Intergenerational report: give us ideas, not politics

March 4, 2015

By Emily Millane

5 March 2015

Remember the reaction when the Treasurer said that somewhere in the world, someone had been born who would live to 150? People were incredulous, mocking.

The collective response to the Treasurer’s statement strongly suggests that the kitchen furniture will be safe after the release of the Intergenerational Report (IGR) today. People are not going to “fall off their chairs” when they see some of the graphs in the IGR. In fact most Australians outside the political class do not have the faintest idea what the Intergenerational Report is, much less will they see its graphs.

As the politicians and the economists fog on about labour force participation rates and old age dependency ratios, and what they mean for the budget, the more salient point for people is what these abstractions mean for them.

People are interested in an honest conversation about what the Australia of 2050, 2060 and 2070 will look like for their children and their grandchildren. No talking points. No zingers. No graphs.

Speaking of honesty, the IGR is a creature of something called the Charter of Budget Honesty Act. The explanatory memorandum to the Act says the IGR exists to, “enhance public scrutiny of the conduct of fiscal policy and accountability of government by requiring governments to be explicit about their fiscal policy intentions”.

Public scrutiny is not enhanced when the IGR is treated as a political opportunity to generate a set of numbers favourable to the Government’s austerity narrative. This is a narrative of fear that says that unless the oldies start working more the Government will have no choice in the next federal budget but to take the scalpel to welfare spending, again.

Hockey laid the ground for this when he penned his first serious piece about the need for higher labour force participation by older Australians this week. It was good to see his acknowledgment that an ageing society is not a burden; it’s not. Longer life expectancies present an opportunity for Australia to be a truly inclusive society where people of all ages and backgrounds can engage. But the point of Hockey’s article, and his subsequent public comments this week have been to signal that we will all shoulder the burden if we don’t keep older Australians off the pension for as long as possible.

Australia’s age pension spending is 3.5 per cent of GDP, well below the OECD average of 7.8 per cent of GDP. Total age pension spending is less than the amount of tax the government foregoes every year by giving concessions on superannuation, nearly 60 per cent of which go to the top 20 per cent of income earners.

As the explanatory memorandum shows when it mentions “fiscal policy intentions”, not only is the IGR a diagnostic tool about the health of Australia’s fiscal position given its forecast demography, it exists so that the public can assess the policy responses governments propose.

Australia’s ageing and longer-living society will place pressure on the budget unless more people stay in work, for longer. This finding is not new.

Thus far, the Government’s only new policy directed at this has been to increase the pension age to 70. By itself, changing the pension age does not keep people in work, especially when people can access their private retirement savings 10 yeas earlier. The Government has continued two programs initiated under Labor whereby employers receive incentive payments to retain older workers, however the value of incentive payments is questionable.

So how might a government go about having that honest conversation with the Australian public about adapting to an ageing society?

Let’s take the issue of jobs. The first thing to do is to discuss the fact that the labour market is not static: more jobs for the oldies does not mean that the young ones miss out. The labour market is elastic and, furthermore, the jobs that people do are different at age 25 from age 59.

The second thing is to develop a suite of policy reforms directed at assisting people to remain productive across a longer life course. Education at various stages of life is necessary to remain employable in the new economy, and education requires investment and regulation of providers. Age discrimination must be combated and treated with the same level of seriousness as gender or race discrimination, and the agencies that work in this area must not be gutted of funding. Strong workplace laws are required to protect workers from discrimination as they age.

Finally, the Government, business and the not-for-profit sector can work together to develop creative interventions like “seniors enterprise hubs” that enable people to re-train and start new businesses. Innovative technology businesses, for example, are not merely the province of the young.

The opportunities are many and they are only limited by imagination. What’s more, they might just engage the electorate in a way that doomsday graphs don’t.