Pension age would rise under business council's austerity plan

 

So much for this ageing population myth
 

This article (below)  contains a handy statement by Tim Colebatch that

The Business Council of Australia is "the lobby group for the biggest 100 companies".

The article shows them on another beat-up about aging population, and pushing to have Treasury bring out another report on the costs of aging that will be even more their way than the Inter-generational Report.

Many people in business have only ever heard one side of this issue, and genuinely believe that we are headed for a huge economic problem whenthe tax take supposedly will fall just as health care and aged care costs are rising. However, the economist Dr Richard Denniss, of the Australia Institute, points out that this is the exact opposite of Treasury’s projections which predict the tax rate will soar despite the ageing of the population.

At the Informa Australia's Population 2050 conference in Melbourne in September 2011,   Denniss, was scathing about such mis-readings of the Inter-generational Report: “The latest Inter-generational Report for Australia says by 2050 we will be so rich that at current tax rates government will be swimming in money….The scare stuff is put in the part called Costs of Ageing. The admission that these costs are in fact small is to be found tucked away in a section rivetingly titled Methodological Issues…So, you’ve been tricked. There’s plenty of money if we just leave tax rates where they are – or even stop lowering them so often.” *

Denniss’s remarks are a timely reminder that treasurers are political animals, and often spin the facts to please business communities whose approval they seek.

Of course, Treasury's projections are based on the belief that there are no real limits to growth, and that Australia's economic growth and even its per capita GDP will go and up forever.

Even so, that is what the last Inter-generational Report's authors believed. As Denniss suggests, the fact that they still managed to turn the Report into a scare about aging, shows how much this was a political rather than a rational economic document.

It is of course true that old age pensions are an expense, and that the pension age should  be lifted to reduce the proportion of people's lives that they spend on this pension.  However we need to remember that, with Australian women averaging close to 2 children each, we are headed for roughly even-sided generations -- which we should learn to consider a normal situation. True, there will be more people too old to work but there will be fewer too young, and about the same proportion of the population will be in their working years.  Besides, we have, according to Roy Morgan polls, never had so many Australians out of work as now. (Adding more people in their working years just means more people dependent on the public purse, if there's no work for them.) In general the young cost more than the old, and are far more dependent (even needing full time supervision, or 9 to 4 schooling) than the old. 

So the implied thrust of this article, that we need to stop our population aging by maintaining our present very high immigration, serves the Business Council's common agenda of getting cheap labour.  (In reality though, as the Productivity Commission has pointed out, immigration has little effect on aging.)

Overall I would see this as a self-serving, rather than a wise document from the Business Council.