Australia’s population is ageing but reintroducing a baby bonus and investing in renewables could go some way towards mitigating the impacts, Treasurer Josh Frydenberg has said.
Frydenberg released the findings of the 2021 Intergenerational Report (IGR) on Monday, describing it as “sobering” reading.
“The IGR comes out every five years, it's always provided pretty sobering news, both to Coalition and to Labor governments because it does show the impact of an ageing population,” Frydneberg told ABC News Breakfast.
Frydenberg said this is partly due to the COVID-19 pandemic which has seen borders close, which has caused our population to plummet.
“The closed borders has seen our population growth at the lowest level in 100 years so these are some of the challenges that we face, but it underlines the importance of economic reform, and greater productivity because they are key to our nation's prosperity,” he said.
Besides needing to reduce the average age in Australia, there are also a number of measures that can be put into place to reduce the impacts of the ageing population.
Some of the biggest impacts of an ageing population are restrictions to the labour force and a drop in productivity. But the report also suggests Australia’s economic future also depends on the likely physical and social effects of climate change and the impacts of mitigation efforts.
Based on the issues mentioned in the report here are four things we need to do to save the Aussie economy.
Bring back the baby bonus
In 2002, then Treasurer Peter Costello introduced the baby bonus and encouraged Aussies to “have one for mum, one for dad and one for the country”.
Frydenberg didn’t reject the concept of bringing the bonus back.
“We do need to think about how we're going to boost our fertility rates,” Frydenberg said.
The 2002 baby bonus was a federal tax rebate scheme for first time mothers and included a lump sum payment directly to the mother, starting at $4,000 per child and rising to $5,000 from 2008. The scheme came to an end after 13 years on 1 March 2014.
The scheme worked well to encourage Aussies to have more babies. With the current predicament in the IGR, having our own babies will help boost the population as well and bring down the average age.
Encourage education and training
With the changing migration situation brought on by the closed borders and the ageing population, Australia is facing a labor shortage.
Australian job advertisements have reached levels not seen in more than a decade according to recent figures released from the National Skills Commission.
So, one solution to this problem is the Government bringing in and funding more educational and training courses like the JobMaker scheme.
Helping young Aussies get properly skilled in industries that are facing the labour shortage will help boost the country’s productivity in years to come.
“Governments can support a culture of lifelong learning by ensuring the education and training system is responsive to change and provides appropriate opportunities for reskilling,” the report said.
“Policies such as the new National Skills Agreement currently being negotiated can improve the operation and efficiency of training, through ensuring individuals have opportunities to upskill and reskill.”
Invest in renewables
Australia needs to pick up its game when it comes to fighting climate change, with the IGR report saying the country’s economic future will likely be impacted by the physical and social effects of climate change.
“The transition to lower carbon emissions globally will mean that some sectors will need to adjust to falling demand for some exports, while new opportunities will be created in other sectors,” the report said.
“The effects will depend on domestic and global actions, as well as the pace, extent and impacts of climate change.”
The earlier Australia switches to renewables, retraining mine workers into positions within the renewable sector, the safer the Aussie economy will be in the face of climate change.
“The change in climate will also affect the economy and the budget. The transition to lower emissions means that some sectors will need to adjust, while others will benefit,” Frydenberg said.
Research by UTS found that renewable energy positions provide a good match for existing coal jobs across the workforce.
The study found that renewable energy will be a major source of jobs in the next few years and depending on the policy decisions taken now, the renewable energy industry could create 20,000 new jobs in the next five years or lose 11,000 jobs by 2022.
Productivity in Australia is dropping and one of the most influential ways to increase productivity growth is to increase wages.
The report suggests that the Government needs to bring in new policies to help increase wages and drive productivity, or else the Aussie economy will suffer.
“Productivity is a measure of how efficiently an economy turns inputs into outputs. Productivity grows when things are done more efficiently today than yesterday,” the report said.
“Labour productivity growth is essential to improving national income and real wages.”
The RBA governor Philip Lowe previously said businesses’ “laser-like focus on costs” could be hamstringing the broader economic recovery.
The report said policies can lift productivity by supporting a dynamic and competitive economy by allowing individuals and businesses to take advantage of new innovations and technologies.
The report suggests the Government should consider easing regulations to allow for more entrepreneurship - leading to a boost in productivity and wages.