Australia's troubled future

The IGR itself steers clear of controversial economic suggestions. But it is valuable in trying to change the current sterile public debate from just discussing government debt to saying there should be more attention to productivity.

A second implication is how to increase skilled migration without an anti-immigrant backlash? There is a global race for talent. Australia for the last two centuries has used immigration to stimulate economic growth. This process needs to continue (even though some politicians and media commentators are opposed to it). For example, post-COVID Australia will need to revive its standing in international education: could overseas students be offered the opportunity of staying permanently in Australia after the successful completion of their university degree?
Third, how to pay for the increased health, education and welfare (HEW)? There are two main choices. Either the government reduces HEW expenditure and/or it increases taxation, such taking the GST to 15%; the GST is in theory very easy increase but would be politically very unpopular.

Fourth, how to increase workforce participation? For example, there could be more paid childcare and/or more parental leave (to give parents an incentive to have children).

Finally, the big omission from the 2021 IGR is (still) any attempt to quantify the impact of climate change. Climate change is the elephant in the room, such as the risk of storm damage along the Australian coast and the problem of coastal erosion. Ironically, a few weeks after the IGR appeared, there was a building collapse on the coast in Florida which cost 54 dead with 86 unaccounted for. Climate change contributed to that tragedy.

To conclude, the IGR is an important document. It encourages us to look four decades into the future, and to think more about increasing Australia's productivity. It may seem a gloomy document but Australia is a much better county in which to grow old than many other societies. China, for example, may grow old before it grows rich.