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As BFD regulars will know, one of my favourite sports is poking a stick at the Boomers. Well, for once I’m going to cut the Boomers some slack. The Albanese government has released selected extracts of its 2023 Intergenerational report: extracts which seek to heap blame on an ageing population for a looming debt tsunami in the coming decades.
But is it really all the fault of a bunch of entitled codgers?
Reading between the lines, the report in fact hints at the real issue: decades of Labor fiscal landmines, all primed and ready to detonate in the near future. The report also exposes the brutal fallacy of the Covid years: that economies could just be “put on hold” during lockdowns with no consequences in the future.
State spending on health, the NDIS, aged care, defence and interest payments to service debt will blow out by more than $140 billion a year over the next 40 years, revealing the extent of the structural budget crisis facing future governments.
Australia’s ageing population, increasing demand for public services and growing cost pressures, including defence commitments, are projected to accelerate government spending across five key portfolios by an estimated 5.6 per cent of GDP based on the size of the economy in today’s terms.
This means the spending pressures currently facing the Albanese government will grow from around a third of all commonwealth spending today to half of all spending by 2062-63.
And rather than bank for the future, Anthony Albanese and Jim Chalmers are blowing the unexpected modest surplus, delivered by a resurgent mining boom, on even more spending and debt.
The government is trying to slant the report as a damnation of an ageing population — no doubt trying desperately to appeal to the young voters.
“Demographic ageing alone is estimated to account for around 40 per cent of the increase in government spending over the next 40 years.
“Ageing and a growing population are driving strong growth in health and aged care spending.”
But elsewhere it admits that poor policy decisions, mostly by Labor governments, will drive the piling debt.
It reveals that the cost of servicing government debt, most of which was accumulated through the fiscal response to the pandemic, will double over the next 40 years from 0.7 per cent of GDP to 1.4 per cent of GDP by 2063/64.
While spending on the NDIS was rising most rapidly, total spending on health will represent the largest increase as a share of GDP over the longer term.
At the same time, spending on welfare and income support payments to individuals and families, and education spending payments will also rise in per capital terms, but decline as a share of GDP as the population ages.
The panicked, reckless lockdown and border closure policies pushed by Labor premiers, especially in Victoria and NSW, created a wholly unnecessary debt Everest. “Dictator Dan” Andrews and Victoria alone cost the national economy hundreds of millions for every day of the world’s longest lockdowns. That’s nearly $40 billion of debt from one state alone. Labor premiers, whipping up an unholy panic, led the Morrison federal government by the nose at will. Morrison lacked the guts to use his “national cabinet” to put the Labor premiers back in their boxes. But the fact remains that staggeringly costly — and worse than useless — Covid policies were driven by the states.
The other catastrophic debt landmine laid by a feckless Labor government is the National Disability Insurance Scheme.
“NDIS and interest on government debt are the fastest growing categories over the next decade, with health and aged care growing most quickly at the end of the projection period as the population ages.”
The Australian
Note the pea-and-shells, here. Health and aged care — both linked to the Boomer population — will spike at the end of the projection period, but in the meantime, the NDIS fiscal monster will have had 40 years to gorge its way to a bloated overspend. The NDIS is already fast overtaking Medicare as a fiscal black hole.
The National Disability Insurance Scheme has become a “magic pudding” for governments, service providers and some people with a disability and the $35bn program’s rising costs are greater than have been publicly revealed, the head of the Albanese government’s NDIS review warns.
Who couldn’t have seen all this coming, when then-PM Julia Gillard first announced the scheme? The media dutifully parroted Gillard’s claim that the scheme was “fully funded” — and ignored the scam that the bulk of the cost was scheduled past the Forward Estimates, meaning that it didn’t have to be accounted for. It was like claiming that you’ve “fully paid for” a loan when you’ve only paid off the principle and left the interest to be paid later.
An even more damnable lie-by-omission was ignoring the fact that the scheme is demand-driven, not budget-driven. The more people jump onto the NDIS bandwagon, the more it costs, without end.
No wonder the scam is projected to cost around $90 billion a year by 2031-2.
Professor Bonyhady says the NDIS is unique, a “policy miracle” delivering support for people with disability, and is changing the lives of hundreds of thousands of people. “(But) it is too inequitable – overdelivering for some, underdelivering for many, and not delivering at all for the majority of Australians with disability,” he says.
The Australian
“Miracle” is one way to describe it. “Useless, boondoggle scam,” is another. As the professor hints, the scheme is being rorted at will by many people who simply don’t need it. There are reports of doctors who, for a lazy five grand, will write up an “on the spectrum” diagnosis that’s the golden ticket to a lifetime on the NDIS. Meanwhile, people with real disabilities are getting sweet FA.
And governments act surprised.
