by the high Australian dollar, which has not dropped in line with commodity prices as it has in the past. Because WA iron ore contracts are negotiated in US dollars, a high Australian dollar means less revenue flows into State coffers.
Asked yesterday during a public accounts committee hearing whether the State could afford unfunded billion-dollar-plus infrastructure projects - including the MAX light rail system and rail extension to Perth Airport - Mr Marney said: "That's what we're modelling now.
"The concern I have is the demographic shifts and what that does to demand profiles for service delivery and at the same time what it does to your revenue base.
"We're actually seeing the baby boomers move out of the workforce at the moment. And that is impacting more heavily on health systems, and so on. We're at a tipping point with the demographics."
Treasurer Troy Buswell declined to comment.
Shadow treasurer Ben Wyatt said it confirmed Opposition worries that the Barnett Government had no "considered plan" to deal with the State's $14.5 billion debt.
He conceded the review may affect Labor election pledges.
WA Council of Social Service spokesman Chris Twomey was worried about the increasing gap between retirees with superannuation and property and those without.
"We are also concerned that single women over 55 with little or no superannuation are emerging as a particular at-risk group for disadvantage," he said.WA Chamber of Commerce and Industry chief James Pearson called on firms to retain older employees.
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