Shadow Treasurer Angus Taylor has criticised the latest edition of the Intergenerational Report (IGR) released on Aug. 24, claiming it is simply giving the Labor government permission to spend more.
“This report paints a picture of Labor’s bleak future,” Mr. Taylor told the Australian Broadcasting Corporation.
“People who are really struggling, they’re not thinking about 40 years from now, they’re thinking about 40 days from now.”
“Generally, when Labor opens a discussion about so-called tax reforms, what they’re referring to is an increase in taxes. I don’t believe that is an appropriate policy prescription given the current circumstances.”
Contents of the Report
The report, published annually by the government, provides Australians with a look at the direction of the national economy as well as analysing other factors that may impact its growth.Through extensive modelling, the IGR also showcases economic projections of the government’s budget over the next 40 years, assuming there are no changes in policy.
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In essence, if the same government maintained the same policies, what would life for Australians look like come 2063?
This year’s report explores what the government believes to be the five most significant forces shaping the Australian economy over the next half-century: an ageing population, technological and digital transformation, climate change and a transition towards a net zero economy, rising demand for care and support services, as well as geopolitical risks and fragmentation.
With a particular emphasis placed on climate change, the report presents a link between productivity and global warming, arguing a hotter climate will likely spur an inability for employees to work longer hours as well as geophysically hinder the output of the agricultural sector.
The IGR projects labour-intensive professions, notably tradies, labours and machine operators will be specifically vulnerable to temperature changes.
“Floods, bushfires and other extreme weather events are expected to increase in frequency and severity, causing major disruptions to local economic activity and ultimately hindering overall economic output. From 1960 to 2018, climate disasters reduced annual labour productivity in the year they occurred by about 0.5 percent in advanced economies,” the report reads.
The overall theme of the report is that productivity must urgently improve.
After a decade of record-low interest rates and quantitative easing, inflation must be eased by the production of goods and services. Essentially, we have created too much demand with too little supply.
The government hopes to combat this issue with a number of reforms to incentivise competition, improve labour productivity with the assistance of emerging technologies, and increase investment in industries likely to provide more revenue and employment opportunities.
Greens Leader’s Criticisms
The report has spurred commentary from across the political spectrum.In unison with Minister Taylor’s sentiments, the current federal leader of the Greens Adam Bandt believes the IGR is indicative of a government whose priorities need to be shifted to more urgent, pressing matters, particularly housing affordability.
“Under Labor’s future, people still won’t be able to afford a roof over their head because there is nothing Labor is offering to tackle the housing crisis that Australia is facing,” he said at a media conference on Aug. 24.
“Labor has nothing to offer people who are locked out of the housing market and who face unlimited rent rises under Labor’s policy.
Mr. Bandt was also confident that taxing large companies would guarantee public expenditure and reduce inflation.
“Labor can’t complain about pressures on the budget and look to reign in spending on the age pension and the NDIS at the same time there is a trillion dollars in savings if Labor makes big corporations pay their fair share.”
Treasurer Eulogises Report
Labor Treasurer Jim Chalmers has defended the IGR saying it has hit the nail on the head in terms of appropriate economic reforms.“What you have seen and what you will see in the pages of the report is a country where people will live longer and healthier lives, where real incomes are 50 percent higher and with the economy more than double today’s size,” Treasurer Chalmers said in a recent address to the National Press Club.
“The outlook is better when compared to 2021, putting us in a stronger position to sustain essential services. Our economy will expand substantially as I’ve just outlined but our productivity challenge, which we’ve reflected in the adoption of a more realistic productivity assumption, means that overall real GDP projections are down.”
Indeed, the emphasis the government is placing on boosting productivity does align with the general economic consensus that Western economies must, in curtailing inflation, address supply shortfalls through a more industrious labour force.
The report also suggests that the Labor government has a focus on Australia’s small business community, as the IGR’s release comes after the announcement of an inquiry into monopolies.
The inquiry is part of overarching governmental efforts to help spur economic growth by promoting competition in numerous sectors and clamping down on anti-competitive behaviour.
