DEMOGRAPHY: by Colin TeeseNews Weekly
Budget ignores an ageing Australia
, June 1, 2002
This writer rarely chooses to comment on the Budget. All of the important issues are usually covered to the point of saturation in the newspapers and electronic media.
This year, however, it seems to be different.
The Prime Minister has all but admitted that the Government bought its way back into office with a raft of pre-election giveaways; though he stops short of conceding that these have taken the budget into deficit, and that now we taxpayers must foot the bill for the excesses.
Mostly the media have been astute enough to pick up on this point. But it is hardly the real issue.
While it may not seem to be at first glance, far more important is the Government's attitude and response to the fact that our population is ageing. It appears that the Government's own report on the so-called consequences of our ageing population has (surprise!, surprise!) revealed that within twenty years an ageing population will be drawing down benefits which the community will be unable to sustain.
Its solution, so it would seem, is that, beginning this year, the aged will be required to pay more towards their pharmaceutical benefits. The consequences of this policy - though it isn't stated - is that, over time, provision of pharmaceuticals will be supplied on the basis of "user pays".
Now the result of this fundamental policy change - and it is fundamental - is that those in their forties now can look forward to an old age when basic medications will be available only to those able to find them. Of course, the Government will hotly deny any such intention, but that is the only possible outcome of the policy on pharmaceuticals introduced in this budget.
Worse still, the attitude to pharmaceutical benefits is the thin edge of the wedge. Under attack, to be certain, is the idea of welfare itself.
That this should be so is nothing less than an admission that the Government's policies on population and prosperity have failed. While we can't employ the workforce, we can't expect families to have more children. Nor can we fund future welfare.
Not that we can expect anything better from the other side of politics.
Ideological commitment results in the wrong analysis, and the wrong solution to the problem. If, as seems likely, what has been done in this budget is continued, the only outcome will be to make things worse.
The engine driving this misguided policy is the Government's so-called report on the ageing population. On the most charitable of interpretations, the findings of this report must be considered questionable.
There are much more plausible interpretations of the facts about ageing populations. The OECD, for example, though no defender of welfare expenditure in any form, has opined, correctly, that governments should not and cannot avoid the responsibility of looking after the aged.
And the Government's chosen perspective on the facts has been challenged by Dr Pamela Kinnear, Research Fellow at the Australia Institute. She recently told the Superannuated Commonwealth Officers' Association that the facts don't support the belief that Australia is facing a crisis arising from the fact of its ageing population. For a start, it is not at all the case that all of those over 65 years become physically or financially dependent.
Most, she pointed out, live healthy, active and independent lives. 93% live in private houses, and only 3.5% require public assistance in daily living.
Dr Kinnear identifies the real problem when she highlights the large numbers of people between ages 15-64 not in the labour force. Most of these are in receipt of income support in one form or another. It is this group more than the aged which are at the core of the problem, though it should be said, that problem is not one of their own making.
Future retirees are, however, unlikely to duplicate the circumstances of those in retirement now. Before we can understand the future, we need to understand how our present crop of retirees came to be so independent, and why future retirees, whatever their numbers, won't be so fortunate.
Coalition Ministers presumably know this, though they are unlikely to share their knowledge with the rest of us.
The fact is, those now funding their own retirement in relative comfort and independence arise from an age when full employment and well paid jobs enabled ordinary workers to retire, perhaps needing the pension, but with their house fully paid off and capable of being maintained by them.
Taxes on a fully employed work force over a working life should enable a pension and other health benefits to be available to them.
To this group should be added another - comprising public servants and long term employees of large companies - who with the help of their employers, provided for a retirement income sufficient to fund all of their needs for the rest of their lives.
Nothing like these circumstances can possibly be anticipated for the future.
We no longer have a fully employed and well paid work force with either the capacity or incentive to save for retirement. We no longer have a pool of securely employed public servants and others funding their own retirement incomes independent of welfare.
At the same time, we have abandoned the notion of full employment. And the community pays for this in two ways. Those who previously paid tax must now, of necessity, become the beneficiaries of unemployment benefits, and, ultimately, of retirement pensions. They and the community are, of course, much worse off as a result of this outcome.
In addition, our addiction to the notion of free trade has resulted in the surrender of the significant part of taxation revenue previously provided by tariffs.
No wonder the Coalition has come to the conclusion that it will not be able to fund future welfare! What they will not recognise is that a rising number of aged is not the cause of the problem.
While ever we have structural unemployment at existing levels and while we maintain our attitude to industry development, even sustaining the existing
aged will be beyond our capacity. And the same circumstance - high structural unemployment - is working, and will continue to work, against families having children.
The inescapable fact is that integrating Australia into the world economy, in the manner we have chosen, makes it impossible for the nation to look after its old, or even to sustain its population at a satisfactory level.
Sooner or later some government will have to face that problem squarely, and deal with it. Industry and employment policies will be at the heart of any solution.
- Colin Teese was Deputy Secretary of the Department of Trade