Joe Hockey (North Sydney, Liberal Party, Treasurer) Share this | Link to this | Hansard source

by leave—Today, the government has released the 2015 Intergenerational report. The Intergenerational report is the social compact between the generations—children, grandchildren, parents, grandparents and each other. It projects what the Australian population, economy and budget could look like in 40 years, and it shows that Australia's best years are ahead of us. It provides us with information we need to prepare for the future and ensures we are well placed to address the demographic changes that Australia faces. It helps us identify where the future opportunities will be.

Australians have always looked forward. We are a generous, compassionate people and always willing to take on full responsibility for the future of our families, and our communities. Australia has witnessed amazing change over the last 40 years, and we will witness a transformation based on ideas and opportunities over the next 40 years. Average incomes have doubled in real terms over the last 40 years and this increased wealth has been broadly shared across the community.

Today, Australians produce twice as much in goods and services for every hour they work compared with 40 years ago. Australians are living longer and we have one of the longest life expectancies in the world. Currently Australia ranks equal first for life expectancy with Iceland in terms of male life. Australian women have the fifth longest life expectancy after Japan, Spain, France and Italy.

In 1975, there were just 122 Australian centenarians. Today there are 4,000. And in 40 years time there will be 40,000 people aged over 100. It should be celebrated that Australians are living longer and in better health. We are on the verge of an ageing population boom, not an ageing bust. This boom will bring many opportunities for Australians that we would never have considered before, and we need to start positioning ourselves now.

The future is what we make it today. This government is preparing and planning for the years ahead. As I said, the Australian population, like so many around the world, is enjoying a longer life. A boy born today will on average live to over 91 years of age, and slightly longer to 93 years if you are a girl. A child born mid-century is likely to live close to 100. Indeed, as the front page of Time magazine highlighted last month, a child born today could live beyond 140 years of age.

Positive actions have increased life expectancies of Australians. From the 1970s we saw life expectancies increase because we introduced seatbelt laws, and laws about drink driving. We developed treatments for heart disease and reduced the prevalence of smoking. Our longer lives and demographic shifts mean there will be fewer people of traditional working age as a proportion of the population. For every person aged 65 and over, there are currently around four people aged between 15 and 64. In 40 years time, that number will halve. Yes, our population will grow over the next 40 years, and migration will continue to play a very important role in that equation. But the IGR projects that population growth could be slightly lower in the next 40 years.

So what does that mean for Australia? The change in demographic structure will have important implications for the tax base and how future generations will fund the services the community needs and expects. It also has important implications for the expected growth in the economy, and therefore our household incomes. So let me explain. We can think about our economy's growth being driven by three main factors—the 'three Ps' as they are known. The growth in population, the participation in the labour force and the productivity of workers. Population growth is unlikely to contribute to economic growth as much over the next 40 years, as it has been in previous days.

The focus then turns to workforce participation and productivity. Australia's future growth and prosperity relies on having a sufficient workforce to fill the jobs of tomorrow. We see in the Intergenerational report that the workforce participation rate will fall by around two percentage points, from nearly 65 per cent today to just over 62 per cent mid-century. That said, there are clear opportunities to increase workforce participation by supporting Australians to get and keep jobs. These opportunities include continuing to support increased workforce participation by women, by youth, for people with a disability, and by embracing the potential of older Australians.

The workforce participation rate of people 65 years and over is expected to increase from 13 per cent today, to 17.3 per cent mid-century. This is our new grey army. The participation of older workers represents a significant opportunity over coming years to benefit from the wisdom and experience of older Australians. But there is more we can do to embrace this! If more Australians want to work beyond 65, they should have every opportunity to do so. But it is their choice. Greater female participation in work represents huge benefits to Australia. By way of example, if Australia lifted its female participation rate to be the equal of say Canada, we could potentially see a $25 billion increase in the size of our economy.

The final contributor to growth that the IGR highlights is productivity. Productivity is about getting more bang for each hour we work. Since the early 1970s we have doubled our output for every hour we have worked. Through significant reforms over the last 30 years, and the adoption of innovative and new technologies, productivity growth has been robust, averaging 1.5 per cent per annum over that period. The big question going forward is: what will be the average rate of productivity growth for the next 30 or 40 years?

The Intergenerational report assumes productivity growth will continue at 1½ per cent per annum for the next 40 years. It is a fair assumption, but it is a big ask. Achieving this rate of growth will require the reform agenda to continue—reforms that make government more efficient, that make our markets more efficient and give every opportunity to Australians to work smarter, not harder. It will also require Australian businesses to be prepared to harness the opportunities when they arise, be it technological change or the opening of new markets. Taking all the assumptions behind population, participation and productivity means that over the next 40 years the Australian economy is projected grow at 2.8 per cent per annum, slightly less than the 3.1 per cent per annum we saw over the past 40 years—but it is still a level of growth that would see our prosperity rise significantly.

Let me put this into context. Australia is in the midst of one of the largest economic expansions in the history of our nation. Australia is in its 24th year of continuous economic growth—almost near the record efforts of the Netherlands, which had 26 years of uninterrupted growth until 2008. The IGR projects another 40 years of average economic growth, consistent with the methodology used in previous IGRs. Without doubt, this is a challenge. Sixty-five years of continuous economic growth—unprecedented. But we do not shy from the challenge. We welcome it. We embrace it. To achieve this level of growth going forward, we must consider what changes will deliver that prosperity. The Intergenerational report is a tool to start the conversation. It is an information kit that will equip everybody to have a dialogue based on facts.

This government is focussed on working with the Australian people to build a stronger Australia. This government will continue to invest in the key drivers of economic growth. That is why we recognise the importance of small business and how they employ a significant part of the workforce. This government recognises the importance of families and the opportunities for women to return to work. This government recognises the importance of infrastructure in creating jobs, reducing congestion and improving productivity.

We need to ensure that we can pay for today, and we also need to ensure Australians will be able to afford our nation's future. We are currently living beyond our means. The Australian government is spending over $100 million every day more than it collects in revenue. Australia is borrowing $100 million every day just to pay for this shortfall, just to pay the daily bills. That is not where we want to be and it is not where we can afford to be. Ongoing deficits and rising debt are not sustainable. We need to be better placed to respond to the potential for future economic downturns and pressures on the budget as we live longer. If we made no changes to policies left in place by the former government, the deficit would have been on a path to reach, in today's dollars, $533 billion. Net debt would have been almost $5.6 trillion in today's dollars.

However, the IGR shows that this government has already made considerable progress to repair the budget. With the measures already legislated, the projected budget deficit and net debt levels in 2055 have been halved. Continuing to work at keeping spending under control will ensure we can deliver the services the community needs and expects. It also improves our capacity to respond to the challenges and opportunities outlined in this report. The policies proposed by the government—or alternatives of a similar value—would get us back to living within our means and net debt paid off by 2032. I say emphatically: we are willing to work cooperatively with all to put the budget on a sustainable footing.

We are at a critical juncture in our history. The Intergenerational report is an incredibly important document to start a serious conversation about the challenges and opportunities ahead for Australia. We should welcome the fact we are all living longer. We also need to ensure that we take the steps now to ensure our prosperity for generations to come, and that we leave nobody in Australia behind. We must take responsibility for how we plan for own future and how we leave things for the next generation and those that follow. This is the social compact between the generations. The 2015 IGR shows that we can have a positive and more prosperous future if we start planning for tomorrow today. This is a conversation the nation wants to have and we are ready for it.

I present a copy of the 2015 Intergenerational report—Australia in 2055 and a copy of my ministerial statement.

I ask leave of the House to move a motion to enable the member for McMahon to speak for 12 minutes.

Leave granted.

I move:

That so much of the standing orders be suspended as would prevent Mr Bowen speaking for a period not exceeding 12 minutes.

Question agreed to.

Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

The Intergenerational report is an opportunity for a government to outline a vision for the nation, to talk to the nation about the challenges and opportunities for the long term, to rise above day-to-day politics, to rise above point-scoring and to rise above sledging the previous administrations, but the Treasurer and the government have shown themselves incapable of doing that. The Intergenerational reportis not meant to be a belated, half-hearted attempt to sell an unfair budget. The Intergenerational report is not meant to be an opportunity to sledge previous administrations. The Intergenerational report is meant to be about the future. This Intergenerational report has eight pages on the future and 80 pages on the past. This Intergenerational report has been politicised like no other. The member for North Sydney is the third Treasurer to bring down an Intergenerational report and he is the first to politicise it in such a blatant manner. The Intergenerational report, as the Treasurer himself today said, is a document of the Treasurer. It is not an independent analysis of the Treasury, but a document of the Treasurer. But this Treasurer is the first to so blatantly politicise it.

Even as the government attempts to politicise this document, they have not done so honestly or competently. On 45 occasions this document talks about previous policies. When you look closely at these previous policies, they are the previous policies of the Treasurer. They are the policies as outlined in his mid-year economic statement. They are the policies as outlined in the document which he owns. They are policies like giving $9 billion to the Reserve Bank, an increase in spending by $14 billion. They are his policies; previous government policies. They are the policies that government. As they attempt to rewrite history, they do not even do so competently or honestly. They talk about previous policies. Yes, they are policies they once had—policies never embraced by this side—like giving $9 billion to the Reserve Bank. If we are going to have a conversation about the future, let us do so honestly and let us have a competent and clear exposition of the facts.

There are other ways that this document is fundamentally flawed. I asked the Treasurer yesterday in the House whether the document would reflect his government's policy of restoring the private health insurance rebate in full. Members will recall that the previous Labor government means tested the private health insurance rebate to make it fairer and more sustainable. That was a very important fiscal reform, not a small one. It saved $25 billion over 10 years or $100 billion over 40 years. We did it against the opposition of the Liberal and National parties, because apparently the age of entitlement is not over for all. But it was done.

The now Prime Minister, as Leader of the Opposition, and the then shadow Treasurer promised to restore it. They did not say that they would do it immediately, in fairness. They said they would restore it when they could. That was within the decade, as the budget returned to surplus. The Treasurer today is predicting a return to surplus in 2028 in his own document. Does the Intergenerational report assumed that the private health insurance rebate is restored in full? There is not a word. It is a fundamentally dishonest projection of government policy. Either the Treasurer should walk away from his policy and admit he got it wrong, admit that the private health insurance rebate should be means tested and admit they will never restore it or the document should reflect government policy. It has neither of those things; that is the truth. If the Treasurer and the government are going to engage in a discussion about the future, we are in it. But we will do so honestly and we will do so based on the facts. We will not do so based on false protections, as claimed in this document.

There is another interesting projection in here which honourable members will be extremely interested in. It relates the age pension. This government is changing the indexation of the age pension. This government is saying that CPI is fair. This government says that pensioners should not have their pension linked to their average weekly earnings. It is a fundamentally different approach to this side of the House. When we were in office, we made the indexation fairer. We introduced more ways the pension could be increased, not less. We said that pensioners deserve a fair pension, linked to the pension, the CPI or a basket of goods which reflected what pensioners actually buy.

That is not good enough this government. They said, 'No, no. Pensioners don't deserve that.' They attempted to change the policy. Today, we have an acknowledgement for first time that this is not fair, because the government says that when they return to surplus they project that they will return the pension to being linked to average weekly earnings. So poor people will have to be on the pension for the next 12 years. The leaners—apparently, according to the Treasurer—have to put up with an unfair indexation measure, but apparently into the future that will be changed.

Here we have assumptions and forecasts made not by the Treasury, not by the Department of Finance, not by the Parliamentary Budget Office but by the member for North Sydney. This is his political document. This is his half-hearted and belated attempt to sell what he has been incapable of selling up until now for the next 10 months: his budget. That is why his use the Intergenerational report. It is an abuse of what the Intergenerational report should be used for.

We know that this government has one way of dealing with demographic change. There is demographic change in Australia—of course there is. Governments need to deal with it. They have one way: making you work longer and then giving you less when you eventually are allowed to retire. This Treasurer, in his grace, allows you to retire after you have worked longer than any other worker in the developed world! The Treasurer says to carpenters, bricklayers, policeman, nurses and soldiers, 'I'm going to make you work until you are 70.'

Josh Frydenberg (Kooyong, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

It is the grey army.

Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

He says, 'I am going to put the grey army out there, laying the bricks and laying the carpets when they have worked hard their whole lives.' The member for Kooyong says, 'No, no. You are going to work until you are 70, longer than any other developed country in the world, and then we are going to give you less of the age pension when you retire.' There is a better way than that. You can invest in the future. You can invest in people's own retirement incomes through superannuation.

Mr Frydenberg interjecting—

Mrs Bronwyn Bishop (Speaker) Share this | Link to this | Hansard source

The Assistant Treasurer will desist.

Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

You can build on that great Labor reform of superannuation. You can take the superannuation guarantee from nine per cent to 12 per cent and let people save for their own retirements with the help of the government. You can help low-income earners save for their retirement by giving them a low-income earners superannuation contribution, which is something this government has taken away. You can actually say to older people, 'We will continue to ensure that you are paid superannuation.' That is something the previous Labor government did and the Liberal and National parties voted against it. They are in no position to lecture anybody. At the time, the Liberal and National parties voted against the policy to let a superannuation guarantee compulsory be paid people over 70. It was an outrageous decision by the Liberal and National parties, passed in this House with the support of the then members for Lyons and New England.

Those changes—the increase in the superannuation guarantee and allowing low-income earners the benefit of a contribution from the tax system, which was some support as people under $37,000 save for their retirement—would have added $500 billion to the savings of the Australian people by 2037. More importantly, we know that those measures would have reduced the number of people on the full age pension by half by 2050. That is how you make the age pension more sustainable. You work with people. You assist low-income earners to save for their own retirement. You say to lower income earners—the carpenters, the plumbers, the cleaners—that they actually deserve a tax concession on their superannuation. If it is good enough for high-income earners and millionaires, it is good enough for cleaners and others in this building, and right across the country, to get a bit of assistance in saving for their retirement—but not according to this government, not according to the member for North Sydney, not according to the member for Kooyong, and not according to the Prime Minister. They say, no, the only way is to cut. We are going to make you work longer, and we are going to give you less when you are eventually allowed to retire. Well, there is a better way.

I welcome the fact that the Treasurer, in his remarks a few moments ago, for the first time recognised there are alternatives. You bet there are. There are a heap of alternatives, and you are going to see them. There are better ways of saving for the future. There are better ways of dealing with demographic change. It is not all about making people work harder and longer. It is not all about taking things away from people. It is about helping people save for their own retirement, giving them a dignified retirement and giving them a chance to live in retirement without reliance on the full age pension. It is about helping people to use the superannuation system to build on our strengths, to build on the strength of that great Australian financial system and our great financial services providers, who know how to invest for the future and how to maximise people's retirement incomes. That should be available to every working Australian and not just those who can afford to get financial advice and those who get massive tax concessions from this government. It should be available to those who are able to work hard and save for themselves and provide for themselves—but they get zero support from this government. All they get are lectures about being leaners and not lifters. All they get are lectures about being takers and not makers. All they get told is that they are a drain on the public purse. How dare they expect an age pension. How dare they expect an age pension that actually increases with growth in Australian wages and the Australian economy. How dare they expect the Australian government to look after them. How could they expect such a thing. How could they expect to get any support from this government.

Well, they cannot expect to get any support—not from the member for North Sydney, who is so out of touch with the aspirations of ordinary Australian people, nor from the member for Kooyong, who lectures them and says they do not deserve a tax concession if they are low- and middle-income earners—and who takes it away from them—and whose main focus is providing more tax concessions to people on high incomes and less to people on low incomes. It says it all about the priorities of this government, which has brought down a flawed document in an attempt to sell their own unfair and flawed budget—a flawed sales job that is about to be supplemented by taxpayers' funds on an advertising campaign—a document brought down a month after it should have been, in breach of the law, in breach of the Charter of Budget Honesty Act. The Treasurer of Australia is in breach of a law he is meant to be administering. He says to the Australian people: 'I will enforce the law.' Well, how about you start complying with it. How about you actually start by complying with your own law instead of beating your chest about enforcing the law on others. You can start by complying with it, and you can start with a bit of honesty. We are not seeing any in this document. (Time expired)