The ageing population is cited by the Abbott government as the driver of many policy changes, including health cuts and tax reform.
But focus groups conducted across the country by the Ipsos Mind and Mood survey have a clear message for legislators. Voters understand that demographic change requires policy change, but politicians should proceed with extreme caution.
The survey “Our Ageing Population” found Australians are very worried about the issue and deeply concerned that governments haven’t got policy right.
“They are concerned about the broad-reaching implications for the nation’s housing, employment and healthcare sectors … Perceptions that the federal government is not introducing policies which will address these perceived problems only serves to heighten anxiety about Australia’s future in the face of this important demographic shift,” the survey concludes.
Most recently treasurer Joe Hockey raised the possibility of humans living to 150 as he foreshadowed a “deep conversation with the Australian people” about ageing after the government releases the latest intergenerational report. And the ageing population is also cited as a reason the government needs to cut spending on healthcare.
“The idea that health has to be cut to support the ageing population frightens people because they think the system is under immense pressure already and they can’t see how more can be taken away, and in regional Australia they feel especially under-serviced,” said Dorothy Dudley, director of the Mind and Mood report.
And while some respondents were prepared to accept the Abbott government’s $7 Medicare copayment (the policy that was on the table at the time of the surveys) they were suspicious that it would lead to even higher payments and a “US-style system” where healthcare became unaffordable.
The report includes quotes from focus group participants on the subject.
- “I don’t personally have a problem with the $7 co-payment, I’m happy for my taxes to go towards healthcare even if I’m not sick, it’s certainly better than a lot of other things.”
- “We have one of the best systems in the world. If there’s no money, then put up the levy for the majority but don’t slug pensioners with a co-payment. It’s not just the visit to the doctor. It’s pathology, then their medication. It really adds up. The vast majority of people don’t abuse it, but people get sick all the time. If you discourage people from going to the doctor they’ll get chronically sick and it will cost more.
- “They won’t just stop at $7 it’ll just keep going up, it gets to become like the US where you could be bleeding out of your head and they refuse to see you. But that’s where we’re headed. We’re not caring as much.”
Respondents were equally anxious about the plan to raise the pension eligibility age to 70 – a policy that applies to those born after 1965 – and generally worried at the prospect that the pension would become less generous but that they would be unable to continue to work.
“The Coalition government’s plans to increase the age pension eligibility age to 70 by 2035 created much discussion,” the report said. “The fact that the age pension is so strongly linked with the concept of retirement was evidenced by many participants confusing the ‘pension eligibility age’ with a ‘retirement age’, although an official retirement age does not exist in Australia.”
It recorded comments from respondents like this:
- “We’re up in arms about the retirement age.”
- “The goal posts are constantly moving.”
- “Raising the retirement age is just weird. It would suck if you got to a point where you can’t keep going and it’s like ‘you have to work another five years’.”
- “The retirement age thing, that must depend on your occupation.”
- “Tony [Abbott] needs to come out here [to regional NSW] and see what it feels like to pick a tonne of apples every day. What your joints feel like at the end of the day. See if thinks he could do it till he’s 70.”
- “The 70 age limit is problematic. Not everyone can do that, not if they have a really physical job. It’s got to be flexible. If you’re a tiler or a bricklayer, your body can’t just keep doing that. You’re lucky if you last to 65.”
The government has ruled out unexpected changes to superannuation this term, but will include superannuation tax breaks in its “root and branch” review of the taxation system,
But according to the report there is “also a deal of anxiety about gaining access to superannuation with a perception that the superannuation goalposts were continually changing”.
It found that “across the board, fingers were pointing at the government who many participants felt had not really fully addressed the challenges they foresaw”.
- “Government needs to be creative, not so tunnel-visioned. They’ve got to think. What if that was my mum, my dad? What would they need?”
- “What measures are our leaders putting in today to help us to make sure it doesn’t happen? I’m not feeling very comfortable with anything really, are you?”
- “There used to be a difference between Labor and Liberal and now they’re the same. I’m also cynical about everything in our society. It’s all driven by the bottom line. Acts of goodwill, not for money, are pretty rare.”
Source: The Guardian
The new year has kicked off on a sour note for the economy with the unemployment rate jumping to 6.4%, the highest in 12 years.
For the past decade, Australia got used to having the unemployment rate around 5%, plus or minus a percentage point, depending on the nature of the positive and negative shocks that hit the economy and the policy response to those shocks.
The gurus at the Reserve Bank of Australia and treasury expect the unemployment rate to rise in the near terms and stay above 6% for several more years, even though interest rates are at record lows and the Australian dollar has fallen by 30% over the past three years.
The causes of the recent spike in the unemployment rate must be understood if it is to ever fall back to 5% or less.
In very broad terms, there are two important determinants of the unemployment rate: the pace of economic growth and wages. There are other drivers including education, skills, demographics, social welfare, but these are more medium-term issues that have probably not been significant factors behind the recent bad news on unemployment.
It is difficult to make a case that it is wages or labour market inflexibility that is behind the recent jump in unemployment. Wages growth has slowed markedly, to levels not seen for at least 40 years. The labour market, through these miserably low levels of wages growth, is adjusting to changing circumstances. In time, these flat or falling real wages will mean demand for labour will be higher than if wages growth was stronger. What is more, unit labour costs are actually falling, which is evidence that employers are not finding wages costs to be a major factor when it comes to hiring new staff.
The problem for unemployment is quite obviously the pace of economic growth. There is simply not enough economic activity in the economy to stop a significant part of the increase in population growth going straight into unemployment rather than being taken up in employment.
Given the mix of population growth, productivity and the composition of the Australian economy, annual real GDP growth needs to be maintained at around 3.25% for there to be enough jobs created to keep the unemployment rate steady. This is what many refer to as the long-run trend growth rate for Australia.
When the December quarter 2014 national accounts are released in early March, they will confirm that real GDP growth has been below 3.25% for nine consecutive quarters (over two years) and in that time has averaged just 2.4%. In other words, for those two years, the economy has fallen around 0.75% short a year of the growth rate needed to keep the unemployment rate steady, let alone push it lower. It is no surprise given this weak economic performance that the unemployment rate has risen by more than 1 percentage point.
The solution, it should be obvious, is to have in place policies that will fire up the economy so that GDP growth can be at least 3.5% for a couple of years so that the unemployment rate can fall back.
The RBA is doing its bit, cutting interest rates to record lows, but is mindful of having monetary policy inflating unwelcome house price gains.
With the budget three months away and the labour market weakness now entrenched, the case for job-creating fiscal stimulus should be considered. The treasurer, Joe Hockey, is speaking of bringing forward expenditure on infrastructure projects, which history shows is cumbersome and slow to deliver the economic growth needed to make a meaning impact on employment. There is also discussion about tax cuts for small business which, again, are long-run issues and unlikely to be implemented before July, a point when the unemployment rate is likely to be 6.75%.
Of course, if the Abbott government were to consider any other stimulus measures, it would be breaking more promises as, by definition, stimulus measures mean a larger budget deficit and higher levels of government debt. The Coalition was swept to power in 2013 on a promise to return the budget to surplus and reduce government debt.
The issue for the 800,000 people currently unemployed should be more about the policy response and not politics. If politics win out and the policy settings err on the side of moving the budget towards surplus and cutting government debt, it is likely that by the time of the next election in the second half of next year, there will be more than 900,000 unemployed. This is not the sort of legacy that in the heat of an election campaign would be easy to defend.
Stephen Koukoulas is a research fellow at Per Capita, a progressive thinktank.
Source: The Guardian