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January 27, 2010
There hasn't been much commentary about Rudd's series of recent speeches about Treasury's forthcoming Intergenerational Report entitled Australia to 2050: Future Challenges. Is it just the holiday season, or another sign of the decllne of the mainstream press?
Ross Gittins is an exception. He critically tackles Rudd's rhetoric. Gittins says that one of the effects of ageing is slower growth in our material standard of living due to to slower growth in the size of the workforce:
But, by my calculation... rather than rising by about 110 per cent over the next 40 years, our real incomes are projected to grow by a paltry 80 per cent..Rudd apparently views this gap with great concern and automatically assumes all of us do, too. He vows to take the steps necessary to prevent this slowdown in the rate of growth in the economy's production of goods and services..How? Mainly by increasing the rate of improvement in the productivity of our labour - the average amount of goods and services produced by an hour of work...If we could increase this rate of improvement to average 2 per cent a year, Rudd tells us, we wouldn't miss out on each being that last $16,000 a year better off by 2050.
Gittins comment is just think of all the extra stuff you could buy with an extra $16,000 per family member. It's hardly worth the effort. My response is how about extra free time from work? That is my choice--to forgo the $16,000 and give more time and energy to my photography.
Gittn's says that Rudd's second point is that the ageing of the population threatens the sustainability of government budgets, as it will result in higher costs for health, aged care and the age pension, with the key spending pressure being healthcare.
Rudd says the looming pressure on government budgets leaves us with three options: first, ''cut health spending, reduce aged care and reduce payments for people entering retirement''. No dice. Second, permit ''long-term unsustainable budget deficits''. No dice.But third: boost government tax revenue by increasing participation in the workforce and ''most critically, by boosting the productivity of the workforce''.
Gittins comment is that he is not buying this analysis. There is the fourth option for covering the expected higher spending on healthcare is higher taxation, only Rudd doesn't have the courage to mention it.
Rudd, as Peter Costello did, is trying to ''pathologise'' the expected growth in health spending: make something good (our greater ability to prolong our lives and make them healthier) sound like it's bad (the elderly will be putting an intolerable burden on taxpayers).According to the Government's projections, our real incomes are likely to grow about 80 per cent over the period. There's no good reason we shouldn't choose - as we assuredly will - to spend a higher proportion of that on improving our health and longevity.
That increased spending is not just higher taxation for hospital care by the welfare state that libertarians call the nanny state.
What Gittins misses is that we are devoting a greater proportion of our income on preventative healthcare so that we don't end up obese or in hospital after a heart attack. We also eat better (clean and fresh food) and we exercise more to get fit. We go to the gym --ride our bikes-- so that we are able to live longer, healthier lives.
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Rudd is using the Intergenerational Report to sell the idea that Labor is real strong on economic growth and prosperity. Better than the Liberals. Trust us. We know what we are doing.