Different backgrounds but a happy marriage

IT is very enlightening to have the same topic discussed by people from backgrounds as different as academe, politics, business and non-government organisations.

Academics are under some pressure to ensure their presentations are accessible to a diverse audience, while the non-academics tend to be more analytical in their discussions than is generally the case.

It is a happy marriage and the quality of the discussions and the Q&A sessions reflected this harmony at this year's economic and social outlook conference.

Some new themes were introduced this year: in particular, the importance of geography; the role internal mobility and migration can play in promoting prosperity; and the performance of our cities.

Making our cities more productive, given the very high degree of urbanisation in Australia, would yield big returns in terms of delivering higher incomes and improved quality of life.

Years of poor planning, inadequate investment in infrastructure and perverse incentives to provide the housing options that the population would actually prefer were some of the more downbeat descriptions of the development of Australian cities.

At the same time, there are reasons to believe that innovation and creativity are particularly achievable.

The session on the demographic dilemma was very well attended. This may have been due to Malcolm Turnbull being one of the speakers.

But the sea of grey heads in the audience suggested there is real interest in what the future holds, in terms of the ageing of the society and the challenges posed.

Eminent demographer Graeme Hugo made the very strong point that, even if the population grows more quickly than in the past, ageing in Australia is effectively locked in.

Of course, longer life expectancy is unambiguously a good thing. But, according to Hugo, the incidence of chronic conditions among those older than 65 is now eight times higher than was the case 20 years ago. People might not die of a heart attack, but many then live with chronic heart disease.

Turnbull spoke of his optimism of dealing with an ageing society, while recognising that the patterns of the past are unlikely to be repeated in the future. What was acceptable for our grandparents, for instance, is unlikely to pass muster with the current ageing cohort. And there is a link to the discussion of the future of cities, as many older people opt to downsize their dwellings but choose to live in bustling, inner-city areas.

Another recurring theme was the structural vulnerability of the fiscal positions of federal, state and territory governments. There is a very long list of new and potentially worthy initiatives, such as school education, disability services and aged-related health. But it was made very clear in a number of sessions that there is no space, in future federal or state budgets, to accommodate these initiatives, absent some new revenue sources.

And while there was heated agreement that state taxes should be reformed by removing the most distorting ones, such as stamp duty and other transaction taxes, there was very little optimism that any progress would be made on this front.

As John Freebairn notes, when it costs $1.65 to raise $1 by imposing one kind of tax and $1.08 by imposing another type, there are significant productivity gains to be had from moving to more efficient taxes.