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Swan on Australia's grey future -

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Swan on Australia's grey future

Broadcast: 01/02/2010

Reporter: Kerry O'Brien

Treasurer Wayne Swan joins The 7.30 Report following the release of the government's
intergenerational report - Australia to 2050: Future Challenges. The report shows the country's
ageing population, climate change and healthcare costs are going to place a heavy burden on the
economy by 2050.


KERRY O'BRIEN, PRESENTER: A growing base of retirees, a shrinking workforce and 60 per cent
population growth in the next 40 years - that's quite a mix of challenges, and to discuss them the
Treasurer joins me now from our Parliament House studio in Canberra.

Wayne Swan, the Government has been talking about Australia's future population and the ageing
population for some time now, with all of the incipient challenges. You've acknowledged that a
population of 36 million by 2050 will also bring big impacts and throw up big issues. Isn't it time
that the Government developed a formal, identifiable population policy about which the public can
have a sensible, responsible debate?

WAYNE SWAN, TREASURER: Well, Kerry, could I make a couple of points? Population growth is desirable
and population growth is inevitable. But that 36 million figure is a projection. It's based on
levels of fertility around about 1.9 births per woman and it's based on levels of migration which
are about the same level as the past 40 years. Now, of course, they will go up and down, depending
upon overall circumstances. The Government is not seeking growth for growth's sake. What we do want
is rising standards of living, we want social cohesion and we want environmental sustainability. So
what we need to do is to put in place all of the policy settings which deliver those objectives.
And they may be delivered by a smaller population or one that is slightly larger, depending on how
those variables go - where the birth-rate goes or where levels of net migration go, because they do
move, Kerry, up and down. In fact...

KERRY O'BRIEN: In part in response to Government policy. It just sounds as if the Government is
moving away a little bit from the sentiment that was coming through late last year - on this
program; Kevin Rudd said he likes the idea of a big Australia. Now, you've also said that you think
that we should be able to plan for and manage that level of population growth. What do you base
your confidence on that Australia can reasonably sustain that level of population just on the basis
of water and arable land alone?

WAYNE SWAN: Well because Australians have always been very good, right through our history, at
adapting to social and environmental and economic change. And the fact is the population will
continue to grow. That's a good thing, because it will deliver rising standards of living. What we
have to ensure is that it delivers also social cohesion and environmental sustainability. That's
why the Government is acting on a variety of fronts. First of all, to put in place all of the
measures to lift productivity, to grow the pie, to lift our standard of living; but also to deal
with dangerous climate change through the CPRS, and also a range of policies to make sure that
Australians have opportunity. That birth does not necessarily determine your progress in life. But
we are not sitting here today and saying there is an ideal fixed population for Australia. It
depends on us putting in place successful policies to achieve those objectives I was talking about

KERRY O'BRIEN: OK. This Intergenerational Report says, "The sustainability of Australia's cities
will also be dependent on better governance in the planning and organisation of city
infrastructure." Who's going to provide that better governance if not the same people who govern
our cities today?

WAYNE SWAN: Kerry, for the first time in our political history we now have a national Government
that wants to work with state government and local government. And when it comes to infrastructure,
we've put in place Infrastructure Australia to commence that planning. We've got a whole reform
process going through the Council of Australian Government organisations to do precisely that. The
previous government sat around the cabinet table, Mr Hockey and Mr Abbott, for years, and they were
observing a growing population and an ageing population, and they refused to come to the party - or
to the table - and deal with those issues. So there's a very big difference...

KERRY O'BRIEN: But what you still don't have is an identifiable population policy.

WAYNE SWAN: We most certainly do have an identifiable policy that deals with our...

KERRY O'BRIEN: What is the heading of this policy? Where is it published?

WAYNE SWAN: Well, Investing in Infrastructure, the Education Revolution, the CPRS dealing with
dangerous climate change - all of those things are the elements that make up a growing standard of
living, a social cohesiveness that we desire and an environmentally sustainable country.

KERRY O'BRIEN: Shadow Treasurer Joe Hockey translates what you've had to say today as meaning that,
"Australians will have to work harder for longer with less reward in more crowded cities." Now
which part of that hasn't he got right?

WAYNE SWAN: He's got all of it absolutely wrong, because you see as I said before, Mr Hockey was a
member of a cabinet that didn't come to the party and deal with all of these issues of planning, of
sustainability and so on. He did none of those things. We've got a comprehensive agenda to deal
with all of those things, because what Mr Hockey and Mr Abbott did and the previous Treasurer did
was that they ignored their Intergenerational Reports and they didn't take any action, and on top
of that they went on a spending spree at the height of the mining boom and locked in permanent
expenditure for circumstances which no longer prevail.

KERRY O'BRIEN: You've got an agenda on paper, Mr Swan, but a lot of the elements of that agenda are
still to be tested. And while Ken Henry, your Treasury Secretary, says that you're gonna have to
find new ways to raise money and you at the same time are talking about significant spending cuts
that you have committed a Labor government to into future years, I'm just not quite sure how you're
gonna do all this, and meet these big challenges.

WAYNE SWAN: Kerry, we've already put in place very significant fiscal restraint through our last
two Budgets. $56 billion in terms of savings. We also put in place the most significant reform of
the pension system in generations. But what we did when we put that in place is we made savings
elsewhere in the budget. We understand that given the challenges that are in this document, this
savings task will be continuing and it will be ongoing. And we have set for ourselves....

KERRY O'BRIEN: OK. But you gotta acknowledge at the same time - and I don't want to invite another
long explanation of why. We understand by now why you introduced your stimulus packages. But there
are those tens and tens of billions of dollars that you've gotta claw back over the next few years.
And that is a part of the equakes, isn't it?

WAYNE SWAN: Yeah, but, Kerry, the stimulus was temporary and if it hadn't been for the stimulus, we
would be starting this task right now that we're talking about in far worse shape.


WAYNE SWAN: Just imagine if we were sitting here tonight with high unemployment, tens of thousands
of business closures, what the enormity of the task would be ahead of this country.

KERRY O'BRIEN: OK. Ken Henry's tax review and what you do about it are obviously going to be
critical to any plan for future prosperity. He's already said quite bluntly that new ways are gonna
have to be found to fund the needs of the projected population. Two of the tax reforms he's already
floated for consideration are a traffic congestion tax, because of the gross inefficiency on our
roads, and environmental taxes to reduce the risk of further environmental degradation. Are you
really prepared to take tough decisions involving new taxes in the kind of political environment we
have in Australia today?

WAYNE SWAN: Well Kerry, the report of the independent tax committee is with the Government and it
is absolutely comprehensive. There's a huge agenda there. The Government is going to take its time
to prepare an initial response and then we will publish that along with the report and we can have
a very substantial and long conversation about the implications for public policy right across the
board. The Government will do that in some months' time and we'll have a full debate. But up until
then, I'm not going to speculate about what may or may not be in the report.

KERRY O'BRIEN: Tony Abbott and his shadow minister - I wasn't asking you to show what was in the
report, I was asking you to acknowledge that there are some big, tough decisions ahead, and I
wonder whether ...

WAYNE SWAN: There's no doubt, Kerry.

KERRY O'BRIEN: ... you're gonna have the courage for that in this kind of political climate where
any hint of a tax increase is absolutely torn to pieces.

WAYNE SWAN: Well, Kerry, I would say we have taken some very significant, tough decisions in terms
of the savings we have already put in place over two Budgets, and we are saying openly in response
to this report that there are further difficult decisions ahead. Made worse, I might say, by the
spending spree of the previous government at the height of the mining boom. But we are prepared to
take those decisions because they're important to our long-term future, they're important to our
standard of living and they're important to our social cohesiveness.

KERRY O'BRIEN: Wayne Swan, thanks for talking with us.

WAYNE SWAN: Great to be with you.