Treasurer Joe Hockey has urged businesses to use record low borrowing rates to turbo-charge the economy.
Mr Hockey on Friday conducted a media blitz a day after releasing the five-yearly Intergenerational Report.
The report warned of lower incomes, tax hikes, higher government debt and massive budget deficits for the next four decades unless action is taken to improve productivity, workforce participation and economic growth.
The treasurer told a business lunch in Brisbane many challenges would be thrown at the Australian economy in coming years, including falling commodity prices, lower terms of trade, recessions in Europe, war and terrorism.
But a “consistent” policy course and innovative businesses making the most of low interest rates and ramp up investment would help the country withstand the shocks and generate jobs.
“There’s a lot of money out there and it’s looking for returns,” Mr Hockey said.
“Interest rates are at record lows, they’re probably going to be at record lows for a long time.
“So I say: `Have a go’.”
The cash rate is at 2.25 per cent but expected to fall even further.
Mr Hockey earlier said tax, superannuation and workplace changes would be needed to drive economic growth and balance the federal budget.
One of the key pressures outlined in the report is the ageing of the population, which will put pressure on government revenue and spending, especially on health.
“Should superannuation laws be changed so they can accommodate our needs as we go in and out of the workforce, and change careers?” Mr Hockey said.
“These are the sorts of questions we need to have answered.”
Mr Hockey said the government would not change tax rates for super in this term, but “broader” thinking was needed ahead of the next election.
Attitudes also had to change about employing older people, which could be helped by changes to the tax system and pay rates.
The report projects a drop in immigration as a percentage of the total population – a view in line with the treasurer’s own thoughts.
“Immigration is a rather lazy way to try to grow your economy,” Mr Hockey said.
“What we’ve got to do is increase our output per hour.”
Mr Hockey challenged the Senate to pass the remainder of the 2014/15 budget.
“If everything went through the Senate we would actually start living within our means,” he said.
He said the government’s small business package to be released before the budget would include incentives to start up businesses, innovate and reward employees.
“The question for all of us is how big are our dreams.”