force participation than would otherwise be the case and bring forth the additional supply of services that we will want and need. pressures on the public purse population ageing will place the public purse under a degree of pressure in a number of ways. public revenues will face downward pressure given the declining share of the population paying income taxes. 7 public expenditure will tend to rise given the demands on public pensions and the fact that many of the types of services that older people require are provided by the public sector directly. insufficient savings to fund retirement? we are becoming wealthier and, through compulsory superannuation and other means of saving, we have gradually been building up private savings to fund retirement. but if we retire this relies on two reasonable assumptions. first, the fall in the labour - to - capital ratio is not completely offset in nominal terms by the increase in relative prices ( wages vs returns to capital ). second, labour income is taxed at a higher rate than capital income. bis central bankers ’ speeches at much the same age as earlier generations had been used to, with longer lifespans on average we ’ ll have to fund quite lengthy periods of retirement. moreover, this will be an environment where there will already be considerable pressure on the public purse, for the reasons i have just noted. insufficient risk - taking and innovation? one last challenge i want to raise relates to productivity growth. there is evidence that older people tend to be less willing to take on risks, including those associated with new business ventures, developing new products and services, and pursuing innovation more generally ( graph 4 ). 8 for this reason, it is possible that ageing could weigh on productivity growth, and hence on our incomes and economic wellbeing. 9 graph 4 population ageing – opportunities to meet the challenges focusing only on the challenges would leave us with a rather gloomy picture of ageing. fortunately, individuals and economies tend to be responsive to these sorts of challenges. allowing relative prices to change and enabling individuals and businesses to alter their behaviours in response to those price signals is a critical part of the adjustment process. applying a little foresight will also be helpful. and the key point i would like to emphasise is that rising longevity provides us with a number of opportunities to meet these challenges. older people are more likely to own an unincorporated business, although this may merely reflect the operation of credit constraints, which would be likely to make it more difficult for younger people to start a business. see lowe p ( 2013 )

i j macfarlane : statement to house of representatives standing committee on economics, finance and public administration opening statement by mr i j macfarlane, governor of the reserve bank of australia, to house of representatives standing committee on economics, finance and public administration, melbourne, on 22 may 2000. * * * it is a pleasure to be here in melbourne again for our regular half - yearly appearance before the committee. i know we met in march and touched upon monetary policy, but that meeting was mainly about reform of the international financial system. on this occasion, we will no doubt have a lot more time to spend on monetary policy. i would now like to start this meeting in the traditional way by reviewing the forecasts i gave to the committee last november, and then outlining our current views on likely developments over the year ahead. last november, with half a year ’ s data available, i said that we expected gdp growth through 1999 to be 3½ %. in the event, it was 4. 3 %, which continued our record of expecting a modest slowdown that did not arrive. i also said that we expected growth to be 4 % in the year to june 2000, and on present indications this still looks likely, even though the rate may well dip below 4 % in the year to march. of course, it will be more difficult than usual to read the true trends this year, with expenditure being shifted between quarters because of the gst, and the boost from the olympics. most monthly indicators of economic activity point to a slowing so far in 2000. however, it is too early to know whether this merely represents the slowdown in domestic demand that we have all been waiting for, and we have had built into our forecasts for some time, or whether it represents something bigger - a significant slowing in gdp growth. our judgment is that we are seeing mainly the former, namely a change in composition of gdp growth. in other words, the slowing in private domestic demand, which is undoubtedly occurring, will be largely offset by the boost that we are getting from net exports and will soon get from fiscal policy. while we expect some slowdown in gdp in the sense that we do not expect to repeat the 4½ % average that we achieved in 1997, 1998 and 1999, we still see quite solid growth ahead. we have no quibble with the sort of figures that were contained in the budget papers showing growth in gdp of 3¾ % over 2000 / 01. such an outcome would be