NATIONAL AFFAIRS: by Peter WestmoreNews Weekly
Rudd and Henry politicise Intergenerational Report
, February 20, 2010
The Intergenerational Report was commissioned by the former Howard Government, in accordance with the Charter of Budget Honesty Act, to provide independent advice from the Treasury to the Australian people and government about the long-term consequences of Australia's population growth.
However, the third Intergenerational Report (IGR2010) released by the Rudd Government has clearly been drafted by Treasury to promote the Rudd Government's proposed changes to health insurance and its emissions trading scheme.
The politicisation of this Treasury report raises real concerns that Ken Henry's review of the taxation system, given to the Government last December, will be similarly politicised.Risks
In releasing the report, the federal Treasurer, Wayne Swan said, "The key conclusion is that an ageing population and climate change present significant long-term risks for the economy and the sustainability of government finances. As the population ages, the rate of economic growth will slow.
"Pressures for government spending will increase, particularly in the health sector. At the same time, we will face the global challenge of climate change, which represents the largest threat to our environment and one of the most significant challenges to our economic sustainability.
"The Government has begun to address these challenges through a broad agenda that includes supporting productivity growth through investment in infrastructure, skills and education, overhauling our health system to ensure it delivers maximum value for money, adhering to a disciplined fiscal strategy and introducing the Carbon Pollution Reduction Scheme."
The politicisation of the report was identified by Ross Gittins, economics editor of the Sydney Morning Herald
. He wrote, "The intergenerational report is essentially a propaganda exercise and, like most such exercises, it relies heavily on exaggeration." (February 8, 2010).
He added, "The report makes much of its finding that the (inverted) 'age dependency ratio' - the number of working-age people aged 15 to 64 available to support each person aged 65 or more - is projected to fall from five today to just 2.7 by 2050.
"This is an exaggeration because it fails to account for the government's decision to raise the age pension age - and thus the de facto retirement age - to 67 by 2023.
"This move hits the age dependency ratio with a double whammy, both increasing the number of people of working age and reducing the number of people of retirement age.
"So what's it all about? Why do successive governments issue intergenerational reports exaggerating our ageing problem and glossing over our need to get serious about healthcare funding?
"It's the Treasurer and Treasury doing what treasurers and treasuries think they're paid to do: preach sermons about the need for More Micro-Reform...."
To this could be added the observation that it is also designed to reinforce the Government's propaganda in favour of its emissions trading scheme, although this is obviously irrelevant to the issue of Australia's future population and intergenerational change.
Other observers have noted that, despite all the resources of Treasury, successive reports have shown absurdly different population projections.
For example, IGR2002, estimated that 40 years later, Australia's population would be 25.2 million. Five years later, IGR2007 predicted that the population would rise to 28.5 million. Three years later, IGR2010 predicts Australia's population in 2050 will be 35 million.
The differing reports show that Treasury's population predictions are worthless. Why then should Australians treat seriously its estimates of the economic effects of rising population? Or its predictions about the economic impact of the Rudd Government's emissions trading scheme?
The sad fact is that IGR2010 has damaged - perhaps fatally - the Treasury's reputation for independence and its economic credibility.
In his response to IGR2010, Opposition leader Tony Abbott pointed out that the Rudd Government was using the report to blame senior Australians for Australia's economic problems.Report's release
Before the report was released, Kevin Rudd claimed that the Intergenerational Report would show that the Opposition's rejection of its cuts to the private health insurance rebate would cost $100 billion over 40 years. In fact, when the report was released, it showed no such thing.
The Intergenerational Report is a highly politicised document which has subordinated accuracy to the government's political agenda, despite its appearance as an independent and impartial projection of future social trends and their impact on Australian society.