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January 19, 2010
So there is to be a third Intergenerational Report, entitled Australia to 2050: Future Challenges, which analyses the key long-term challenges facing Australia for the first half of this new century. This is to be released in the next few weeks, but we have heard this account before from Peter Costello, when he was Treasurer in the Howard Government. Kevin Rudd adds little that is new. More problematically he says nothing about addressing the effects of climate change on the economy.
According to Rudd's Australia Day speech the ageing of our population is the key challenge. Rudd says that to understand its implications, we need to ask three basic questions:
First, how much are we ageing by?
Second, how will this impact on family living standards and the economy?
Third, what can we do about it?
No mention of ageing and wellness at all. For Rudd its all about the negative impact of ageing economic growth and prosperity. Rudd says that:
On the first question, the Intergenerational Report projects that our population will grow from 22 million today to 36 million by 2050... On the second question public finances will be burdened with the increased costs of looking after the needs of older Australians - in health, aged care and age pensions - but with a smaller proportion of Australians in the workforce, tax revenues won't keep pace with those rising costs.
Consequently, we will either generate large, unsustainable budget deficits into the second quarter of the century, or else we'll need to reduce government services - including health services - as the needs of an ageing population become greater. This is the same message as Costello. For the old political order an ageing population is not an active population.
The third question is what can be done to strengthen economic growth in the face of the fundamental challenge from the ageing of the population.Rudd says:
In the long-term, there are three sources of economic growth - the three Ps of population, workforce participation and productivity growth.With lower fertility rates and stable migration ratios, population policy will on current trends at best make a marginal contribution to the challenge of an ageing population.The truth is that the strong policy levers lie with policy measures to lift participation and productivity growth...the most important of the three Ps [is] productivity growth. It is productivity growth that must play the central role in building Australia's future economic growth.
Again this is same message as Costello. It's Treasury's message. Rudd's twist is that productivity growth had fallen under the Howard Government:
During the 1990s, productivity growth hit the two per cent mark following the reforms of the Hawke-Keating Governments, but it fell to just 1.4 per cent in the first decade of this century. If we let this trend of lower productivity growth continue, Australia will struggle to meet the major challenges facing our economy in the decades ahead....The Australia to 2050 report shows that without a concerted effort to increase productivity, average annual productivity growth will be just 1.6 per cent over the next 40 years, leading to average annual economic growth rate falling to 2.7 per cent, compared to the historical average of 3.3 per cent over the last 40 years.
And Labor's plans to grow Australia's productive capacity over the long-term? Well, there is nothing new there either.
It is increased investment in long-term nation-building economic infrastructure including in roads, rail and ports; an education revolution, in the form of doubling the investment in Australian schools over the next five years; helping businesses use technology to work smarter and faster through the high-speed National Broadband Network, and implementing microeconomic reforms to cut red tape for business and build a seamless national economy.
Nothing about greening Australia to make it more sustainable or making the shift to a low carbon economy. Not a mention, even though this is actually a key long-term challenge for Australia.The inference is that Rudd Labor is not serious about making the shift to a low carbon economy.
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Rudd's Australia Day speech? Did they change the date when I wasn't looking?