Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

The kids will be alright with a generational future fund

By Malcolm King - posted Friday, 10 May 2013

Tension between the generations is not new. The young over throw the ideas of their elders and recast them as their own. But intergenerational tension, based on inequities and access to economic opportunities, is an entirely different and far more serious matter.

We need to start an intergenerational war chest for future generations to fund infrastructure and human capital projects of their choosing.

There are about 5.8 mature age people aged 55 and over in the population. Around 2 million of them are working fulltime (1.3 million) and part time (700,000). Of the 3.8 million not in the labour force, 2.2 million currently access the aged pension. We can expect another one million boomers to draw on the age or disability pension over the next 20 years.


The so called 'generation Y' and those born after them, will be taxed to build infrastructure projects and support the ageing boomers while saving for a home and paying off HECS debt. Where's the fairness in that?

Last year the Australian Parliament voted against establishing a national intergenerational future fund while South Australia and Western Australia took steps to establish their own future funds.

The Barnett Government will build a $4.7 billion nest egg by 2032 to be spent on roads, ports and medical research to spread the benefits of the mining boom to the next generation.

One would have thought that by looking at Europe and its sovereign debt issue that an intergenerational future fund (or sovereign wealth fund) would be a 'no brainer'.

Look at Norway. The Norwegian Sovereign Wealth Fund which was started in 1990 is now worth $US600 billion. Its income comes from taxes on oil companies, exploration licence fees and dividends from the state-owned Statoil. Norway is thinking of future generations.

Even though older workers are working longer, the fiscal gap between government revenue and outlays to fund health and pensions will still be in the order of 2-3 percent of GDP.


According to the 2010 Intergenerational report, 'Australia to 2050, future challenges', the proportion of working age people is projected to fall, with only 2.7 people of working age to support each Australian aged 65 years and over by 2050. In 1970 it was 7.5 people.

There has been little discussion of demographic workplace contraction, so I have listed three issues, which will hit business practice over the next 30 years.

Wage inflation

For the last 20 years, Australia has been very successful in keeping wages from breaking out. Yet this time around it will be employers not workers behind the push to increase salaries to hunt for talent. Wage inflation by sector will rise and it will push up the CPI. How much? We don't know but an increase of two percentage points would not be far off. Inflation is a cancer that kills savings and value.

  1. Pages:
  2. Page 1
  3. 2
  4. All

An edited version of this article appeared in The Drum

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

10 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Malcolm King is a journalist and professional writer. He was an associate director at DEEWR Labour Market Strategy in Canberra and the senior communications strategist at Carnegie Mellon University in Adelaide. He runs a writing business called Republic.

Other articles by this Author

All articles by Malcolm King

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 10 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy