CANBERRA OBSERVED: by News WeeklyNews Weekly
Band-aids won't solve Australia's ageing problem
, March 13, 2004
Peter Costello's alarm bell ringing over the nation's rapidly ageing population appears to be based more on a Treasury cold sweat about a future shortfall in tax revenue than any genuine concern for the future of Australia and the type of country we want in 40 years time.
Mr Costello's basic premise when announcing his very modest reforms to the superannuation system was that following an international trend Australia's population was getting older.
Furthermore, people were living longer, and that as a consequence tax revenues and the cost of caring for the older generation was going to fall very heavily on those taxpayers who are today's toddlers.
However, the answer in Mr Costello's "Demography is Destiny" speech is that governments simply had to find ways to deal with these demographic realities.Four options
Mr Costello (courtesy of a paper prepared by Treasury experts) said that, in response to the ageing population, governments could do one of four things.
They could cover future budgets deficits by increasing taxes, cut expenditure by around 5 per cent of GDP, they could run up deficits and increase government debt, or they could try to grow the economy by lifting labour force participation and productivity.
It would surprise no one that Mr Costello came out in favour of "option four" which was basically the "let's keep what we are doing - only better" approach.
In short, no novel solutions, no social or tax policy to turn around the crisis of lack of children, or of the explosion of "singleton" households.
The solution was to follow the orthodox path of growth by freeing up labour markets and getting more people into the workforce to keep tax revenues rolling in.
Given that he had seized the chance to look at Australia over the coming few decades - not something that governments generally do - it was disappointing that Mr Costello was not prepared to even think about tackling the fundamental cause of the current problems.
Why are Australian women having fewer children and having them much later? Why are there 100,000 abortions a year? Why is it that as many as one in four women is never proposed to? Why is the fastest growing household that of the single person? The answers to these questions are among the hardest for any government to solve.
Indeed, it would be foolish to expect governments to turn around the phenomenon of the "contraceptive mentality" which is slowly strangling Western society.
Nevertheless, there are some things governments can do to encourage families to have more children, since it can be argued that governmental changes since the 1970s have accelerated certain trends which are now bearing their barren fruit.
Even a halving of the abortion rate would represent a 20 per cent increase in the current number of babies being born in Australia. In Treasury-speak, that's 50,000 future new taxpayers each year every year.
All the latest evidence suggests that psychologically, physically, emotionally - even financially, it is preferable to have a child rather than to abort - particularly for younger women who are most likely to take that drastic action.
The tax system also could be radically changed to give women the choice of having children, and for families to have one income earner for a few years.
A second family wage along the lines of the French system would at least give families the choice. The institution of marriage also needs to be given support with a serious overhaul of divorce laws.
It is becoming increasingly apparent that men are more and more reluctant to marry - there is nothing in it for them.
The odds are against marriage working anyway, but if the marriage fails (as almost one in two now do) men are likely to be severely disadvantaged financially. The Family Law Courts will deny many the chance of seeing the children they are forced to support at all.
The Government is making some noises about overhauling the Family Court, but the divorce laws themselves are the source of the problem.
Given a choice between a life of serial monogamy with occasional sexual relationships which carry little or no responsibility for caring for a spouse or offspring, men are choosing the single life in droves.
And while the Federal Government insists increased immigration does not change the demographic mix, surely a large and properly targeted immigration program to invite young families and skilled and educated people in the 20s and 30s will contribute to easing the ageing crisis.
Unless and until some of these problems are tackled Australia will continue to drift until the ageing crisis becomes real enough for a government of the future to act.