SYDNEY Australian Treasurer Joe Hockey said on Friday that his government would seek to raise the retirement age to 70 by the year 2035 as part of reforms aimed at stemming what they warn is a looming "fiscal crisis."
The announcement came one day after an audit of the Australian economy recommended broad structural changes and a tight rein on costs, setting the stage for what is expected to be a tough national budget later this month.
"In 21 years' time, that is when you will be entitled to the pension, when you turn 70," Hockey said in an interview with 2GB Radio in Sydney.
Australia's A$1.5 trillion ($1.39 trillion) economy sailed through the global financial crisis, but a slump in mining investment and a sluggish response to record low interest rates has hit government tax income as expenditure continues to grow.
Australian Prime Minister Tony Abbott and Hockey have been girding voters for hefty spending cuts and other measures in the May 13 budget to tackle deficits forecast at A$47 billion this year and totaling A$123 billion over the next four years.
The previous government had already announced plans to increase the retirement age from 65 today up to 67 by 2023, but the announcement is likely to prove politically thorny for Abbott.
On Tuesday, Abbott flagged the prospect of a temporary income tax levy on higher income workers to help tackle the deficit, a proposal that was met with criticism from opponents and a cool response from business groups.
Although debt is expected to peak above A$400 billion, that would be less than 30 percent of Australia's annual gross domestic product.
In the United States and the euro area of 15 countries, government debt accounts for more than 100 percent of GDP, figures from the Organisation for Economic Co-operation and Development show.
Australia remains one of only a handful of countries that still boasts a triple A credit rating, making its debt especially attractive to foreign central banks and sovereign wealth funds.
($1 = 1.0785 Australian Dollars)
(Reporting by Matt Siegel; Editing by Michael Perry)