The Baby Boomers should not expect future generations to pay for their current benefits. The brilliant Harvard professor, Niall Ferguson, describes the traditional intergenerational compact as our most important social contract and one that is being broken in Western economies.

Our deficit in 2016 is estimated at $37.1 billion. Our net debt has risen from zero in 2007 to some $279 billion in 2016. If the Senate continues to block expenditure reform and Treasury assumptions on growth, unemployment, terms of trade, productivity and inflation are not realised, national debt will continue to rise. Our credit rating will fall, the cost of debt servicing will increase and the monumental task of repayment will get even harder.

Not just going fishing: Higher mortgage debt levels are keeping Baby Boomers in the workforce for longer, Ahuri research shows. Credit:Louie Douvis

This week the secretaries of the Treasury and the Department of Finance have spoken on expenditure restraint in unusually blunt terms.

We have an ageing population, increasing life expectancy, an aged pension benchmarked to average male weekly earnings (the highest possible index) and the family home excluded from the asset test. The aged pension costs us $42 billion a year and is estimated to grow at 6 per cent a year over the next 10 years – far higher than any predictions of inflation, GDP growth and real wage growth.