Mr McARTHUR (2:45 PM) —My question is addressed to the Treasurer. Has the Treasurer seen a Productivity Commission report highlighting the need for government action now to combat the long-term effects of demographic change? How is the government responding, and what are the alternative policies?

Mr COSTELLO (Treasurer) —I thank the honourable member for Corangamite for his question. This is the government that, as part of its Charter of Budget Honesty, required an Intergenerational Report to be prepared for the first time in 2002 and benchmarking of progress each five years thereafter. In addition to that, at the request of the Council of Australian Governments I asked the Productivity Commission to do its own projections in relation to the ageing of Australia's population.

The draft report of the Productivity Commission largely endorses the Treasury forecasts and says that Australia's ageing of the population could open up a gap between revenue and outlays—state and federal—of the dimension of around seven per cent in 40 years time. This is because the work force age population in Australia is hardly going to change but the number of people of retirement age is going to double, or more than double, over the next 40 years. In particular, the costs in relation to medical care—not only because older people draw down more on medical care but because new drugs and new techniques are being invented—are going to put considerable pressure on the Commonwealth account.

What is the government doing to address these challenges? We are taking measures to increase participation amongst the work force population. We are taking measures to increase productivity. We have announced an increase in the preservation age for superannuation to 60 and an increase in the age pension age for women to 65. We announced at the last election a mature age tax offset to encourage Australians aged 55 to remain in the work force. We have announced changes to the Pharmaceutical Benefits Scheme to base that scheme on a sustainable basis.

There were a lot of opposition spokesmen and spokeswomen out on the weekend. One of them was the honourable member for Melbourne. He spoke quite a lot of sense on the weekend: he went out and warned of the Medicare Gold Labor Party policy, which would add a substantial burden to future federal budgets. He was right about that. There has probably never been a more irresponsible promise made. In the context of an ageing population and increasing health care, there was an offer, without private health insurance, of free first-class private health care to everybody over 75—a cohort of people that we know is going to grow and grow over the next 40 years. There has probably never been a more expensive promise made.

Where does the Australian Labor Party stand on Medicare Gold today? When I was a kid there used to be an ad that said, `Don't wait to be told; you need Palmolive Gold.' Don't wait to be told; ditch Medicare Gold. The member for Melbourne was out there belling the cat on the weekend. Medicare Gold is a promise which is irresponsible. It is a promise which no government in Australia in 40 years, let alone 30 years or 20 years, would possibly be able to honour.

The Australian Labor Party have now conceded they lost the last election because they had no economic credibility. That is their own analysis. And the Australian Labor Party now say, `We are determined to become credible.' You will not be credible if you maintain the policies that led to the loss of credibility. It is more than signing bits of cardboard. Economic credibility comes from policy. Until such time as the Australian Labor Party change their policy on Medicare Gold, change their policy on industrial relations, change their policy on unfair dismissal and change their policy on the Pharmaceutical Benefits Scheme—which they opposed and then they supported and now they oppose—

Ms Gillard —What are you on about?

Mr COSTELLO —That is what happened in the campaign with co-contributions—one wonders where it is up to now. In the confused menagerie that the Australian Labor Party today represents, the Leader of the Opposition calls his economic spokesmen `roosters'. The member for Lyons calls the member for Grayndler a `mangy dog'. The member for Brand has his chief of staff out describing the Leader of the Opposition as a `dead parrot'. Those of you that watch Monty Python, as I do, please go back and have a look at the video. On the weekend, a rooster declared a jihad on a dead parrot! My head was spinning! This is the animal farm that the Australian Labor Party now represents. Until it has the opportunity to get some policy, it will not have economic credibility. Credibility comes from policy.