TRANSCRIPT
of
HON. PETER COSTELLO MP
Treasurer

Interview with Ian Henderson
ABC Radio, PM
Wednesday, 7 August 2002

SUBJECTS: Population growth; population policy

HENDERSON:

…population for the future of Australia’s prosperity?

TREASURER:

Oh this is very important because over the last 40 years, as our working age

population has increased – this is the baby boomers coming through the workforce

– that’s actually been positive for growth. Over the next 40 years, as the proportion

of the population that is working age declines, that is, as the baby boomers

move out of the workforce, population factors will actually detract from our

economic growth. That means if we want our economic growth to rise anything

like the way it has risen over the last 40 years we have got to find productivity

improvements to make up for those factors.

HENDERSON:

We also have to have to have an increasing population of working age. Doesn’t

that mean we have to have rising fertility rates?

TREASURER:

Well the thing about fertility rates, of course, is, that they are very long

lead times. What we are experiencing today is a decline in the fertility rate

which really started 30 years ago. If you were to boost the fertility rate today,

in 30 years time you would see the pay-off. You wouldn’t see it off in 3 years

time, or even in 15 years time. In fact, if you boost the fertility rate the

short term consequence is you have more dependent to working age population

because children of course, are outside the workforce. So, the immediate effect

is that your dependency ratio would rise and you get the pay-off after about

30 years.

HENDERSON:

So the concern of some of the community, including some of your senior colleagues,

about a decline in fertility, about maternity leave, about abortion rates and

so on, as a solution to Australia’s ageing population, is simply misplaced?

TREASURER:

Well, it’s, it’s not something that will have any effect in the next 30 years.

It is a policy for improving things in about 2030, but it is not a policy for

improving things in 2010 or 2020. And what we have got to come to grips with,

with the ageing of the population, and a much more direct thing that we could

influence, would be to get better participation by those who are older age in

the workforce, particularly men in the 60 to 65 age group, where Australia has

very low participation in the workforce of men in the age 60 to 65 bracket.

If you were to encourage more men in that bracket to stay in the workforce you

would have much more immediate effects on the ageing of the population than

a fertility policy which has a 30 year lead time.

HENDERSON:

What policy changes are necessary to get men aged 50 to 65 back into the workforce?

TREASURER:

Well, I think flexible working hours would help, because I think, you know,

men who have had senior executive positions and retire might, for example, want

to stay on in a part-time capacity, flexible working conditions. Re-training,

men who have been in industries which have been re-structured and need re-training.

I think more acceptable tax arrangements which encourage them to not rely on

superannuation or the age pension, but encourage them to stay in the workforce.

And increasing the preservation age for superannuation, which we now have in

train, should also make a contribution in this area.

HENDERSON:

What sort of tax changes are necessary to encourage older men, in particular,

to stay at work longer?

TREASURER:

I think we have got to keep our tax rates as low as we can. The other side

of all of this debate that is going on at the moment, people come up with ideas

for more expenditures. If those expenditures lead to higher tax rates they could

actually be counter productive in terms of dealing with the ageing of the population.

HENDERSON:

So are you saying that we can look forward, in the near future, to lower tax

rates, in order to help overcome this ageing population problem?

TREASURER:

I think we have always got to keep our tax rates as competitive as possible

and what I want to say in all of this debate, is, a lot of people have come

up with a lot of ideas for new expenditures, but one of the good things that

can be done to deal with the ageing of the population is to keep our tax rates

competitive. One of the bad things would be if the new expenditures made it

less competitive.

END