Retirement age won't change despite need for older workers

Dr Chalmers told the National Press Club the Employment White Paper due out in September would canvas a range of measures aimed at boosting workforce participation across all age groups but "we are not contemplating a change to the pension age".

The Intergenerational Report released on Thursday estimates the proportion of people of working age will decline over the next 40 years as the population ages, heightening the need for greater workforce participation, particularly among women, older Australians, people with disabilities and indigenous people.

Treasury projects workforce participation, which is currently at a near-record high of 66.7 per cent, will gradually decline to 63.8 per cent by 2062-63 as more people enter older age groups that are less inclined to work.

Though in the past 40 years an increased participation rate among older people has helped offset the effect of population ageing, by 2062-63, almost one in every four people will be 65 years or older, which Treasury says will drag on overall participation.

It also expects those with a job to work fewer hours because of part-time and more flexible work arrangements, with the average working week shrinking from 32 to 31 hours by the early 2060s.

But Dr Chalmers said the report's projections "aren't predetermined. There's a level of confidence, but not certainty, about how the coming decades play out for us".

The treasurer said the government was working on ways to boost participation, including among older Australians.

"The focus of the Employment White Paper will be about all the workers and how we can give them more choices and more chances if they want to work," he said, adding that factors such as how physically demanding certain jobs are may figure in the choices people make.

"We need to make it much easier for people to work and to work more if they want to," Dr Chalmers said.

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As part of measures to slow the ageing of the workforce, the government is working on an overhaul of the immigration system aimed at making Australia a more attractive destination for skilled migrants.

But the treasurer said the government would not be considering reinstating a baby bonus.

"I think a baby bonus served a purpose in the early 2000s but the opportunities and policy levers are different [now]," he said.

He said the government had found a better way to achieve the same objective by extending paid parental leave and making early childhood education cheaper.

The treasurer also flagged the government would be looking much more closely at the retirement phase of superannuation given that many retired people are only drawing down on a fraction of their superannuation savings.

"I do think that there is a big problem, a big challenge, for us to address," he said, singling out concerns there is a lack of understanding and options for "retirement products in the drawdown phase".