- The Federal Opposition has accused the Coalition of presenting a narrow view of Australia’s long-term economic future in the latest Intergenerational Report.
- Shadow Treasurer Jim Chalmers today said current plans to boost Australia’s productivity are sorely lacking.
- Industry organisations and research advocacy groups have called for further investment to drive innovation and hopefully lift productivity levels.
- Visit Business Insider Australia’s homepage for more stories.
The latest Intergenerational Report may spell out the next forty years of Australia’s economic conditions, but searing opinions about the five-yearly paper have already arrived.
The Federal Opposition has accused the Coalition of lacking vision for the long-term future of Australia’s economy in the latest Intergenerational Report, as peak bodies for the business and research sectors call for major investments in technology and innovation.
The fifth Intergenerational Report, released Monday, suggests trends observed before the COVID-19 pandemic, combined with the impact of the crisis itself, will see Australia’s economy grow at a slower rate over the next forty years than the forty years just passed.
The core assumptions are that Australia’s population will age due to improved life expectancy, lower fertility, and a pandemic-induced downturn in migration. This will drive up spending in health care and aged care, with real government spending per individual expected to rise from $22,420 in 2020-2021 to $38,680 by 2060-61.
At the same time, an ageing population will see the participation rate fall from its current record-high levels, making Australia’s tax base smaller by comparison. Those who do work will be expected to contribute more, too, with the report pinning Australia’s hopes on the productivity rate climbing from 1.2% per year to 1.5% per year over the next three decades.
All told, the report states the real GDP is “projected to grow at 2.6 per cent per year over the next 40 years, compared with 3.0 per cent over the past 40 years.”
Despite Australia’s remarkable economic recovery from 2020’s COVID-19 shutdowns, the new figures are “sobering,” Treasurer Josh Frydenberg told the Centre of Economic Development of Australia on Monday.
Shadow Treasurer Jim Chalmers lambasted his parliamentary opponent after the report’s release, claiming the figures suggest the Coalition “threw in the towel” on improving Australia’s economic future.
“He said today that future growth will depend heavily on productivity growth, and we agree with that,” Chalmers told reporters in Brisbane. “But assuming that productivity will come roaring back is different to actually having a plan for it.
“They haven’t hit their productivity projections in the past and there’s nothing that’s been said today or in the document today that gives us any confidence that they will hit these productivity projections into the future.”
The effects of the COVID-19 pandemic notwithstanding, Chalmers said Australia’s economy was $158 billion worse off in March 2021 than projected in the 2015 Intergenerational Report, which was also penned while the Coalition was in power.
The policy interventions mentioned in the most recent report focus on gradually boosting migration to make up for Australia’s falling fertility rate. But productivity gains, where possible, could be found in the digitalisation of Australia’s workforce and technological advancement.
This focus has been welcomed by the Australian Industry (Ai) Group, whose CEO Innes Willox today said the “keys to lifting our productivity performance are working and managing smarter.”
The Commonwealth could seek other methods of wringing productivity from the workforce through “greater adaptability of workplace practices and more flexible industrial relations,” Willox added.
The opportunities posed by the transition to a leaner, greener economy were recognised by Chalmers, the Ai Group, and advocacy body Science & Technology Australia, whose CEO Misha Schubert proposed further investment in the STEM sector.
“The clear message from this report is that Australia needs to level up its investments in future income-generating R&D and research translation to tackle the challenges ahead,” Schubert said. “Science and technology are the answer to every one of them.”
Although the report was only made public hours ago, opinions on how to rectify Australia’s lagging productivity have flooded the public sphere. With any luck, it won’t take the full forty years for policymakers to put the best ideas into practice.