Future generations of Australians will pay the price for today’s political inaction if we do not take a close look at our settings and prioritise a sustainable future for all over entitlement for the few.
If we do not take action it will be the most vulnerable people in our society who suffer the most, and we would have failed to live up to the promise of a fair and just society that protects and lifts up the forgotten people.
As a starting point, Australia cannot afford to continue to provide generous middle-class welfare to individuals who otherwise are able to provide for themselves. For example, social security at 42 per cent of all commonwealth payments is unsustainable.
Today, for every person over 60 who is supported by government in their retirement, 4.7 working Australians contribute to that support. By 2055 that picture will have changed drastically, the figure dropping to 2.7 working Australians, assuming we continue today’s level of skilled migration. The collapse in the number of working Australians relative to retirees combined with locked-in full or part pensions for 80 per cent of us means Australia is on track to decline in the same way as Japan.
Japan was the poster child for postwar expansion but failed to adjust its economy through difficult reform.
The consequences of Japan’s failure to change have delivered years of negative growth and falling wages, fewer opportunities and an enormous unsustainable debt of more than $US10 trillion, which is threatening Japan’s prospects today.
This does not mean we should not maintain a healthy safety net to provide for older Australians who cannot provide for themselves.
It means that with net debt expected to exceed $317.2 billion this year, we cannot go on indulging a culture of entitlement for people who can look after themselves if we want to be able to fund world-class schools and hospitals and build infrastructure to support the next 50 years of growth.
A true measure of a fair and just society is how we protect the vulnerable and enable the elderly to live out their lives, enjoying a retirement that reflects their years of hard work.
But where someone’s wealth, not merely income, means they can live or retire in comfort relying on their own pocket, any argument that working Australians trying to get ahead should subsidise that lifestyle is hard to accept given the nation’s debt trajectory.
The discussion should be informed by the realities of our present financial position and the hope that the prosperity and opportunities enjoyed by most Australians today will continue to be the hallmark of our society into the future.
Younger Australians will inherit an unsustainable burden of debt and expenditure or, if we reform, the wealth of opportunities that for generations has characterised Australia.
The deciding factor will be whether we are willing to talk about these issues and, more important, whether our political leaders are willing to stand up and make the tough decisions that will ensure all of our children are born into a country that rewards hard work, innovation and creativity.
Welfare payments occupying 42 per cent of commonwealth expenditure are an obvious place to start to consider our options, but dealing with this alone is not going to solve the problems we increasingly face.
A federation that encourages blame shifting due to a vast and increasing vertical fiscal imbalance, ongoing avoidance of an informed debate about our volatile revenue base, and a culture of viewing success with scepticism as opposed to celebrating growth could add up to the obituary of the lucky country.
The rationale for the Shepherd Review, which published its Statement of National Challenges on Monday, is to take these issues out of the hands of politicians and public servants, and to put them in the hands of the people they affect.
The next stage of the review involves receiving submissions from the public and we encourage all sections of the community to engage with this process. We will elicit this feedback through town hall meetings, social media and written submissions.
The best solutions to our problems will be found by listening to many voices.
Ultimately we have a choice between taking action now, while we can, or down the road when our backs are against the wall and our options are greatly restricted. Most Australians want their neighbour to do well, desire a safe and prosperous community, and understand that such a country is built on mutual success and respect.
We also believe that younger Australians are not only ambitious but also compassionate and want to leave to our children a society where they have the opportunity to prosper rather than being left behind.
To secure that future we need to acknowledge that as a country we face challenges, and commit to finding the answers together.