JIM CHALMERS MP
MEMBER FOR RANKIN
INTERGENERATIONAL REPORT MUST THINK BIG ON REFORM
The strong and welcome jobs numbers released last week were a tribute to Australians who have overwhelmingly done the right thing by each other to limit the spread of COVID-19.
But just because the recession and its aftermath could have been worse doesn’t mean the recovery couldn’t be better.
The 56,000 jobs lost when JobKeeper was cut should not be lightly dismissed, nor should the 1,729,100 people still looking for a job or for more hours, or millions more whose work is insecure and underpaid.
We need more Australians to share in the spoils of this recovery and the decades to come and that means not just creating opportunities but ensuring they can be grasped.
There are two ways to get this wrong and squander the recovery: by continuing to bungle vaccines and quarantine; and with the deficit of vision which characterised a Budget which spent big but thought small.
That’s why next week’s Intergenerational Report is so important.
The IGR should be all about the long-term thinking necessary to ensure our economy and society is stronger after COVID than before.
How we create a new generation of growth and more opportunities for more Australians in more parts of the country.
It needs to be a serious document, taken seriously by the Morrison Government.
The Intergenerational Report has a chequered history.
The idea was to detail economic and demographic trends over the next 40 years, and to analyse their impacts on Government finances.
The first three were released in 2002; 2007 and 2010. Both sides of politics delivered three quality documents.
But the extreme politicisation in 2015 of the fourth IGR by the Abbott Government was a very disappointing development.
As this paper’s Jacob Greber pointed out, it was a political exercise to try to justify the horror 2014 Budget and to score political points over fictional Labor policies.
It was clear even before COVID-19 that the Government also got some of its projections wrong.
Productivity growth, rather than ramping up to the 30-year average growth rate of 1.5 per cent, had stagnated and continues to stagnate, driving wages growth to historic lows.
Over the 5 years since the last IGR was published, productivity grew by just 0.5 per cent a year on average, and wages growth averaged just 2.1 per cent per year.
The projections for real economic growth were also way off.
Annual growth slowed in the ensuing 5 years to just 2.4 per cent on average each year, and growth in output per person slowed to just 0.8 per cent per year in the 5 years since the report was published.
The last IGR also ignored key challenges like climate change altogether – one of the key intergenerational threats to our economy and Budget.
This month’s IGR has been delayed by a year and we’ve barely heard peep about it. This doesn’t give us confidence that it’s treated as a priority or an opportunity.
We have low expectations for anything other than another partisan exercise designed to justify harsher cuts to Medicare and the NDIS.
Instead this IGR should be an opportunity to improve long-term thinking and could drive a resurgence in growth, job security, wages and broad-based prosperity.
It could and should be a pivot point, to modernise our understanding and our thinking on climate and energy; the care economy; work and family; digitisation; population; our role in the world.
That’s why we need to elevate and refocus the IGR.
It could be released in the middle of each parliamentary term on an agreed consistent template, supplemented by more topical analysis.
It could do a much better job measuring what matters: adding a permanent focus on intergenerational and geographic disadvantage, and economic mobility, alongside traditional economic measures.
Climate change and energy should as a permanent feature as well. And better evaluating which policies work over time – which ones represent true value for money, and which don’t.
For the second time in just over a decade Australia risks overperforming in a crisis and underperforming in the aftermath.
The Productivity Commission has just concluded that this is the slowest decade of economic growth per person and the slowest income growth per person in at least 60 years, and after historically slow wages growth Treasury expects real wages to go backwards.
Without a comprehensive vision for economic reform economic growth, living standards and incomes won’t perform any better over the next 40 years than they have in the last five to ten.
We won’t get that comprehensive vision without a comprehensive Intergenerational Report.
The Government’s Budget delivered generational debt without a generational dividend.
This IGR can’t be another missed opportunity.
This opinion piece was first published in The Australian Financial Review on Monday, 21 June 2021.