ageing population

Who really understands the inner workings of our “modern vibrant” economy - that finely tuned mechanism that gives everyone a fair go and preserves our way of life? Turns out it’s more like one of those classic Bruce Petty cartoons with machines with lots of levers and belching fumes at the hapless operator.

I was recently surprised to happen upon a lecture given by a real life economist who managed to make the swirling mess make sense – and nothing is at it seems. I’ll try to explain- if you are prepared to accept the opinions of someone like me, who you don’t know and will probably never meet – but hey we do that every day when we swallow the opinions of News Corporation and Fairfax media empires, don’t we?

With charm and enthusiasm, Flinders University Professor of Economics Philip Lawn comprehensively dismantles all the old chestnuts used to justify government’s obsession with debt and deficit, their absolute belief in continued growth, and their lust for scaring the pants off everyone about pesky older people, dole bludgers, and I would add lately Middle Eastern death cults and those who dare ask questions on Q&A.

In explaining government spending, Prof. Lawn refers mainly to pensions, so, for the purposes of this article, which gives my summary of what Prof. Lawn is saying in the videos below, I’ll also refer mainly to pensions, although his explanations hold true for all forms of government spending.

Here's the gist of it:
There is no budget emergency. The Australian Federal government cannot go broke. Our taxes aren’t used to fund pensions, and government has access to as much $AUD as it likes, whenever it likes.

The Federal government has access to a bottomless pit of $AUD to finance the aged pension or indeed any of its spending. Although we are encouraged to believe that pensions, Medicare, hospital and school spending is bleeding us taxpayers dry, this is not true. We aren’t paying our taxes so that we can help fund our aged and disabled pensioner incomes, or build hospitals and schools. The truth is that taxes are levied on the private sector and working population to enable the government and other purchasers to spend in a manner that is not undesirably inflationary. Taxes are just a lever, used to quell inflation.
 
Prof. Lawn on Currency Issuing Central Governments and some macroeconomic facts:

Macroeconomic Facts

The Federal Government is a Currency Issuing Central Government (CICG) and is the monopoly owner and issuer of $AUD– which is a Fiat currency.

As a CICG, the Federal government does NOT have to tax, borrow or sell assets to finance its spending. Barring obstruction from a hostile Parliament, it has access to as much $AUD as it likes, whenever it likes.

You, I, State and Local governments, banks, businesses, are users of the $AUD. We do not have unlimited access to $AUD, and thus face day to day budget constraint. The Federal government does not. Its circumstances are not like that of a household, bank, businesses etc.

A deficit does not reduce government’s capacity to spend, nor does a surplus increase its capacity to spend. It taxes and sells government securities/bonds (described falsely as government borrowing) for specific purposes but NEVER to finance its spending.

A CICG NEEDS to destroy enough private sector spending power to nullify the inflationary effect of its own spending, so taxes are used to destroy private sector spending power.

Central banks – in our case the Reserve bank- sell government securities/bonds when a CICG operates a deficit in order to control interest rates.

So, CICGs spend first, then tax to the level required to nullify the inflationary effect of their own spending. Then, if required, government will sell government securities to maintain a targeted interest rate.

But- Can’t banks create $ out of nothing? ......Yes, but the money they create (financial asset) is always matched by a financial liability. However, when the Federal government creates $AUD for spending purposes it creates a financial asset but no offsetting financial liability.

Thus, the Federal government is the ONLY creator of net financial assets, which are needed for the private sector, in aggregate, to ‘net save’.

The important issues are:

- Will the real assets exist in the future for retirees (pension/super) to purchase?
- Will the basic G&S, health services, nursing homes, etc. be available for retirees to purchase with their income cheques?

And, as the population ages, and the working population shrinks, the nation’s ability to provide these real assets depends on:

- The productivity of the working population (economy’s sustainable productive capacity), and
- What proportion of the real stuff produced is made available in the form of real stuff needed and desired by retirees.

So you may be wondering, wouldn’t the Federal government’s exploitation of the bottomless pit lead to hyper-inflation a la Zimbabwe? (Called Demand–Pull inflation)

No it won’t........ well only if there is no competent management, because:

- Demand Pull Inflation occurs if net spending of the Federal government pushes Total (public and private sector) spending beyond the economy’s productive capacity (full employment level of GDP)
- If total spending is LESS than the productive capacity of the economy, there is no hyper- inflation, but there is unemployment. As has been the situation in Australia for the last 40 years!
- Ideally we want total spending to exactly equal productive capacity – full employment and minimal inflation, and there is NO REASON why the Federal government cannot manage its spending to ensure this is the case. It faces no financial constraints in doing so

This explains why the huge budget deficits of the US Federal government in 2008-2011 weren’t inflationary. Total spending in the US was still well short of the productive capacity of the economy, as proven by the official unemployment rate in the US at the time being 9-10%.

So in summary:

- A Currency Issuing Central Government can always net spend to a level that ensures total spending equals the full employment level of GDP
- It should never spend beyond this level as this would be inflationary. ....Only a fool would recommend this!
- If, once ensuring total spending equals the full employment level of GDP a CICG operates a budget deficit, so be it. It has access to the bottomless pit of $AUD. It can run deficits forever.
- Taxes paid by the working population do not finance the pension bill
- Taxes paid by working population are required merely to quell the inflationary effect of retirees spending and government spending.
- Federal government spending, including provision of the pension, is financed by creating new money and spending it into existence.
- The Federal government prevents this from being inflationary, and destabilising the economy by reducing the spending power of the working population by taxing it (i.e. it destroys some existing money)

What’s more, it is a furphy that if we get more people onto superannuation, they won’t be a drain on the poor old taxpayer, because:

- Taxes do not finance the pension. Pensions are financed by the Federal government creating new money.
- In order for retirees to spend in a way that is not inflationary, ‘spending room’ must be made available for them, by the Federal government taxing the working population. The working population still has to be taxed even if all retirees were financed by superannuation.
- If the switch to superannuation provides a higher fortnightly spending cheque for retirees, meaning they can purchase more Goods and Services, more spending room must be made available to prevent their spending becoming inflationary. .......
- Resulting in the Federal government having to tax working population more!

Are there other solutions?

- The Federal government could reduce its own spending – meaning fewer public goods and infrastructure – which Lawn believes we are witnessing now
- Increase the productivity of working population, negating the need for the Federal government to create more spending room, and negates the need to increase the tax impost on working population. By increasing productive capacity of working population:
- A smaller working population can produce same/more G&S for all citizens
- Overcomes the concerns about an ageing population
- Overcomes the need to increase tax impost on working population
- May even provide more G&S for retirees to purchase and enable the AFG to increase the pension  without having to increase taxes

What really matters is if there are enough real Goods & Services for retirees to purchase with their pension/super cheques. If not, retirees will be forced to compete in the market place with the working population for G&S – which will cause inflation.

Undesirable solutions include increasing tax on the working population or reducing government spending on provision of public goods. The desirable, sustainable, sensible, ethical, call it what you like, outcome is to increase the sustainable productive capacity of the economy (i.e. increase productivity of working population), thus ensuring a smaller working population can provide the real G&S to meet the desires and needs of everyone. Ah yes, I remember when we were told that one day we’d be able to enjoy shorter working weeks and retire younger!

That sounds good, so how do we increase the sustainable productive capacity of the economy? Well, we maintain our Natural capital; improve critical infrastructure - much of which has ‘public good’ characteristics so should be supplied by government; make technological advances –which requires R&D spending; and sustain the workforce - which requires spending on education, training, preventative health etc. This is starting to look like what most people want government to do isn’t it?

So, what is undermining our ability to achieve these things?

- High population growth rate
- Increased rate of resource use and waste generation caused by growth in real GDP
- Inadequate government spending on critical infrastructure, inadequate government spending on R&D, inadequate government spending on education, training, health etc.

Hey, Lawn has just described the government ideology – mind you there’s no resistance from Mr. Short One and his limp opposition. Both sides- the Laborials as Bob Brown once called them- are promoting population growth, promoting GDP growth (even though it no longer increases per capita well being) and cutting government spending!

Indeed, our high population growth rate means a larger proportion of economic activity must be dedicated to expanding infrastructure, equipment, skills etc. Each 1% growth per annum, requires 7-10% of GDP; however government infrastructure spending has been approx. 1.85% GDP per 1% growth per annum...... No wonder we can’t get a seat on the train!

And, how are we travelling at present?

- Labour productivity increasing at a low rate compared with pre GFC years (peaked around 1998-2002 – see Chart 3 Grattan Institute Report ‘Australia’s Productivity Challenge’ Page 14 here)
- Population growth and resources throughput growth is reducing the Natural capital that provides the natural resources needed in future
- The desire for GDP growth isn’t making us better off (GDP vs. GPI Genuine Progress Indicator)
- There is already inadequate spending on R&D, education, health
- Critical infrastructure has been run down due to inadequate government spending on public goods

The Federal government could run a balanced economy if only it wanted to – it just doesn’t want to. Instead it seems hell bent on stripping us down to our underpants and reducing our standard of living and quality of life. With indecent obsession, government is doing almost everything to undermine the ability of a future Australia to cater for the very challenging future we face, and is trying to repair an unbroken and unbreakable budget.

I just can’t get my head around the morals of these people with their hands on the levers of control. There is no budget emergency and the only black hole in Canberra is the bottomless pit of $AUD. We are being encouraged to begrudge spending on essential government services and those in need, misled that our taxes are funding that spending and to top that off a good dose of suspicion and fear towards our fellow citizens. Whoever is managing this climate of fear and suspicion has the morals of an alley cat.

If you’d prefer to hear Professor Lawn direct, without being filtered through my brain, I highly recommend his YouTube (Parts 1&2) which are embedded in this article. The URLs are: https://www.youtube.com/watch?v=-j-cqKQb1Ho and https://www.youtube.com/watch?v=et5Kt1NVwlQ

Jenny Warfe
July 2017

The Federal hospital funding system, based presently on growth in demand and costs, will change under the Abbott government. This "change" is actually about slashing and downgrading what each States receive, to make the system "more efficient".

This "change" is an $57 billion attack on our nation's health care system.

In two years, over $50 billion will be stripped from hospital funding. So despite Australia's population growing faster than any other developed nation, funding will be savaged and more people will be "cared for" with less!

The Abbott government is set to change the hospital funding system introduced by Labor, which was based on growth in demand and costs, with one that ties federal funding increases to inflation and population growth. So, under this "change", funding will be on a whim, and what's begrudgingly available, not on population growth or needs!

“On top of this, the Government scrapped the National Partnership Agreement funding to the States, which rewarded performance in meeting waiting time targets for emergency departments and elective surgery. The enormity of the ongoing cuts was starkly highlighted when the Treasury advised the Senate Economics Committee that Commonwealth funding for public hospitals from 2017-18 to 2024-25 would be reduced by $57 billion" says AMA President,AMA President, A/Prof Brian Owler

Treasury figures show the commonwealth savings from cutting funding to the states for hospitals and schools will escalate rapidly, rising from $1bn in 2017-18 to $3bn in 2018-19 and $7bn the following year. By 2020-21, it will be $10bn. So, as our population continues to blow out, there will be more and more "savings" on hospitals and schools - a formula for a third world nation?

Australian Medical Association (AMA) said the system was not coping with the demands and warned the situation would worsen with less funding, and hospitals have already been hit by a $1.8 billion cut in last year's budget. The AMA has also warned of a possible ‘perfect storm’ in Australia’s public hospital system as Commonwealth funding shrinks, performance benchmarks are not being met, and prices for hospital services under activity-based funding decline.

Governments love, sponge off and delight in population growth, but they not only fail to maintain funding, it's being shrunk, piece by piece! Health care is not an optional extra, or a luxury that puts icing on the budget "cake", but something very basic that's part of our human welfare and an essential service! After more than 2 decades of "economic growth", ironically we are becoming more impoverished and worse off? Who actually benefits from this economic system? Clearly not the majority!

How can economic rationalism justify risking people's well-being, and even lives? How is our health care system to become "better", and provide more with less? It's unsustainable, cruel and potentially catastrophic.

Victoria's biggest hospitals each stand to lose out on more than $1 billion in federal funding over the next decade, according to a state government analysis. The State stands to lose $13.6 billion in funding, which according to Health Minister Jill Hennessy, was equivalent to losing 2.3 million elective surgeries or 11.6 million chemotherapy treatments. Of course, denying people surgery, and chemotherapy, will make the system more "efficient"! Nature will take its course, and people will suffer and die on the waiting lists, and thus eliminate excessive demands!

The massive shortfall in federal funding for hospitals will lead to even longer waiting times for elective surgery, prompting higher morbidity rates, with the smaller states and regional Australia worst hit. People's health care should be locked in, and set to increase incrementally with population growth- not be set as a political bargaining chip, and people made victims of poor economic management!

It's pure and cruel neo-liberalism - of caring for The Economy as the expense of the people it's meant to serve.

If Treasury is failing our present population with the provision of basic public service funding, how can it be trusted with the future, and expect the public to have confidence in the integrity of the latest Intergenerational Report?

ANMF Campaign - Take Action

Video and text inside: Recently the Federal Government released another Intergenerational Report. It would be easy to dismiss it as a political stunt. After all the well-known scientist they got to spruik it, Dr Karl Kruszelnicki, has now done just that, correctly lambasting it for its failure to talk about climate change. Any discussion about the future which leaves out climate change is farcical.

And these Reports, first commissioned by Peter Costello, are absolutely a Trojan Horse for the right wing agenda of winding back the social contract, dismantling the benefits achieved in Australia with a lot of blood, sweat and tears over many years, in health, education, and retirement incomes, which make Australia one of the best countries in the world to live in. They run a scare campaign about population ageing designed to convince us that our health, education and retirement incomes systems are not sustainable. Speech by the Hon. Kelvin Thomson, Federal Member for Wills, to the Protectors of Public Lands Annual General Meeting Saturday 18 April 2015

But is the issue of Intergenerational Equity important? Bloody oath it is. Do we want to be remembered as a generation that wrecked the planet and passed on an inheritance and legacy of unemployment, mental health problems, drugs, conflict and terrorism to the next generation? Surely we have an obligation to pass on to our children and grandchildren a world in as good a condition as the one our parents and grandparents gave to us. We do not have a right to trash the joint.

So how are we going so far? Well let's look at deficit and debt, the two Ds, a bit like Daz and Dee from The Block. It is true that we need to balance the books. It is true that leaving behind deficit and debt is unfair to future generations, who have to pick up the interest bill.

It is worth noting that countries with large populations and rapid population growth tend to have greater problems of deficit and debt than smaller countries, or countries with stable populations. Rapid population growth leads to overcrowding and pressure on existing infrastructure. Residents and communities naturally object to this, so in order to head off public objection to rapid population growth governments have to build new infrastructure. This new infrastructure is very expensive, and leads to deficit and debt.

The Queensland academic Jane O'Sullivan points out that maintaining infrastructure in a population growing at 2 per cent doubles, repeat doubles, the infrastructure cost for governments, who have only two percent extra taxpayers to pay for it.

We have seen a classic example of this in Melbourne, with the former State Government secretly locking Victorians into a contract to build a tunnel through Royal Park that would have cost $8 billion. Seriously $8 billion for a tunnel! I recently had Professional Engineers in my office giving this outrageous cost as an example of the way the public sector is being stooged by private consortiums. Victorian taxpayers have dodged a massive financial bullet as a result of the new Victorian Government negotiating an end to this contract. It is remarkable that the Liberal Party and its media and corporate cheer squad have the temerity and audacity to criticise this. To lock Victorians into a multi-billion dollar contract with a secret side note days before an election was the height of contempt for the right of Victorians to democratically decide our future.

It is brazen and shameful that they should criticise an incoming Government for delivering what it promised - no East West Link. The $340 million cost is entirely the responsibility of the Liberal Party for its secret and devious attempt to foist this project on the Victorian people no matter how they voted. Frankly they should pay the money, not ordinary Victorians. At the very least they should hang their heads in shame.

Let me return to the double Ds, deficit and debt. During the good times John Howard and Peter Costello introduced measures which damaged the revenue and pushed up deficit and debt. The fiscal time bombs they left behind for subsequent governments included abolishing tax on superannuation income, cutting capital gains tax in half, introducing the Baby Bonus - now thankfully gone - and ramping up Family Payments.

The Abbott Government has gone down the same path. They reinstated the Howard Government’s fringe benefits tax arrangements for privately owned motor vehicles, which Labor had cancelled, at a cost of $500 million a year. They cancelled Labor's 15 per cent tax on superannuation income over $100,000. This reduced revenue by about $600 million a year. They abolished the carbon price, at a cost of $7.6 billion, and overturned the mining tax. One country which runs a whacking great surplus and has no debt is Norway, which years ago introduced a sovereign wealth fund. People say Norway is fortunate because it has lots of natural resources. And we don't?

The legacy of deficit and debt we are handing down to future generations is not unavoidable. For example we have allowed companies to avoid paying tax on their income.

In one financial year just 10 companies channelled over $30 billion from Australia to Singapore and avoided paying tax in Australia. In that year, 2011-12, an estimated $60 billion in so-called "related party transactions" went from Australia to tax havens. Energy companies have established "marketing hubs" in Singapore, but their principal purpose appears to be as a destination to shift profits in order to pay less tax. A report by the Tax Justice Network estimated annual tax avoidance by the top 200 companies at over $8.4 billion.

And as for infrastructure spending, the property developers who are the beneficiaries of the increased land value that comes from population growth ought to be the ones to pay for the costs of this growth. I support the Labor Government capping Council rates. Pensioners shouldn't be the ones paying for population growth; the beneficiaries should be.

My friends let's now look beyond the double Ds. How are we really going? Is there really intergenerational equity? Not in my book. The opportunities I and my generation had - free tertiary education, lots of job and career opportunities, affordable housing - seem a distant memory for way too many young people. They are now fitted up with an axis of financial evil - job insecurity, housing unaffordability, and student debt.

Job security has declined dramatically. Back in the 1980s well over half a million 15 to 19 year olds had a full time job. By January this year the figure was more like 150,000, an all-time low. There has been a dramatic switch from full-time to part-time employment. Back in 1980 just 20 per cent of workers aged between 15 and 19 were part-timers but the figure is now about 75 per cent.

This might not be a problem if those same young people were also studying and setting themselves up for more secure work once they have improved their skills and qualifications. But this is not happening. Youth unemployment is now at its highest for 17 years. The number of long-term unemployed has risen dramatically in the last seven years, and is now well over double what it was in 2008.

Well-qualified young workers are finding it difficult to break into high-skill jobs. Many young people have to continue their part-time university jobs after they finish their degree. And those who do have jobs have less secure jobs. Three weeks ago the Saturday Age reported a worker who only knew if he had work when he received a text message just 15 minutes before his shift was due to start at a clothing warehouse. As a statement of the bleeding obvious, it is impossible to plan his day or his life around that kind of insecure work. It is a throwback to the work arrangements on the waterfront a hundred years ago, when dock workers would stand in a line waiting to be picked out for a day's work.

The rise of casual, contract and labour hire jobs, with far fewer protections for workers, is a feature of the last 20 years. More than 2 million workers are now engaged as casuals and more than 1 million are contractors or in labour hire.

The personal and social consequences of unemployment and underemployment are negative and long-lasting.

Experts say that young people lose their hope, their health deteriorates, they suffer from depression and anxiety, and they become vulnerable to drugs and crime. Being out of work for long periods can affect physical health, mental health, and future employability. The job market is now also tougher for postgraduates.

Young people are also getting the rough end of the pineapple in relation to housing. Whereas I and my generation had opportunities to buy and live in detached houses, high-rise apartment towers in Central Melbourne are now being built at four times the maximum densities allowed in such crowded cities as New York, Hong Kong and Tokyo.

These hyper-dense skyscrapers are being built with little regard to the effect on the residents within, or their impact on the streets below, or on neighbouring properties.

And as if these issues aren't big enough, this week a prominent Britain-based international mental health commentator, delivering a public lecture for the Queensland Mental Health Commission, suggested the modern rat race could be making us unhinged! Gregor Henderson said that across the world levels of diagnosed depression and anxiety, and the prescribing of drugs to deal with those conditions, are rising alarmingly. Mr Henderson said there may be a link between the way the modern world is structured and the elements of emotional and psychological distress we are seeing.

He said that if we keep putting such a high value on economic product, this leads to materialism, consumerism and individualism, which are mostly short-term benefits. Our modern style of living is out of synch with our mental and physical wiring.

I certainly think one of the contributors to increasing mental health issues is the loss of our connection with nature. Numerous studies have shown that public open space delivers tangible and important benefits for physical and mental health. Mathew White and colleagues at the University of Exeter Medical School found that people who live in urban areas with more green space tend to report greater wellbeing - less mental distress and higher life satisfaction - than city dwellers who don't have parks, gardens or other green space nearby.

A study from Norway says that health benefits from nature arise from nature's stress reducing effect. Stress, as is well known, contributes to cardiovascular diseases, anxiety disorders and depression. The American biologist E. O. Wilson says that because humans evolved in natural environments and have lived separate from nature only relatively recently in our evolutionary history, we have an innate need to affiliate with other living things. That is why the work of civic-minded groups such as the Protectors of Public Lands is so important, not just for us, but for those who come after us, and I congratulate you on the work that you do to protect our remaining public open spaces.

People aren't just unhappy with their own lives. They're unhappy about the quality of their political leadership as well. One of the defining features of modern political life is a pervasive loss of faith in government's ability to solve problems, or indeed do anything much at all.

Sally Young, Associate Professor of Political Science at the University of Melbourne, says we are living through a lost era of policy making. She says that politicians of today are suffering a crisis of confidence about whether their policy making can make a difference. She contrasts this with the difference made in the 1970s by Gough Whitlam and Malcolm Fraser.

So if we are failing future generations, and I am convinced that we are, what can we do about it? I think employment is one key. We need to get fair dinkum about full employment. Now there are plenty of captains of industry and economists who immediately change the language and the objective of "full employment" to that of "creating jobs". But they are not the same thing at all, even though they may sound similar.

The objective of "creating jobs" is used as cover for the desire to reduce workers’ pay, conditions and rights. It is claimed that reducing these things will increase labour market flexibility and thereby create jobs. It is also used as a battering ram against the environment, with the need to create jobs used to justify all manner of environmental atrocities. We should not agree to surrender pay and conditions or our beautiful and unspoiled environment. This would be the opposite of intergenerational equity.

So how do we achieve full employment then, given its importance? I think five steps are crucial.

First, we should wind back our migrant worker programs, which have skyrocketed in the past decade. In a stable or slowly growing population, workforce ageing will help solve unemployment. As workers retire unemployed workers or young people entering the labour force get job opportunities. This is how things used to be. But when we are running massive permanent and temporary migrant worker programs, the unemployed and young people entering the market find themselves up against ferocious competition from new arrivals. The size of these programs puts us on a treadmill. No matter how fast we create jobs we still have unemployment above 6 per cent. More than 760,000 Australians are out of work, a totally unacceptable figure, and a recipe for drugs, crime, mental health issues, even terrorism. As recently as the year 2000 the then Immigration Minister Phillip Ruddock said that net migration may average out at 80,000 per annum. A funny thing must have happened on the way to the Forum, because his government subsequently increased it to over 200,000 per annum, where it still sits.

Second we should focus on education, skills and training. What has happened to technical and further education is a scandal. Back in 2008 political parties promoted the deregulation of vocational education. 'Contestability', that is competition between the public TAFE Colleges and new private training colleges, became the name of the game. They competed for students and for government subsidies. The idea was that competition would lift standards and be good for students. The result has been the opposite.

Private training colleges have been quite unscrupulous. Their interest has not been in the students, it has been in making money.

They get students in and churn them through. They have no interest in whether the students get the skills they need to find work afterwards. As long as the students, or taxpayers, pay them, they're alright jack.

Private colleges have cherry-picked the most lucrative courses, leaving TAFE to deliver the balance. The creation of a private market in education led to the appearance of education brokers, signing up people outside Centrelink offices with inducements like free laptops. Consumer protection has been inadequate.

And then there is the change towards "competency-based" training. Whatever the virtue of the theory, in practice colleges have put students through courses in a matter of weeks. Quality assurance has been absent. Trainers sign students off as competent, but in practice they are woefully incompetent.

What we can do about this? The Australian Education Union TAFE Division has called for a cap on the funding available to private training providers, with 70% of government funding going to the public TAFE institutes, and TAFEs and private providers able to compete for the remainder. The union is also calling for the abolition of third-party delivery, in which training providers pay external businesses to deliver training courses.

Then there are the universities. We introduced student fees and uncapped student places. Now the Liberal Government wants to deregulate student fees. This would be a disaster. When I went to University there were no fees and places were allocated on the basis of academic merit. If Christopher Pyne succeeds, the system will have been turned on its head. Academic merit and performance will count for nothing. Your capacity to pay large fees, or more commonly your parents’ capacity to do so, will count for everything. How are academic standards and quality expected to survive such an onslaught?

The explosion of international student numbers has damaged the integrity of the system. On Thursday the NSW Independent Commission Against Corruption released a damning report which said universities are too financially reliant on international students to fully confront academic incompetence, poor language skills, plagiarism and even bribery. “Students may be struggling to pass, but universities can’t afford to fail them,” the report says.

Education needs to return to being about academic achievement and quality, not making a profit.

Third we need to back science. The 2014-15 Budget cut a staggering $150 million from the science budget, including a $115 million cut to the CSIRO. The CSIRO says these funding cuts will cause the loss of nearly 1400 workers, over 20 per cent of its workforce, including 500 science and research staff. We can't compete with the rest of the world behaving in this short-sighted way. And we should rebuild engineering expertise in government, and insist that companies building infrastructure invest back into the engineering profession, for example through cadetship graduate programs.

Fourth we need to back manufacturing. During the mining boom we acted as if it didn't matter if all our manufacturing went offshore. But to have all our eggs in the mining and agriculture baskets is, once again, foolish and short-sighted. Recent developments around the iron ore price reinforce this. We need a diverse economy, and manufacturing provides good jobs in the middle of society - not rich but not poor. It brings with it research and engineering expertise; the kinds of things that distinguish successful nations from unsuccessful ones. We should be wary of entering into trade agreements that kill off manufacturing and render our economy narrow and vulnerable.

Finally we should back the home team - Australia. Our personal buying habits, our government buying habits, and our foreign takeover laws should support Australian jobs and Australian industry. It is remarkable that when the Victorian Labor government says it is going to use local steel that we have economic commentators saying you can't do that it's a breach of our trade agreements!

We should have food labelling laws that spell out what food is Australian and what is imported, so consumers can make an informed choice. We should not enter into Trade Agreements that contain Investor State Dispute Settlement clauses or other provisions which act as a barrier to governments carrying out the wishes of the electorate on matters like these.

There is much that we can do which will generate full employment, and it needn't involve trashing the environment. But if we don't do it, then future generations will be deprived of the opportunities that so many of us have had. And the big question for us now is, do we want to be remembered as greedy, selfish, ignorant and short-sighted, or remembered as visionary, intelligent, compassionate and generous?

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?

Download the summary

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.

Governments are creating a great fear of an "ageing population" and population decline.  While asylum seekers are shunted off to PNG, there are over 1000 people legally imported into Australia each day - as skilled migrants or under the family reunion scheme – to alleviate our “ageing population”.

Our cities and infrastructure are buckling under the heavy weight of population growth, to alleviate our "ageing population"! We have constant "shortages", cut backs and austerity measures due to population pressures.  Young people are at risk from being lost to unemployment, and debt, as our economy lags behind population growth.
Mug shot of Charles Ponzi (March 3, 1882 – January 18, 1949). Charles Ponzi was born in Italy and became known as a swindler for his money scheme.

Increasing spending on welfare

With total government spending at $485 billion, spending on the welfare state accounted for a majority share—or 65% of the total. It is astounding that of the $316 billion that the government spent on welfare, approximately half, or $158 billion, was due to tax-welfare churn (The process of levying taxes on people and then returning those taxes to the same people in the form of income support payments and welfare services simultaneously or over the course of an individual’s lifetime).

When combined with the fiscal pressures of an ageing population and expected lower tax revenue growth, it is clear the Australian welfare state is unsustainable on current trends.

Australia is facing a welfare state-driven financial crisis like that which exists in Europe today. (CIS report: Target 30)

Target30 propose that superannuation be used to buy annuities, pension assets tests should include the family home, and aged pension and preservation ages be raised and aligned.

Social security and welfare spending accounted for A$138 billion in the latest budget, a rise of nearly 14% per year over the past decade. Assistance to the aged has risen to almost A$55 billion, a rise of 22% per year since 2003-04. In 2003-04 A$26 billion were payments to the aged, while families with children received A$21 billion.

Health expenditure expected to nearly double as a proportion of GDP over the next 40 years and aged-care spending projected to increase as a proportion of GDP from 0.8 per cent in 2010 to about 1.8 per cent in 2050.

The aged pension is predicted to cost $37 billion this year rising rapidly to $45 billion by 2015-16. It is estimated another 220,000 older Australians will start drawing down an aged pension in the coming four years.The greatest risk to prosperity come from sustained increases in spending, especially in health. Over the past decade health expenditure rose by over $40 billion in real terms. According to a Grattan Report the ageing population was not the prime cause. Rather, people of any age saw doctors more often, had more tests and operations and took more prescription drugs.

After welfare, the second biggest chunk of the federal budget is healthcare. This is "burdened" by the ageing population. The health budget is set to escalate to $71 billion by 2015-16.

In third place in the budget comes education spending at almost $30 billion a year, including funding for universities, non-government schools and some funding for public schools (although states still pick up most of the tab for public schools).

News.com: Where does all the money go

No doubt the best solution would be to ensure that older people were eliminated, by voluntary euthanasia, after they finished contributing economically to our society.

Ageing migrants

Despite many older people living long and healthy lives, and being financially self-sufficient, they are are being exaggerated as a threat. Migrants are ageing too. Professor Graeme Hugo AO, Director of the Australian Population and Migration Research Centre at the University of Adelaide, says the issue of ageing migrants is important to a range of policy areas in Australia. The last Census showed that 32,000 aged pensions are being paid every year direct to Greece and Italy to migrants who formerly came to Australia over the decades in the 20th century, and have now retired.

It's assumed that young migrants are the "silver bullet" to our ageing workforce, but migrants age too!

We need to end the stigma and discrimination of the aged in the work force and tap into their wisdom and experience. Japan has an ageing population, and still their economy is strong and growing - due to production and skills.

Importing young migrants only temporarily keeps our population "young" anyway, as everyone ages at the same rate. Rather than a constant flow of foreigners, many of whom are now facing higher rates of unemployment than Australian born, employers need to be flexible to allow part-time work, and tap into the experience and abilities of older workers.

Immigration only temporarily relieves ageing population

NSW Treasury Long-Term Fiscal Pressures Report answer to the fiscal ‘challenge’ of Australia’s ageing population is to increase immigration, restrain public sector pay, and – the quote here is direct – through “lowering community expectations” of services. There’s no Get Up! outrage over humdrum issues like 10 year-long queues for public housing, or ballooning hospital waiting times, or the fact that only 2% of rents in Sydney-Illawara are affordable for very low income workers. Deniers avert our attention to asylum seekers and gay marriage,"McMansions", big cars and over-consumption.

Population growth is also the lazy way to grow GDP (as opposed to GDP per capita) and make Treasurers look good. If this wasn’t enough, big business also has enormous influence on our major political parties through donations.

Young people remain longer in education before they take on full-time jobs in an economy increasingly based on knowledge and skills, and older people may often experience difficulty in finding employment. In 2011, 36% of Australia's older people were not born in Australia, a substantially higher proportion than the 24% of people under 65 years who were overseas-born.

It's not just "baby boomers" who are ageing!

In the Productivity Commission 2010 report titled Population and Migration: Understanding the Numbers, the Commission concluded that "Realistic changes in migration levels also make little difference to the age structure of the population in the future, with any effect being temporary, since immigrants themselves age."

Where does population growth end? We might be able to temporarily dilute, by a fraction, the proportion of people aged over 65, but in the long term the next generation will inherit a bigger "ageing population" to compensate for - but how?

“Realistic changes in fertility can have little impact on the age structure of the population in the short to medium term. While they have a greater effect in the longer term, they cannot stem the ageing of Australia’s population. Realistic changes to fertility could have some effect in the long term, but the proportion of older Australians will still grow from current levels. ”

End to the Age of Entitlements

The nation's peak welfare body has backed Joe Hockey's call for an end to the age of entitlement, arguing that people have "learned to expect new things from government" and tax reform is needed to transform the system. Australian Council of Social Service senior policy officer on tax and economics Peter Davidson said slowing growth and an ageing population meant the tax and welfare system was unsustainable.

The Australian: Joe Hockey call for an end to the age of Entitlement

Baby Bonus, Schoolkids Bonus and a Seniors Bonus are all "wasteful". Acoss says that taxes should be as simple, transparent and predictable as possible.

The Age of Entitlement is over. We should not take this as cause for despair. It is our market based economies which have forced this change on unwilling participants. Government spending on a range of social programs including education, health, housing, subsidised transport, social safety nets and retirement benefits has reached extraordinary levels as a percentage of GDP, and in an age of slowing growth and ageing population, are simply unsustainable.
It's an admission that our "growth" will inevitably lower our standards of living, and we will be less for our taxes. It's pure Ponzi economics!

Two decades of economic growth and we are being strangled economically.

“The reality is that despite more than two decades of strong economic growth, fault lines are emerging in our economic and social foundations that we simply cannot continue to ignore.

“There are major holes in our social safety net that the next government will have to address – in affordable housing, education, disability, mental and dental health, and community controlled services for Aboriginal and Torres Strait Islander peoples..." In reality, 22 years of "economic growth" has left us worse off, and poverty is increasing with 2.2 million people living below the poverty line.

ACOSS outlines proposals for first 100 days of new government (They never suggest limiting growth!)

Australia has long been one of the countries which has most enthusiastically pursued growth through immigration. But as the fertility rate fell – it has been below replacement rate for more than 30 years – that Big Australia goal became ever more reliant on imported people.

With no policies on slowing immigration levels, the flow of migrants to the western suburbs will hardly slow at all.

Lower fertility rates mean older, less innovative and productive workforces. More importantly to the Ponzi economic order, older, stable or declining populations consume less. So growth requires either importing people, or exporting stuff, or a combination of the two. Orthodox economics simply can’t cope otherwise.

“Economic growth” Ponzi economics

The Economy is meant to serve us, not “grow” to detrimental levels and deny its very purpose – to care for our health, education, children and seniors, and be a safety-net when emergencies strike.

“We’re certainly operating a Ponzi scheme in Australia,” says Dr Bob Birrell, an economist and migration expert from Monash University.

“Our growth is predicated on extra numbers… [and] more of our activity is going into city building and people servicing, which do not directly produce many goods that can be traded in overseas markets".

There are limits to growth, and Ponzi pyramid growth schemes always collapse and leave the participants worse off - except for the capital owners at the summit. What we need is a circuit-breaker to the growth/ageing population/"economic growth" mentality that is destroying our environment, vilifying older people, and causing hardship and increasing budgetary austerity.

From 2011 to 2026 ethnic people over 80 will increase by 59% compared with 29% in the Australian-born population. The rate at which Australia's population is ageing has been accelerated by immigration. Furthermore, this effect will increase. Immigration is a major contributor to the dementing demographic. These statistics run counter to the ideology peddled by the growth lobby and its promoters should be held responsible.

Australians misled by so-called 'demographic experts'

Australians have often been presented with the idea that they must submit to ever-increasing mass immigration because this will counteract our so-called 'aging population problem'.

"Immigration is the best solution for Australia's aging population, according to Bernard Salt, from KPMG."
Immigration Essential for Australia - according to expert, Australian Immigration News, Friday, 2 October 2009

However, a recent publication by the Federation of Ethnic Communities (FECCA) shows that immigration is actually making what might have been a mild problem because of baby-boomers much worse.

FECCA cannot be accused of anti-immigrant or even anti-immigration bias. The date of the FECCA publication was 2011, and based on data reflecting much lower immigration numbers than we have had in the past few years. The mind boggles at what the real size of the problem may be, especially if we continue with current numbers, let alone ramp them up.

Immigration and Aging in Australia - the facts

- The proportion of older foreign-born Australians has been growing more rapidly than the Australian-born population.

- From 2011 to 2026 ethnic people over 80 will increase by 59% compared with 29% in the Australian-born population.

- From 1996 to 2010 the proportion of over 80s in the foreign-born population increased from 16.3% to 25.9% compared with 22.9% to
27.5% for the Australian-born.

- By 2026 one in every four people aged over 80 will be from non-English speaking backgrounds.

Immigration and Dementia trends in Victoria

- One in four Australians with dementia is Victorian.

- By 2050, the number of Victorians with dementia is projected to be 246,389, nearly 4 times as many as in 2011.

- 44% of victorians were born overseas or have one parent born overseas

Immigrant ageing population

According to the Access Economics report (2006) one-sixth (16%) of people aged over 60 years spoke a language other than English at home,

while just over one-third (33%) of people aged over 60 years were born in a country other than Australia.

Around one in eight (12.4%) of Australians with dementia do not speak English at home.

In 2011, 40% of Victorians over 65 were from culturally diverse backgrounds. The older culturally diverse population will grow by 44% in the next 15 years from 2011 to 2026.

Funding is being sought to care for non-English background people with dementia because of the growing size of the problem. It is ironic that in Victoria, where the problem is worst of all, in 2002 the Premier Steve Bracks convened Melbourne's Population Summit where he and others repeatedly justified unwanted and undemocratic plans to vastly increase immigration rates with the myth that high immigration fixes the aging population problem:

"LEADING political and business leaders have joined in a call for increased immigration into Australia in a bid to speed growth and overcome the problems of an ageing population.

Among the political leaders who consider more immigrants are good for Australia are Labor Opposition leader, Simon Crean and Victorian Labor Premier, Steve Bracks.

Both spoke in favour of a higher population at a special conference in Melbourne, last month.

Australia must set population growth targets as part of comprehensive national policy or risk becoming "an ageing, declining society", Simon Crean warned."

"Major call for more migrants," Consyl Publishing & Publicity Ltd, March 2002

Where is this immigration ideology taking us? How can we sheet this disaster home to those responsible and make them stop increasing the environmental and social damage they have inflicted on this country?

NOTES

The following links were updated on 1 December 2016:

Source of all immigration and ageing factoids and their references was, "Meant to Care," Discussion Paper, Ethnic Communities Council of Victoria, 2011, Volume 1, Number 2, p.13.
http://eccv.org.au/library/file/policy/Final_eccv_Dementia_Paper_Aug_2011.pdf. A library of earlier and later sources is at http://eccv.org.au/aged-care/aged-care-policy/