Intergenerational Report: political reaction

LABOR says the IGR is ‘hot air’, while the government is under fire on the retirement age and climate change.

4pm: Parliament question time today was dominated by the Intergenerational Report and the efforts to halt the executions of the Bali Nine duo.

Joe Hockey has a go at former Labor treasurer Wayne Swan across the chamber, as Tony Abbott looks on. Picture: Gary Ramage

3.50pm: If Australians in their 50s are struggling to find work, then raising the pension age to 70 is “off in dreamland”, a seniors group says.

National Seniors Australia chief Michael O’Neill says a bigger effort is needed to hire older Australians.

He said raising the pension age was a legitimate debate but difficult when those in their 50s were being discriminated against now.

Australian age discrimination commissioner Susan Ryan was pleased the report looked at the positive economic potential of senior workers.

“The ageing revolution has happened, we’re here, we’re not going away, so let’s make it work for the whole economy and the whole community,” she told ABC TV.

Mr O’Neill said the report helped put to bed some of the “doom and gloom” about the ageing debate.

-AAP

3.05pm: The Intergenerational Report’s section on population makes fascinating reading, if you put aside for a moment the worrying economic implications of the ageing workforce.

Australia’s population is projected to reach 39.7 million in the next four decades with an explosion in the number of people living longer than 100 years.

The dramatic increase in the number of centenarians — forecast to be about 40,000 Australians in 2054-55 — is well over 300 times the 122 people who reached the milestone in 1975.

In 2054-55, life expectancy at birth is projected to be 95.1 years for men, up from 91.5 years today. Women will live to 96.6 years, compared with 93.6 years today.

And some experts suggest medical advances to come may mean some people could live to 140.

Read more population findings here: Population growth raises age-old question

Here’s a graphic showing the boom in centenarians:

2.50pm: To recap on the release of the 2015 Intergenerational Report:

AUSTRALIANS will be richer and healthier as the population grows to 40 million by mid-century but the nation will be burdened with crippling debt and deepening deficits if federal parliament cannot agree on budget reform.

Life expectancy will rise to 95 years for men and almost 97 for women and people will keep working longer according to a new government report that paints a picture of the nation in 2055.

National income will almost double to $117,300 for each Australian on average in today’s dollars under Treasury forecasts that take account of slightly slower economic growth compared to the booms of the past four decades.

The population will grow from 23.9 million today to 39.7 million by mid-century but only if the country continues to attract about 215,000 migrants in net terms every year — a key assumption some believe to be too low.

Joe Hockey is using the new findings to insist on the need for further budget savings beyond those already passed by the Senate, arguing that Labor must have an answer to the long-term challenges if Coalition proposals remain blocked.

FULL REPORT: Road ahead is bigger, older and broke

Presenting the report at noon, Mr Hockey flagged a renewed effort to entice a “grey army” of older workers to continue working and deliver national prosperity in the 21st century.

“This is the grey army that is going to deliver prosperity in Australia’s future and we need older Australians, we want older Australians if they choose to do so to remain in the workforce and to come back into the workforce,” the Treasurer said.

“And that is where there is going to be a lot of structural effort over the next few years.”

Labor said the IGR was highly politicised and a missed opportunity, with treasury spokesman Chris Bowen describing it as having “more hot air than the Hindenburg”.

And the report’s approach to climate change has also come under fire, with the Climate Institute’s chief executive John Connor saying the IGR is “reckless” for failing to acknowledge the economic challenges and opportunities presented by acting on global warming.

There’s a range of reports and reaction in our rolling coverage below.

Go to our Intergenerational Report special section for full reports on sectors such as health, education and pensions plus analysis from Dennis Shanahan and David Uren.

And there’s a big story from Adam Creighton here: Workers face increasing income taxes

IN FULL: Read the entire report here (pdf)

Meanwhile, a taste of things to come? The world’s oldest person Misao Okawa, a mother of three, grandmother of four and great-grandmother of six, has turned 117 in western Japan, reports AFP. Okawa, one of only a handful of people born in the 19th century and still alive “is looking in good shape”, an official at her Osaka nursing home said.

2.30pm: Tony Abbott has faced a barrage of questions about the IGR’s section on climate change.

A paragraph reads: “Some economic effects may be beneficial — where regions become warmer or wetter this may allow for increased agricultural output — while others may be harmful. For example, lower rainfall may reduce crop yields, or transport infrastructure (such as roads, ports and rail networks) may become more susceptible to damage from extreme weather events.”

In question time the Prime Minister replied that the facts of the document have been provided by Treasury experts and called on Bill Shorten to demonstrate his “better angels” by engaging in a bipartisan discussion about economic reform.

“There might be a temptation to scour this document trying to score political points but … I’m confident that this parliament is better than that,” he said.

The Climate Institute’s chief executive John Connor says the IGR is “reckless” for failing to acknowledge the economic challenges and opportunities presented by acting on global warming.

“When it comes to climate change, this Intergenerational Report barely addresses challenges for this generation let alone the next. It contains no projections of policy outcomes, no projections of the costs of climate impacts, and no recognition of the need to achieve a net zero emissions economy by mid-century,” Connor says.

“The report also fails to mention the fiscal impact of using taxpayer funds under the Emissions Reduction Fund and the loss of the revenue previously generated from the carbon laws – an impact previously estimated at $24 billion to 2020 alone.”

Earlier, Greens leader Christine Milne said the government had “destroyed all credibility” in the IGR process through its partisan politicking and ignorance of global warming.

Greens senators will move to require the independent Parliamentary Budget Office to rewrite today’s report and take control of all future IGRs.

“You can’t have true intergenerational reporting without examining global warming and pollution from fossil fuels,” Milne says.

“You also can’t just quarantine global warming to an environment section. Global warming will impact on everything from agriculture to public health and migration and population.”

2.15pm: Tony Abbott, asked about the Intergenerational Report in parliament, says the Coalition’s budget savings have already been halved “thanks to a government that takes economic reform seriously”.

“Madam Speaker, there is so much room for optimism about this great country of ours right now,” he says.

He cites low and stable interest rates, low petrol prices, diminished electricity prices and a “low and competitive” dollar.

“Madam Speaker, I want my children and grandchildren to grow up in a better Australia than I did and, Madam Speaker, government’s task is to make it so and this government is delivering.”

Here’s another graphic, which shows net debt projections:

2.10pm: More reaction from industry groups, with the Australian Institute of Superannuation Trustees saying the IGR fails to make the case for lifting the retirement age to 70 years.

“Raising the retirement age is a very blunt tool that will hurt a lot of involuntary retirees who - for all sorts of legitimate reasons – cannot work longer,” chief executive Tom Garcia said.

“The IGR shows that there is no need to panic. Increasingly productivity, higher labour force participation, a maturing superannuation system and a sustainable Age Pension system will all contribute to building a stronger Australia.”

He called on the government to bring forward the postponed increase superannuation guarantee from 9.5 per cent to 12 per cent.

The Australian Industry Group’s Innes Willox says the current tax system “doesn’t work” and must be reformed as “priority number one”.

Willox that Australian business cannot compete if it faces a 30 per cent tax rate for big business and 28 per cent for small business.

“Flatlining productivity as we’ve done for the past decade can’t happen anymore,” he tells Sky News.

Willox says Australia must “value-add” to its products and “work smarter” to maintain living standards.

Willox says there was “a lot of rhetoric in the past year or so and that wasn’t true in the short term” but there are some “structural imbalances” that must be addressed.

“We do need to start to take action. We can’t keep rolling along as we have in the past,” he says.

1.45pm: ACTU president Ged Kearney says boosting wages and reinstituting measures such as Labor’s low-income superannuation contribution would prevent older Australians relying on the age pension.

Interviewed on Sky News, Kearney says many workers simply can’t continue working past 67.

“If we actually made sure people have decent incomes then they can contribute to their retirement incomes as well,” she says.

1.30pm: Here’s an interactive snapshot of the Intergenerational Report’s key findings:

Australia’s road ahead: bigger, older, broke. Our lead story on Intergenerational Report: http://t.co/fcGpvNteBy @australian

— David Crowe (@CroweDM) March 5, 2015

1.25pm: Greens leader Christine Milne says the Abbott government has “destroyed all credibility” in the IGR process through its partisan politicking and ignorance of global warming.

Greens senators will move to require the independent Parliamentary Budget Office to rewrite today’s report and take control of all future IGRs.

“You can’t have true intergenerational reporting without examining global warming and pollution from fossil fuels,” Milne says.

“You also can’t just quarantine global warming to an environment section. Global warming will impact on everything from agriculture to public health and migration and population.”

“Closing the gap is relegated to one paragraph. The first Australians have been ignored, again. What a sad reflection on this narrow-minded and mean-spirited government.

“This is an election pamphlet, not a serious economic document. It is an insult to the intelligence of the parliament, the media and the public.

If the Greens’ motion is carried, it would be highly unlikely to pass the lower house, where the Coalition holds a majority.

“The report supposedly looks forward to 2055, but in 50 years people will look back at this report in the same way we now look at tobacco industry’s lies from the 1950s.”

Hockey’s IGR insults the intelligence of the nation pretending global warming will have no impact on our future #Auspol

— Christine Milne (@senatormilne) March 5, 2015

1.20pm: Watch video of Joe Hockey’s IGR presentation:

1.15pm: Here’s a big story out of the IGR from Adam Creighton:

Workers face increasing income taxes

AUSTRALIAN workers are facing relentless and damaging increases in personal income tax over the next 40 years, largely to pay age pensions to increasingly wealthy retirees, unless the government can pass its remaining budget savings.

The federal budget deficit will rise inexorably to almost 6 per cent of GDP by 2054 — more than double this year’s deficit — forcing the government to lift tax the burden to unprecedented levels in order to balance the budget.

According to the government’s latest intergenerational report, the net level of debt is set to rise from 15 per cent to almost 60 per cent of GDP — more than $2.6 trillion in today’s dollars and a significantly level higher than either Canada or New Zealand today.

“If no changes are made to payment levels ... taxes would need to rise and remain at a sustained level of around 26 per cent of GDP,” the IGR said. The previous high is 24.2 per cent.

Read the story in full here: Workers face increasing income taxes

1.10pm: More reaction is coming in to the main findings of the 2015 Intergenerational Report.

Australian Chamber of Commerce and Industry chief executive Kate Carnell says increased skilled migration is needed to deliver “significant benefits” in the long term, as well as greater participation by women and seniors.

“We do need to continue to focus on more skilled migration as well. The three together can deliver significant benefits in the long term,” Carnell tells Sky News.

“The old age pension has got to be a safety net… We’ve got 70 per cent plus of Australians getting the OAP even though we’ve had superannuation guarantee levies for a very long time now.”

Carnell says the current policy “dilemma” is that political parties are too eager to rule out unpopular measures.

“A range of ways of … increasing revenue, such as raising the GST, have been knocked off by both sides,” she says.

Carnell says that if the opposition and the Senate aren’t willing to back the government’s cuts, they should propose their own.

IGR: More stories and analysis

IN FULL: Read the entire report here (pdf)

1.03pm: ‘More hot air than the Hindenberg’

LABOR has given its first response to the Intergenerational Report, with treasury spokesman Chris Bowen saying the IGR is a “missed opportunity for the body politic” with “more hot air than the Hindenberg”.

He says the Australian people are “yearning” for an economic strategy modelled on the previous Rudd-Gillard government with higher compulsory superannuation and special benefits for low-income earners.

“This government knows only one way – to cut and punish,” Bowen says.

Bowen says “a proper and honest” IGR should be prepared by an independent body, such as the Parliamentary Budget Office.

“This is a highly political document… What they should have done is engage in a proper process with the Australian people,” he says.

Bowen rules out supporting any moves to raise the retirement age to 70.

“I don’t think Australians should have to work the longest working life in the OECD which is 70,” he says.

“These people work hard during their life and they deserve a dignified retirement and they shouldn’t have to work longer than anybody else in the developed world.”

more to come...

1pm: FOR something that Joe Hockey said would “shock our socks off” the Intergenerational Report is a sobering rather than shocking document which is designed to “start a conversation” rather offer any immediate solutions, writes Dennis Shanahan in his analysis.

Reead it in full here: More sobering than shocking

12.55pm: Joe Hockey says it is “self-evident” that, if the Coalition is able to repair the budget, the government will be able to provide tax cuts.

“We have average wage earners approaching the second highest tax bracket; When they go into that second highest tax bracket it starts to detract from economic growth,” he says.

“Obviously the faster we can get to the point where as a nation we live within our means … the more capacity we’ve got to incentivise people with tax cuts.”

And the Treasurer predicts new technologies will fundamentally transform the climate change debate in the future.

“Having said that, we all have responsibility to do some heavy lifting and quite obviously this government is doing part of that heavy lifting,” he says.

12.50pm:Economics editor David Uren writes: JOE Hockey’s intergenerational report delivers 35 years of continuous budget surpluses beginning in 2019-20 thanks to the assumed passage of savings measures currently stalled in the Senate.

Read his full analysis here: DAVID UREN: 35 years of budget surpluses ahead

12.45pm: Joe Hockey says the IGR is “a call to arms” for economic reform, saying no “fair dinkum” political party could “pretend the status quo is acceptable”.

“You can’t be nostalgic for 20-years-ago public policy. The public policy of free education or free healthcare for everyone,” he says.

“What we need to do is frame public policy for the future and that means … empowering individuals to have more control over the government’s services they access and government services need to be more flexible.”

The Treasurer says consumers are using technology to break down old business models and the government has “got to facilitate change rather than restrict change”.

“The purpose of this IGR … is to begin a conversation with the Australian people. Every town hall, every street corner, over every barbecue, we want Australians to embrace the future.

“It’s a great future. Our nation has a fantastic future but we’ve got to own it.”

Hockey also wants to increase female workforce participation although that was already happening “because you can’t live in a capital city in Australia” with only one income.

Hockey won’t comment on whether a retirement age of 75 years might ultimately be necessary.

“The question is how do we shape policies for the future rather than nostalgic look looking at the past? How do we ensure the quality life of every day Australians gets better?”

IGR: More stories and analysis

12.30pm: Treasurer Joe Hockey has flagged a renewed effort to entice a “grey army” of older workers to continue working and deliver national prosperity in the 21st century.

Presenting the IGR’s key findings, Mr Hockey says the prediction that a child born mid-century will live to 100 is a “dramatic change” on earlier projections.

Population growth will remain “essentially pretty much the same” with migration as a share of the population predicted to fall.

Mr Hockey said the government was continuing Labor’s policy trajectory by increasing the pension age to 70.

“This is the grey army that is going to deliver prosperity in Australia’s future and we need older Australians, we want older Australians if they choose to do so to remain in the workforce and to come back into the workforce,” the Treasurer said.

“And that is where there is going to be a lot of structural effort over the next few years.”

More to come shortly.

12.15pm: The 2015 Intergenerational Report has been released. The Australian will bring you the findings plus reaction and analysis throughout the day.

Here’s the main story:

THE ROAD AHEAD: BIGGER, OLDER BROKE

AUSTRALIANS will be richer and healthier as the population grows to 40 million by mid-century but the nation will be burdened with crippling debt and deepening deficits if federal parliament cannot agree on budget reform.

Life expectancy will rise to 95 years for men and almost 97 for women and people will keep working longer according to a new government report that paints a picture of the nation in 2055.

Read David Crowe’s full report here.

And stark reading on the ability of the workforce to support the ageing population:

POPULATION TO HIT 39M BUT AGEING FAST

AUSTRALIA’s population is projected to reach 39.7 million in the next four decades with an explosion in the number of people living longer than 100 years.

The dramatic increase in the number of centenarians — forecast to be about 40,000 Australians in 2054-55 — is well over 300 times the 122 people who reached the milestone in 1975.

And the number of people aged 65 years and over is projected to more than double in the next 40 years.

The findings of the 2015 Intergenerational Report “Australia in 2055’’ confirm that Australians will live longer and continue to have one of the world’s longest life expectancies.

With longer lives, the expectations of Australians will also rise.

Read Stefanie Balogh’s full report here.

IN FULL: Read the entire report here (pdf)

And here are some key points:

2015 INTERGENERATIONAL REPORT PREDICTIONS FOR 2055:

— The population will rise to 39.7 million in 2055, compared with 23.9 million today (assuming net overseas migration remains at 215,000).

- Life expectancy at birth will be 96.6 years for women and 95.1 years for men, up from 93.6 years and 91.5 years today.

— There will be about 40,000 people aged over 100, and 2 million people aged over 85.

17.3 per cent of over-65s will be participating in the workforce, compared with 12.9 per cent today.

— Real per-capita GDP will increase on average by 2.8 per cent, compared with 3.1 per cent over the past 40 years.

— The government will spend $3200 per person on age and service pensions, compared with $2000 today.

— Aged care spending as a proportion of GDP will increase from 0.9 per cent of GDP to 1.7 per cent.

— Health spending per person will jump to $6460, compared with $2830 today.

The rapidly greying population presents a demographic time-bomb for the nation with the numbers of those in the labour force declining as the community ages. Picture: Thinkstock

9.45am: AUSTRALIAN government debt could rival that of Spain unless the nation embraces a “reform path”, Joe Hockey’s parliamentary secretary said ahead of today’s Intergenerational Report.

The Treasurer will release today the fourth Intergenerational Report, which projects Australia’s demographic and economic challenges over the next four decades.

PREVIEW: Confidential briefings sway senators

Parliamentary secretary Kelly O’Dwyer this morning told Sky News: “If we had continued along the trajectory set by Labor the net debt to GDP would have gone up by 122 per cent by 2054.

“That is just below Greece and it is certainly ahead of Spain and a number of other European countries. If we continue along the path that we’re currently on — the status quo that we’ve currently legislated — we’re still going to see net debt to GDP at around about 60 per cent, which again is about equivalent to Spain.

“If we commit to a reform path, we’re actually not only going to be able to pay back that debt by around about 2030 or thereabouts but we’re going to be able to then start ensuring that we can return payments to people through income tax cuts in the years beyond that and that’s going to help grow our economy.

“(The IGR) assumes that we are going to continue along the path of uninterrupted economic growth, so there is no margin for error here. There is no margin for error if there is a global downturn or a global shock.”

The Coalition will rely on the report to sell its message of fiscal restraint to reduce the deficit and pay down government debt. It will be accompanied by a taxpayer-funded advertising campaign.

Labor treasury spokesman Chris Bowen has accused Mr Hockey of leaning on his officials to produce a document supporting the Coalition’s agenda.

“It could win the Miles Franklin Award for fiction,” he said.

“What he is doing is he’s using the Intergenerational Report as a prop to aid his flailing campaign to sell his unfair budget.

“The Intergenerational Report is and should be an important document and contribution to the national debate. That’s how Peter Costello intended it; that’s how Wayne Swan handled it.

“We will judge the Intergenerational Report on its merits, but what we have seen so far is deeply concerning.”

A future Labor government would get the independent Parliamentary Budget Office to produce intergenerational reports, to ensure short-term political considerations had no weight on either their timing and substance, he said.

Treasurer Joe Hockey, left, with Finance Minister Mathias Cormann, Parliamentary Secretary Kelly O'Dwyer, Minister for Small Business Bruce Billson and Assistant Treasurer Josh Frydenberg today before the release of the 2015 Intergenerational Report at Parliament House in Canberra.