GST

The Intergenerational Report's (IGR) predecessors assume that the answer to our future prosperity lies in the combination of population growth, productivity and participation. After an almost unprecedented 24 consecutive years of economic growth, we certainly have achieved population growth, productivity is declining, there's record high unemployment, but where's the prosperity?

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The report says that to drive higher levels of prosperity through economic growth, we must increase productivity and participation. If we are to achieve these goals we need to encourage those currently not in the workforce, especially older Australians and women, to enter, re?enter and stay in work, where they choose to do so.

Federal Treasurer Joe Hockey laments that by 2055 around 22.6 per cent of the Australian population will be aged over 65 and that there will only be 2.7 people of traditional working age to support the older population.

... the Intergenerational Report shows the growth in the costs of many services, especially in health, that will put pressure on the budget and threaten the sustainability of those services. Every day our spending exceeds Government revenue by more than $100 million. To make up the shortfall we have to borrow that $100 million per day.

If spending exceedes revenue, surely it's time to reconsider and redefine what's meant by "economic growth"? Family or individual households can't be maintained in this manner, and neither can businesses.

Income tax and goods and services tax, and taxes on superannuation – the taxes that affect us – will have to climb in order to fund the things we are going to need!

Beyond 2017-18 Commonwealth grants to states for hospitals will increase only in line with the population and the consumer price index. But the cost of running hospitals is continuing to climb. Not meeting that cost is unrealistic (unless the states meet it by doing something such as lifting the goods and services tax) but it holds back the projected deficit.

SMH> Intergenerational report how labor was framed

Australians could face record taxes in order to balance the budget if the full suite of government’s economic measures are not put in place, according to the recent intergenerational report!

But the future of the Australian workforce will mean Australians will need to work longer and harder over the next 40 years in order to sustain the nation’s economy.

Productivity

David Richardson from the Australia Institute questions our Treasurer Joe Hockey on the importance of workforce participation and technology and the role that health technology. By implication, education is going to play in economic growth into the future productivity, but none of those things are in the Intergenerational Report. It's assumed that productivity growth is 1.5 per cent for now and for ever, no matter what. Tertiary education, and skill training, is becoming prohibitevely more expensive, and based on a business model - hardly encouraging productivity and cutting-edge innovation!

While the recent Intergenerational Report references how technology is changing our lives it failed to properly quantify the shrinking correlation between future productivity gains and job growth. The Intergenerational Report expects Australia's past level of productivity growth to carry on into the next 40 years, largely on the back of technological change and innovation. On the contrary, our big exports of education and housing are hardly productive, and manufacturing is declining.

High immigration may have no effect on productivity, as data shows, or as the Australian experience suggests, may reduce it. And it can be irrelevant to participation.

Participation
Participation refers to how the workforce can allow people to work later in life, as well as how workforce options and flexibility can build the participation of more young people and women. So apart from population factors, participation and productivity hold the key to future economic prosperity.

Currently, three fifths of our population increase is through migration with only two fifths from natural increase, so it’s already pretty high by historic levels.

The IG report notes the importance of migration to the country's economic performance acknowledging over the years, migrants "tended to be younger" than the resident population and therefore "helped push labour force participation rates". On the contrary, unemployment within migrant groups is higher than averate, and migrants actually don't stay "younger" but age at the same rate as everybody else- one year more per year!

Population

Australia's population growth rate has increased above historic trends, largely due to immigration. Since the Sydney Olympics in the year 2000 the population of Australia has grown by 25 per cent. The ABS predicts population will be around 40 million in 2061 and up to 70 million by 2101.

Dr Jane O’Sullivan, of Queensland University, makes the point that each new person we need to spend at least $200,000 on infrastructure. (Some would say more like $500,000). Rather than producing prosperity, our unwieldy economy is costing more to maintain.

Australia will become even bigger, denser, and more multicultural over the next 5 years. Some ‘Aussie Dreams’ may start to disappear such as the ‘quarter acre block’ and along with it the Hills Hoist garden shed and enough space for a game of backyard cricket. People are to be more crammed together, for the benefit of "economic growth"? If lifestyles can't be maintained, then who benefits?

McCrindle- population growth in the media

Our economy is staggering under the weight of heavy demands, yet illogically it's assumed that we can "offset" our ageing population's costs through high population growth?

A growing number of voters say they would now support an increase in the rate of the GST, following a year in which the tax has been a simmering political issue. The Abbott government on Thursday revealed plans to subject downloaded music, movies and books to the GST in what Federal Treasurer Joe Hockey calls an 'integrity' measure, not a broadening of the GST. So, welfare is being cut, piece by piece, and taxes are increasing. Where's the prosperity?

Experience shows us that rapid population growth is no guarantee of economic prosperity, and conversely a stable population does not doom a country to economic failure.

Today, on Geraldine Doogue's "Saturday Extra" (ABC radio national), the wrong impression was given by a British-accented commentator that the GST had been brought in in Australian in a fair and reasonable manner. This is infamously untrue and misleading on election day. Wide-eyed talk of how people oddly resent 'change' ignores the fact that change initiated by the people is resisted adamantly by the press and the politicians.

Geraldine's Saturday Extra on Election day 2010

Today, on Geraldine Doogue's "Saturday Extra" (ABC radio national), the impression was given by a British-accented commentator that the GST had been brought in in Australian in a fair and reasonable manner. This is infamously untrue.

History of Howard's Goods and Services Tax (GST) whitewashed

Howard won the 1996 election promising that he would never never introduce the GST (which had rightly been made such poison by former prime minister, Keating.) After Howard was elected in 1996 he set up a sham parliamentary inquiry to look into supposedly reforming Australia's tax system. One person on the inquiry, Paul Zammit, resigned because he was interested in serious alternatives but found that Howard had planned for the inquiry to ram through a GST. Howard used this inquiry to pretend that an independent inquiry had recommended the GST, weeks prior to the 1999 elections. As a result of a confusing campaign, Howard clawed back into power in 1999, whilst losing the popular vote. On a two party preferred basis, the Liberal Party lost 49.02% to 50.98% [1]. Had more been understood about the GST, the loss would have been greater. Nevertheless, and in spite of a Senate majority opposed to the GST, Howard claimed a mandate to introduce the GST. He was able to get the Democrats leader, Meg Lees, to vote for the GST against the wishes of most Democrats and most of the Australian public. This history shows that the GST was introduced deceptively and against democratic objections.[2]

Change is good?

The election commentary this morning is full of how strong politicians supposedly inflict pain on the electorate for a greater good which the electorate is too stupid to understand. There is also wide-eyed talk of how people oddly resent 'change', but of course people resent change because they have no control over the results and they have adjusted, to their benefit, to what is. Change initiated by the people is resisted adamantly by the press and the politicians.

What a grab-bag of last-minute propaganda surfaces in these desultory election 'commentaries' on the ABC.

Footnotes

1. The two-party preferred vote was originally given as "48.5% to 51.5%". I have since discovered from these pages that that figure was wrong. It was in fact 49.02% to 50.98% - our apologies. 49.02% to 50.98% is still a substantial loss of the popular vote. That was a substantially larger margin than the 1990 two-party preferred margin of 50.10% to 40.90% against Labor. For having lost the 1990 election Howard was depicted a victim of injustice by the Australian newsmedia. - JS, 14 Oct 11

2. For discussion on the GST, see also #comment-98088">comment to John Quiggin's article Core Promises of 8 May 2008. See also SMH article Let's have the honest truth, once and for all of 18 August 2004 by Alan Ramsey which was #comment-98057">quoted in that discussion. Note that the evidence of John Howard's dishonesty was not challenged on that forum discussion by any Howard apologist.