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Treasury on public policy « Previous | |Next »
October 18, 2005

In a speech given to the Lowy Institute in September, Peter Costello, the federal Treasurer outlined the parameters of long-term public policy as it is understood by the mandarins in Treasury.

Costello describes it thus:

Three years ago Australia’s first Intergenerational Report provided a framework for thinking about the economic challenges Australia will face over the next 40 years.The Report looked at domestic demographic developments and how they might impact on Australia over the long term. It highlighted the effects of declining fertility rates over the last 40 years and how that, together with increased life expectancy, will contribute to the ageing of our population. The Report detailed how an ageing population will subdue economic growth but increase fiscal pressures.

So how does Treasury propose that we deal with this issue? Costello is quite clear. He outlines 'the framework for thinking about the components of long-term economic growth --- known by shorthand as the 3 “Ps”---Population, Participation and Productivity'--- thus:
An increasing population (on consistent participation and productivity) will build the size of an economy. A stable population with a declining participation rate caused by population ageing will, other things being equal, slow the growth of an economy. And, everything else being equal, an economy where productivity is increasing will generate a larger economy.

Over the long term, a country’s economic prospects derive from the level of its population, the engagement of the population in the workforce and the level of their output. These factors will shape and influence Australia’s future, but so too, will they shape the countries around us.

Note the lack of health or wellbeing as a component of long-term economic growth in this response. Suprising isn't it? It is not very rational to try to grow the Australian economy with a sick population is it?

Increasing the productivity of the workforce which underpins 'the engagement of the population in the workforce and the level of their output'---presupposes a healthy workforce, not a sick one. Yet health, it would seem, is a blind spot of the econocrats.

In the Intergenerational Report of 2002-3, which assessed the long-term sustainability of government finances in detail, Treasuy had argued that the ends of economic policy were the wellbeing of the populatlion, not economic growth per se. In this Report it is stated that:

“The overarching objective of the Government’s economic policy is to improve the wellbeing of Australians in a way that can be sustained over time. This is related to both the current generation of Australian and future generations. The Government’s policy framework aims to ensure that economic, social and environmental policies compliment each other to bring about sustainable improvements in wellbeing.” (p.13.)

So what has happened? Has Treasury backtracked? Has it lost its nerve? Or is Costello uneasy about the wellbeing because of its close association with happiness? Or is wellbeing and happiness too close to ethics and the utilitarian neo-liberal econocrats are uncomfortable/uneasy with ethics?

| Posted by Gary Sauer-Thompson at 9:57 AM | | Comments (0)