Populate or perish: Frydenberg warns our slow growth a challenge

Treasurer Josh Frydenberg has warned Australia’s slow population growth will be a challenge for future productivity gains.

Jun 24, 2021, updated Jun 24, 2021
Former Treasurer Josh Frydenberg is considering his options for another possible tilt at Federal politics. (Photo: AAP Image/Mick Tsikas)

Former Treasurer Josh Frydenberg is considering his options for another possible tilt at Federal politics. (Photo: AAP Image/Mick Tsikas)

Frydenberg will release the five-yearly Intergenerational Report on Monday, a guide to how the Australian economy will perform over the next 40 years.

He provided a broad outline of what to expect from the report while addressing a Committee for Economic Development of Australia dinner on Wednesday.

He will launch the 2021 IGR at another CEDA conference in Melbourne on Monday.

“I feel like I’m the warm-up act for myself here tonight,” the treasurer quipped.

“The Intergenerational Report will kick off a broader discussion about our challenges we face, whether it is around productivity, population, the ageing of the population and the like.”

The IGR was first introduced in 2002 by former Liberal treasurer Peter Costello.

The 2021 report, the fifth in the series, is a year later than scheduled due to the pandemic.

Frydenberg said the economy is transforming and posing challenges.

He said Australia’s 30-year average for productivity growth has been 1.5 per cent.

“We’re not there,” he said.

“If you look back at the last few decades, 80 per cent of our economic growth has been driven by productivity.”

He said population growth is a key driver of productivity.

“What you are going to see in the IGR is our population is going to be smaller than we initially thought because of the effects – and that’s a permanent thing – because of what has happened with COVID. We just don’t make that up,” he said.

“Population growth is the lowest level in 100 years, net overseas migration is negative and it is going to take some time to pick that up.”

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Shadow treasurer Jim Chalmers is already questioning how reliable any predictions in the IGR will be, given former Liberal treasurer Joe Hockey’s 2015 version has proved “so spectacularly” wrong.

A new analysis by Labor has found even before the pandemic, the 2015 forecasts have proved to be well short of expectations.

As of December 2019 the economy was $91 billion smaller than predicted in 2015 with a cumulative loss of $201 billion in economic activity.

This underperformance equates to an average loss of $8036 per person, it says.

“Having so spectacularly over-promised and underdelivered on their last Intergenerational Report, how can Australians trust Scott Morrison and Josh Frydenberg to live up to this one?” Chalmers told AAP.

“After eight long years, Australians know the rhetoric never matches the reality.”

He said the country can’t afford for this report to be another missed opportunity.

Chalmers said Australia’s rebound from last year’s recession has been built on the sacrifices of its people, and they deserve a recovery that works for everyone.

“This Intergenerational Report must offer the long-term thinking required to ensure our economy and society are stronger after COVID than before,” Chalmers said.

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