Prime Minister Kevin Rudd has signalled the federal government's determination to push ahead with major infrastructure projects as Australia's population ages.
Mr Rudd said it was important to "radically invest" in world-class infrastructure that increased the productivity of the workforce.
Speaking at the Queensland Art Gallery in Brisbane on Saturday night, Mr Rudd said the "core challenge" facing the Labor government was dealing with economic problems emanating from a greying population, with nearly 25 per cent of Australians predicted to be aged over 65 by 2050.
"We need to grow the economy faster by boosting the productivity of our economy," he told 500 guests at an Australia Day reception.
Spending projects highlighted
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He cited multi-million dollar investments in a national broadband network, road and rail construction, education and health as examples where the federal government would spend heavily over the next few years.
"It's not just talking about infrastructure, it's not just talking about skills, it's doing stuff about infrastructure, it's doing stuff about skills," Mr Rudd said.
"This therefore is what must be the underpinnings of our strategy for the future.
"If we can lift our productivity growth, we can generate better living standards for Australians in the future and generate additional tax revenue we need to support the future needs of an
ageing population."
Rudd hails stimulus
Mr Rudd said the Australian economy did not dip into recession during the global financial crisis due to the government's economic stimulus.
"But none of this would've been possible if the nation didn't pull together," he added.
"Australia - in facing the economic abyss in 2009 - made a difference together.
"For the year and decade ahead, that does not give us licence to be complacent."
He said a Treasury report due soon projected Australia's population would explode to 36 million by 2050.
The participation rate in the workforce would decline from 65 per cent to 60 per cent, producing huge pressure on government spending as there would be less tax generated and more expenditure on aged pensions, he said.
