Treasury’s IGR “based on one big lie”

By William Bourke, President of the Sustainable Australia Party

On 28 June, the fifth ‘Intergenerational Report’ (IGR) was finally released.

After a long delay, Federal Treasurer Josh Frydenberg and the Treasury lay it all out.

The problem is the IGR is based on one big lie.

Treasurer Josh Frydenberg outlines how 30 years ago, for each person aged over 65, there were 6.6 people of “working age”. Today, there are four working age people and by 2060-61, there will only be 2.7 for each person aged over 65. In other words, the economy can’t afford an ageing population.

You’d think workforce participation had gone down in the last 30 years, with worse to come. It hasn’t. The opposite has happened.

But isn’t living longer a good thing? And what is “working age” anyway?

According to the IGR’s central economic assumption, you are apparently working (and paying taxes) if you are 15-64 years of age. Conversely, you are not working (or paying taxes) if you are 65 and above.

The IGR authors at the Federal Treasury have clearly not left the 20th Century.

What matters is what portion of the population is actually working, not what portion is 65 and above.

This tricky and obsolete working age assumption in the IGR, upon which the whole report hangs, will be endlessly spun by politicians, activists and the media in coming days, weeks and months. Yet as any economics 101 student, often 19 years old and studying full-time for the next few years, should know, there is an inconvenient truth here: age does not determine workforce participation.

Workforce participation is more so determined both by economic opportunity and reducing discrimination in the workforce. Over recent decades, opportunity for, and discrimination against, women have both significantly improved, allowing much greater workforce participation for women of all ages.

Workforce ageism is another area we can greatly improve on, along with employers taking up their responsibility to increase training and education for Australian youth.

COVID-19 and the shutting of Australia’s borders has inadvertently helped in this regard, with less access to cheap and exploitable migrant labour. We’ve seen much-improved outcomes, with the Australian Bureau of Statistics (ABS) revealing that youth unemployment just hit a 12-year low.

I’ve written before that:

‘In Australia, an increasing number of people (voluntarily) work past 65, offsetting an increase in the average age and stabilising our workforce participation ratio.’

But “stabilising workforce participation” now looks like a pessimistic estimate. The COVID-19 pandemic has actually helped to drive Australia’s overall workforce participation rate to an all-time high of 66%. It was around 61% in 1980 and has been steadily growing since, despite a gradually ageing population that the IGR claims brings workforce participation down.

This again proves the point that ageing does not determine or lower overall workforce participation. Societies adjust. Australia’s healthy and many welcome the gradual ageing process, which has been accompanied by higher workforce participation.

There is still a lot of slack in the market with many people across all ages unemployed and underemployed. Recent estimates put this number at over 2.5 million Australians (19% of the workforce).

What’s the real agenda and why is the Federal Treasury’s IGR ignoring this empirical evidence?

Mr Frydenberg will say the fiscal and economic challenges associated with a smaller and older population must be met with a ‘well-targeted, skills-focused migration program’.

This is despite it being scientifically proven that migrant Australians age at exactly the same rate as everyone else and that immigration has no material or long-term impact on ageing.

The IGR also gnashes its teeth over lower fertility, but totally ignores one of the key reasons – skyrocketing housing prices driving up Australia’s cost of living – and then doubles down on one of the key drivers of this housing affordability crisis, being government-engineered rapid population growth.

Talk about a self-defeating policy agenda.

The IGR was cooked up as an idea to napalm society into accepting something it is sceptical about and has never been properly consulted on: high immigration-fed population growth.

Rapid population growth – as opposed to slow and managed population growth – has many economic and environmental costs and relatively few benefits, even under the pessimistic workforce participation assumptions in the IGR.

For example, even under the IGR assumptions:

… ‘per capita real GDP growth will slow only slightly, the IGR will say, from 1.6 per cent over the past 40 years, to 1.5 per cent.’

Did anyone notice the recent Reserve Bank statement that the pause in Australia’s migration program will lead to higher per capita living standards for Australians?

There are other fallacies in the IGR, but the central assumption of lower workforce participation is the key issue to focus on. Everything else in the report falls down like a house of cards once this big lie is exposed.

The IGR is a key weapon used by major party politicians to uphold a system of governance and economics that is corrupt to the core, designed to benefit the few at the expense of the many.

All of this demonstrates that the IGR is yet another case of lies and statistics.

It is clear that the IGR engineers its conclusions to support a pre-conceived narrative. It also ignores that personal income taxes are only part of the tax economy and that the Reserve Bank of Australia has an unlimited amount of money to print to pay for any so-called budget deficit, including COVID support and the aged pension system.

A long-lived society with low population growth is clearly the best outcome for the economy, environment and society.

Australia should hold a stand-alone national “population plebiscite”. It would give all Australians the choice between the current government target of around 40 million by 2050 and a much more manageable 30 million.

The latter can be achieved with one simple policy change: lower annual permanent immigration program from the recent level of around 200,000 back to the average annual permanent intake level during the 20th Century of around 70,000.

Lower immigration is not “anti-immigration” as some will assert. Lower immigration is the most pro-immigration thing we can do. It will help to rebuild broad public confidence in the immigration system for the long term. Critically, a manageable rate of immigration will also help to prevent voters from being driven into the arms of political parties with extreme immigration policies.

This article was first published at Independent Australia.

Comments

  1. So true. Also the income support system has totally changed since 1980. Widows, in particular, were shoved straight onto long-term income support any time from 40 on. Anyone who was long-term unemployed was encouraged to apply for DSP. Single mothers were under no pressure to work while they had kids at home. Long-term income support was treated as a reasonable solution for lots of groups.

  2. Who would trust a government institution to be an honest actor when it comes to this anyway? The fox is guarding the henhouse.

  3. Sure, the P-for-participation assumption is a big lie. But so is the P-for-productivity assumption, where Treasury claims 1.5% pa, but they’ll be lucky to get 1%. And so is the P-for-population assumption, where Treasury claims that 235,000 net migration is normal government policy, when it is anything but. In blunt terms, Treasury is at war with the people.

  4. These Inter Generational Reports continue to be based on observable & easily evidenced lies, to try & construct the need for mass immigration.

    The simple facts are not only a case for zero migration but an active round up & deportation of the last decades mistakes in an unwanted ‘overshoot’ 4 million foreign nationals & migrant guestworkers currently in Australia.

    Facts.

    🔻Australia’s population pyramid is actually in pretty good shape compared to every western developed country.
    🔻Australian projected pension & health care outlays are low to moderate compared to most of the OEDC.

    🔻There was no case to raise the retirement age or compulsory superannuation contributions, in fact based on life journey, work patterns & gender life expectancy – Australia could easily afford to lower it to 55 years for men & 60 for woman.

    🔻The impact of Australia immigration in the last decade has been horrendous.

    Nothing good – except perhaps in lessons learnt and to now fix up the migrant intake mistakes & not repeat them.
    -/-
    Australian has taken in over 1.9 million foreign nationals on PR, a huge burden and ticking time bomb in sucking up our Centrelink & Medicare and then pensions.
    A PR is foreign national non Australian, almost all are third world unskilled, on low to zero declared incomes who have never made any taxation or social contribution to Australia. A high ratio are aged or very aged, non contributing in taxation & a major healthcare & welfare burden on Australian taxpayers.

    The spawn of the migrant PR similarly show very high welfare dependency, low vocational & income attainment, very high unemployment, and are 2 to 3 times the ratio of Australian born citizens in Centrelink or other welfare dependency.
    An imported & then locally spawned ‘inter-generational welfare burden’ to Australians.

    As an aside, but relevant.
    Does anyone wonder why there is a such a high ‘returned traveller ratio of PR’ in arrivals since the first international border restrictions in March 2020?

    Of the 324,000 ‘arrivals’ in Australia since March 2020 over half or 163,000 have been foreign national PR.

    Labelled as ‘returning Australians’ but they are not.

    They are foreign nationals on a foreign passport with an Australian PR status. Primarily Chinese or Indian nationals on sole Chinese/ Indian passports, but also South East & North Asian, Middle Eastern, African etc.

    Why? Because these foreign national PR were living overseas whilst on Australian welfare, or left Australia as part of their normal pattern to live in their home country on Australia welfare, but were disrupted in their usual pattern of flying back into Australia to ‘check in’ to continue receiving their welfare benefits.

    Surely priority should be given to Australian born citizens in being able to return. A PR is not an Australian, they are foreign citizen on a foreign passport and a responsibility of their home country, not Australia.
    They are an economic, social & now a bio security risk to Australia.
    Indian nationals – PR who have flooding in to reclaim their Centrelink welfare & overloaded or sneaked through quarantine & are now infecting Australian with the covid-19 delta Indian strain…
    When is the mainstream media going to start reporting the truth on this?

    The TR / SCV.
    And then we have the intake of over 2.3 million foreign nationals as TR (1.75 million currently) & SCV (665,000) of which 360,000 are third world unskilled migrants sneaking into Australia via the NZ SCV loophole).

    That’s 2.1 million foreign nationals TR & SCV of third world origin, unskilled – who have entered Australia on a pretext visa to live and work illegally.

    The net combined total is 4.0 million.
    Four million third world migrant non Australian foreign nationals unskilled allowed into Australia to either bludge off Australia taxpayer, or live & work illegally.

    15% of our onshore population as third world unskilled migrant foreign nationals. More migrant guestworkers than Gaddafi at his peak. And his ones paid tax & had to leave when not wanted.

    The next effect these 4.0 million non Australian third world migrant guestworkers has been to:

    🔹Lower our gdp per Capita by 6.8% compared to what it would have been (gdp / less people on higher income)

    🔹Lower our wages (and thus taxation) for all by some by 7.3% (relative OEDC wages growth v Australia)

    🔹Overload our public services.

    🔹Our Welfare & Medicare, our hospitals & our prisons with this migrant intake overly represented.

    🔹Create higher living costs in housing in both purchase or rent.

    🔹Create massive housing contention resulting in over 116,000 Australian permanent homeless and another 340,000 Australians seeking affordable housing.

    🔹90% of the third world migrant guestworker foreign national are concentrated in Sydney or Melbourne (ABS) resulting in huge swathes of both cities being converted into exact replica slums of Guangzhou, Mumbai & Cairo.

    🔹The migrant intake has created massive pressures on public infrastructure in transport, roads, power, water and other services – which they don’t pay for as they work & live illegally cash in hand.

    🔹The non Australian foreign national PR & TR migrant intake have increased environmental impact & emissions.
    The 4.0 million foreign nationals in Australia emissions are 60,000,000 tonnes of Co2 (Aust average is 15 tonnes per person), yet it they were repatriated back to India (.2 tonnes op) or China (5 tonnes pp) it would be a fraction of that.
    By sending them back we would achieve both Australia and global emissions reductions!

    🔹The third world migrant influx has destroyed our Australian education affordability & quality as the Education sector prostituted itself as a third world migrant guestworker visa alibi.

    And the 4.0 million non Australian third world foreign as the vast numbers are neither productive to Australia society or contributing to taxation outlays (as they live & work illegally, cash in hand, no tax).

    -/-

    So I make the case for a ‘smaller Australia’, not a bigger Australia.

    Including the active shedding / forceable repatriation of at least 2 million of the third world migrant guestworkers and vetting and repatriation back of up to 1 million or more of the foreign national PR who should never have been given Australian Centrelink or Medicare benefits in the first place. (This should only be for a full citizen and after 10 years of proven taxation & social contribution & assimilation)

    👉🏾And that creates a smaller Australia.
    An Australia that has higher incomes, higher employment, better housing, better health services, a reduced welfare and health care dependency & an improved standard of living & quality of life.

    Where our young people can access & afford education, earn a decent wage, pay a reasonable rent, buy a house, raise a family.. retire at at reasonable age if they wish and live off a reasonable pension as an entitlement from their taxation and social contribution.

    • Absolute BeachMEMBER

      You are without doubt the most rational and clear thinker on MB. If the LNP were asked to refute those points Josh would have zero of substance to say. Thanks Mike. With your permission I will C&P that on Monday to my local MP.

      • Sure – cut & paste / copy to the world.
        It’s all true.
        Happily pay for a full page of the Australian if that’s what’s needed for the media to present the real facts to Australians & force our politicians to act to the people’s will.
        I believe the majority of Australians want only a small intake of high skill fully assimilating productive migrants.

        And a majority of Australians would support an very aggressive vetting & then PR or TR Visa cancellation & deportation of many of the 1.9 million PR & most of the 2 million third world TR migrant guestworkers…
        … Who should have never been allowed into Australia in the first place.

  5. PalimpsestMEMBER

    One other point to make – the average immigrant age is about 10 years higher than the average Australian age. The immigration ponzi has been ageing the population.

  6. ” Reserve Bank of Australia has an unlimited amount of money to print…” It hasn’t, otherwise all good.
    In 2060, all workers will have 40 years of super contribution and 2.7 working people should be sufficient.

  7. MathiasMEMBER

    I think… globally… Currencies are going to fall into Negative Interest Rates.

    When a Currency goes into Negative Interest Rate Territory, Banks will begin charging you money to keep your money in the bank. That’ll start a cascade of people withdrawing there money out of bank accounts. At a certain point, ( -2%? -5%? ), Currencys like the Australian Dollar will be declared dead.

    People will have money. Currencys will be dead. What do we do? Crypto wont survive. Gold and Silver may be an option… but I think ultimately, in a verdict of war, it’ll come down to Communism vs Capitalism… and it’ll be a fight for the USD.

    I believe US is going to win the war ( China vs US ).

    As has been pointed out, China has made enemys of the world and the first wrong move that happens, the world will Sanction China so hard that there economy will be in freefall overnight. If we do have a world war 3, it’ll be short lived and half the world will sanction china back to the stone age.

    I believe at some point, collapsing interest rates will make most currencys redundant ( Aussie Dollar is dead ). EUR is dead. GBP is dead. AUD is dead. CAD is dead. Most currencys will end up with -5% interest rates and at some point, people will abandon the currencys for just about anything that holds value. There will be so many disincentives to hold Aussie Dollars in the future, that people will just abandon it.

    US will fight for CAPITALism and China will fight for COMMUNism. US will win and they they will want ‘CAPITALism’ and we will want a store of money, value in the new society.

    I believe, the USD… is about to become the Global Currency of the World and all other Fiat currencys are about to die.

    Gold and Silver will always be there as a store of value but we cant buy groceries with gold bars. We will need Currency.

    With the Aussie Dollar dead at -5% interest rates, I can see the world shifting to the USD as all other currencies become dead.

  8. MathiasMEMBER

    Economics lives in the moment.

    The problem Im seeing, is there’s been 20 years of Intergenerational Damage that has already happened with people socially, that to undo that damage is going to take a bloody miracle. Economics says, ” A human labor force product who’s just turned 60 can get a degree, start a career and save for a 30 year house “.

    I think the Labor Force has been destroyed so badly, poorly educated, poorly utilised, business sectors in tatters, house prices jacked up on everyone ( destroying peoples lives ) that this damage is more then just a statistic of Participation Rates and Unemployment, that the Mental Health and Social Disenfranchisement, and abuse of citizens in society is going to come back and have Economic ramifications.

    I find it laughable that there are people who think, ” We will just get over that and everything will be totally fine “. I do not agree and I based upon what I’ve seen in society, I think there is a lot of future damage that is going to come out in society which has not yet been uncovered.

    I dont think the solutions are going to be simple solutions. We’ve destroyed peoples lives and now we are saying, ” Oh but the economics says this… “. I dont believe it will be that simple.

    There is a lot of commentary on the Aging Crisis. As far as Im concerned, it begins 2018 to 2038. Leith has said, ” As people die, the debt burdens fall and the passing on of inheritence rebalances things “. Yeah, maybe.

    I just dont know. I think there is more damage then realised on the surface and I while I accept that we have all these fancy solutions to fancy problems, I just dont think its as black and white as made out to be.

    One thing I do know, is most 50 year olds are where most 20 year olds should be. We’ve been deposed by almost 20-30 years of society. If we dont have an emergency solution from all the housing crisis we created thats made everyone homeless and destitute for the past 20 years, then I cant imagine societys going to work well.

    I try and live with an open mind but to be honest, I dont see a lot of this happening. 2018 to 2038. Its ONLY 2021 and we are on the cusp of an economic collapse. I do not believe we will last another 17 years. I cant see that happening. Australias dead and we will have -5% interest rates before we know it.

    Interest rates:
    https://gyazo.com/f0af79c9adb8dd13504342672d475ee0?token=0315100a320b24b9c957f1e607cc1750

    I think at some point, we are going to need a Government in an Emergency Situation to keep people alive. In the future nightmare which I see, many people are going to die and there are going to be a large number of deaths.

    Bonds have been collapsing for a number of years ( even before Covid arrived on the scene ).

    AND… in all the above, I havent even begun to talk about the damage Covid will bring to our future.

    As far as Im concerned, AUD is dead. USD is new global currency.

  9. MathiasMEMBER

    Why… will people keep Australian Dollars anymore… at -5% interest rates… when they can just as easily switch to the USD? Why would you keep Australian Dollars in an Australian Bank Account at -5% interest rates when your being charged money just to keep it there?

    Business’s in Australia will be forced to adapt to accept USD currency or customers will shop elsewhere. Either they accept USD currency or people will shop Online ( ebay ). The customer is always right.

    I firmly believe, that the United States will fight blue murder for a Capitalist Future. They will fight so we have a system of money because the only other alternative to ‘Money’ is Communism and USD wont accept that.

    If the US Dollar dies, then they’ll replace it with another currency to ensure the future of Capitalism. If they dont, then we will be moving back to the Gold Standard.

    Hint: Open up a Perth Mint account in USD / Gold / Silver . You can keep your money in USD and/or shift it to Gold/Silver at the push of a button. You can have the best of both worlds. You can hedge between USD and Gold/Silver anytime.

    There is virtually no reason to keep your money in Australian Dollars. As far as Im concerned, the Australian Dollar is a Dead Man Walking… and its only a matter of time before the AUDUSD and Australian Interest Rates collapse to nothing.

    Im starting to think there is a plan for a ‘New World Order’ which has been forced upon by China. US has no choice but to react while its being attacked by a Communist Nation.

    I believe the plan is to create a USD Global Currency, whether it means world war or not ( and it probably will ).

    • I had a look at the Perth Mint digital gold and silver products. When you buy an ounce of Gold you are paying 1% extra for a certificate and when selling it I think is the spot price. So you need to factor in that 1% so with gold not really going anywhere but down in the past 1yr, you need to at least make 2% so you can sell and make 1%, which is way more than the banks are offering to be honest.