Not-for-profits say there’s no time to wait to act on Intergenerational Report

Posted on 28 Aug 2023

By Greg Thom, journalist, Institute of Community Directors Australia

The 2023 Intergenerational Report is an attempt at predicting what Australia will look like four decades from now.

First released in 2002 the sixth version of the recently released blueprint contained dire predictions of the economic, climate and demographic headwinds heading our way.

The not-for-profit sector says governments across the nation should prepare now to meet these challenges before it’s too late.

The report looks at five major forces affecting Australia’s economic growth in the coming decades:

our ageing population
technological and digital transformation
climate change and the transition to net zero
rising demand for care and support services
geopolitical risk and fragmentation.

Labour shortages, falling levels of home ownership, ballooning healthcare costs, slow growth in household incomes and the impact of climate change, are just some of the challenges Australia faces in the years ahead.

While acknowledging the potential impact on the budget bottom line, Treasurer Jim Chalmers said the report nonetheless represents an important opportunity for Australians to understand where the country is headed.

“The IGR is all about how we maximise our advantages in a world of churn and change,” he said.

Given the wide scope of what the report set’s out to cover, it’s perhaps not surprising that the response from organisations in the sector was just as varied, and aligned to their purpose.

Care and support

The Benevolent Society CEO Lin Hatfield Dodds said there was an urgent need to prepare the care and support sector for the huge increase in demand for services flagged in the report over the next 40 years.

“We are far off where we need to be,” said Ms Hatfield Dodds.

“We must get the right settings in place so this sector can provide increased, improved and more reliable services to Australians.”

Ms Hatfield Dodds said anyone who has followed the recent Royal Commissions into aged care and disability knows that too many people fall through the cracks of systems that are overworked, underfunded, and overdue for structural reform.

She said technological innovation to increase productivity gains in areas such as assistive technology and business management will be essential.

As will a workforce that is paid appropriately and knows it is valued.

“Currently, the care and support sector struggles to attract and retain sufficient workers to meet the needs of people receiving support services through the NDIS, aged care and early childhood education and care systems.”

Ms Hatfield Dodds said it was important that the federal government focus on how essential the care and support economy is to Australia given the trends identified in the Intergenerational Report.

This mean implementing the changes needed to accommodate the large number of people who will be eligible for care services in future.

“Elevating the needs of the care and support economy – which are the needs of Australians – is a national priority.”

Immigration

Migrant support and advocacy body Settlement Services International said the Intergenerational Report reinforced the pressing need to implement policies that harness the full potential of new arrivals to Australia.

SSI general manager of newcomers, settlement, and integration Yamamah Agha said the reports predictions underlined the important role migration plays in sustaining the health of Australia’s ageing nation and the importance of long-term planning to strengthen the country’s migration system.

"Taking proactive steps to implement the 2023 Migration Review’s recommendations, such as streamlining visa types and qualification recognition processes will be critical to bolstering our nation’s growth and sustaining key workforces, like the care economy," Ms Agha said.

With projections that Australian government’s share of health, aged care and defence spending will rise from the current level of a third to 50% in the decades to come, Ms Agha said it’s imperative to leverage the economic and workforce potential of migrants settling into Australian society to meet the challenge.

"Welcoming newcomers is not enough,” she said.

“We need to develop pathways and active measures that enable their complete participation and engagement within Australian society.”

Ms Agha said as the percentage of working age Australians declines, the effectiveness of the country’s migration systems will play a pivotal role in supporting future growth.

“As the nation grapples with the challenges presented by an ageing population and evolving economic priorities, implementing the recommendations drawn from the Migration Reviews is paramount in harnessing migrants' full potential and securing Australia's long-lasting prosperity.”

“We must get the right settings in place so this sector can provide increased, improved and more reliable services to Australians.”

Benevolent Society CEO Lin Hatfield Dodds.

Social safety net

The Australian Council of Social Service (ACOSS) urged Canberra to “get real” about tax reform in light of the report’s projections.

ACOSS CEO Sandra Goldie said more revenue will be vital to meet the forecast increase in spending on essential services and to maintaining the nation’s social safety net in the years to come.

“As the population ages, we will inevitably spend more on health and care services,” said Ms Goldie.

“The choices are clear – either raise the public revenue to fund decent services for all, ramp up user charges, or leave people to fend for themselves.”

ACOSS called on the federal government to:

introduce a 15 per cent levy on post-retirement superannuation earnings to help fund quality aged care services.
introduce a 10 per cent Commonwealth royalty on offshore gas resources and abolish fuel tax credits for off-road use [except for agriculture to fund the energy transition]
Reform negative gearing and reduce the capital gains tax discount to invest in housing.
extend the high-income Medicare Levy Surcharge to all individuals to help fund essential healthcare.

Ms Goldie said the Stage Three Tax Cuts should also be abolished to fund poverty reduction initiatives.

“With the inevitable pressure on current and future budgets to provide the health and care services we need, respond to climate change, and lift people out of poverty, the government and all stakeholders must ‘get real’ on tax reform.

“Australia can’t afford to forego $20 billion a year for high-end tax cuts or lower the company tax rate.

“We must close the loopholes and shelters that allow people and businesses who have the ability to pay to avoid their obligations. Superannuation, capital gains tax, private trusts, and mining resource taxes must return to the tax reform agenda.”

Ms Goldie said tax reforms should be linked to expenditures on the services people need.

“The government must confront the twin challenges of growing needs for services and a leaky tax base. We have an opportunity to bring the community on board with an agenda that joins the two together.”

Climate change

The Climate Council said the Intergenerational Report underlined how tackling the effects of climate change is the number one priority for Australia’s future.

So much so, urgent climate action would be the difference between “prosperity and penury” in the decades to come.

The environmental advocacy group said the report clearly showed how much Australia stands to lose economically if the nation failed to tackle harmful climate change and the “significant repercussions” a lack of action would have on future planning.

Climate change protest — The Climate Council believes taking urgent action on climate change would be the difference between “prosperity and penury” in the decades to come.

Climate Councillor and economist Nicki Hutley said climate change was not just an environmental concern, but an economic imperative.

“The Intergenerational Report shows climate change affects some of our most important economic sectors,” she said.

“We are talking about losses in productivity, agricultural production, possibly tourism demand, and an increase in costs from extreme weather disasters.”

Ms Hutley said Treasury estimates showed Australia faced lost economic output to the tune of hundreds of billions of dollars.

“These estimates don’t even include health and mortality yet, which we know are among the biggest of climate-related costs.

“Our choice is clear: take urgent climate action or endure substantial economic consequences.”