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Thursday, 3 February 1994
Page: 331

Mrs SILVIA SMITH —I address my question to the Minister for Social Security. Can the minister advise the House of the implications of the recently released EPAC analysis of Australia's ageing society for the government's retirement incomes policy?

Mr BALDWIN —I can say to the House that the report to which she refers contains a wealth of useful and significant information and analysis about the consequences of the ageing of the Australian population. I might just give a few brief statistics to give some sense of the dimensions of the phenomenon we are dealing with here.

  The total population is projected to rise from the current level of around 17 million to somewhere in the range of 24 to 30 million by the middle of the next century—by 2051. There is to be a significant increase in the so-called dependency ratio; that is, the ratio of young and old people outside the work force to those who are actually part of the work force. The numbers of those aged 65 and above are projected to rise from 1.9 million at present to over five million. That will be a doubling of the percentage of the population. The population over 80 years is projected to treble. We are looking at a very significant set of developments that will have major implications for levels of expenditure in areas like health and social security.

  Given that, it is absolutely imperative that we adopt a long-term approach. This is a policy area where short-term approaches are clearly not at all appropriate. The report makes it very clear that the policy responses need to be set in place now if we are to have a sustainable situation several decades hence. It is not just a matter of retirement incomes per se; it is also a question of ensuring that we have an economic structure that facilitates rapid productivity growth and increased levels of national savings if we are to have a basic structure where we can support this higher proportion of dependent people.

  It will lead to a significantly increased burden in the areas of health and social security. That is a significant issue but it ought to be manageable given the right sort of policy framework being put in place now. Contrary to the claims coming from the opposition, the government has been meeting this challenge. Since the release of this report there have been a bevy of opposition spokespersons on social security. At last count, I think there were three—the honourable member for Berowra and Senators Newman and Patterson from the other place. I feel a bit miffed that, unlike some of my colleagues, I have a relatively small number of shadow ministers covering my portfolio. I suppose that would clog up the front benches a bit more.

Mr Beazley —And you have Bronny as well. You have four. She is shadowing the lot.

Mr BALDWIN —Sorry, I have four.

Mr Keating —Or course Bronny is listening. Send her a cheerio call in the Senate.

Mr BALDWIN —Cheerio, Bronny!

Mr Keating —She would be in there now listening.

Mr BALDWIN —That is right.

Mr Keating —Cooee!

Mr SPEAKER —I do not think the minister needs the assistance of the Prime Minister.

Mr BALDWIN —Two of the three opposition spokespersons have made a statement on this matter. They were not entirely consistent, but then we would not expect that. I refer to what the co-author of the EPAC report said on 31 January on the AM program about the government's approach to the ageing population. The co-author of the EPAC report said:

Australia in many ways has been a path breaker with home and community care, with employee and employer funded superannuation and with early concern about health care costs.

I will take that a bit further, focusing on the retirement incomes area. Take the much maligned superannuation guarantee charge that the opposition has been so disparaging of. The EPAC report provides some very interesting information and analysis about that issue. The EPAC report stated:

The SGC will play an important role, with the projections showing that it might keep government welfare expenditures down to around 8 percent of GDP in 2051 (c.f. 9 percent without SGC).

That is a significant impact on the level of outlays as a consequence of the superannuation guarantee charge. The percentage of the population on age pensions is expected to remain constant, but the average level of pension paid will be significantly lower because of much higher levels of non-pension income. The EPAC report continues:

The SGC is expected to increase the aggregate national savings by 0.5 percent or more of GDP per year. While only a relatively small amount each year, its cumulative effects would be very significant.

In conclusion, the report confirms the basic wisdom of the government's policy approach to retirement incomes and other areas. It is particularly important that we get on top of the long-term unemployment problem because if we do not then the proportion of people with significant superannuation entitlements and significant home ownership will be much less and there will be a number of other consequences which basically underpin the importance of that.