Australian Policy Online has an interesting paper titled “A high-tax future for Gen X and Y? Medicare and the intergenerational crisis” from the CIS which is worth having a quick peek at – especially for anyone around my age.
A belated heads up over the Census Mapstats site, where the ABS now lets us build maps with the Census data online.
Charles Franklin of Pollster.com spent an hour on Minnesota Public Radio talking about polling techniques. It’s worth a listen if you’re into that sort of thing – which I’d imagine most of you are since you’re reading this on a site called Pollytics 
The daily Intrade/Gallup tracker for the US Election looks like this:
Late last week Roy Morgan Research released a poll on political leadership. If we look at all similar polls taken this year where the survey respondents were given a broad choice of candidates for the leadership of the Liberal Party, we end up with this chart:
And finally, William’s hat breathes a sigh of relief.
17 Comments
Hmmm, Costello comes out of the series with the highest vote for Preferred Liberal Leader. I wonder what will happen to that trend after the release of his “look-at-me book”.
Probably go higher as the hard core ALP supporters start telling the pollsters to “Bring him back!”
It will be interesting to see where Milne, Shannahan and the other Costello groupies at Murdoch Inc go from here. Wipe the egg off their faces, mix it into a humble pie and force it down … or cook up another phantastic scenario whereby Pete girds his loins to save them.
The need for intergenerational reform will not go away. However tempting, now is not the time for preemptive intergenerational envy, but for some enlightened self-interest and self-sacrifice. This will have to go along with a fatalistic acceptance of the need to pay twice for health care. Otherwise, the longer we continue to delay establishing a national system of health savings, the more Medicare will become a problem.
To be brutally frank, they can take their fatalistic acceptance and shove it where the sun don’t shine.
It poses an interesting question – although I’m not fussed on their particular solution.
Would there be room in the policy mix for more self-insurance of healthcare? Some sort of investment scheme where savings are tax deductible and the money can be drawn on for healthcare costs?
The basis of the problem is that parliamentarians, economists, and the commercial world have all been asleep at the wheel and playing to popular opinion.
It has been patently obvious for more than half a century that the average age of the population was on the increase and that successive governments had been plundering the already less than adequate provisions for social welfare.
Keating was the most blatant when he arranged for the portion of income tax revenue notionally set aside for age pensions to be bundled into consolidated revenue and not accounted separately.
The concept of a “Future Fund” is fine in principle, but, in it’s present form, is hopelessly inadequate.
Medical expenses are increasing well beyond the capacity of the current rate of growth in the economy to support them and more people are becoming dependent on Social Security payments as superannuation funds continue to under-achieve in an increasingly unstable and inflationary monetary system.
Radical rethinking of the system is desperately needed.
I don’t think that the superannuation style investment scheme is appropriate for healthcare.
With these schemes, the amount you finish with varies depending on the proportion of your income over your working life that you contribute, as well as your choice of investment product and your risk tolerance. With super, which basically translates into the general lifestyle you’ll be able to afford when you’re retired, it’s entirely appropriate that different people will have different goals and outcomes here – some people may want to go without now to have a more comfortable retirement, others not so much.
On the other hand, with healthcare you are looking at something entirely different – retirement happens to (most) everyone, but healthcare costs vary wildly from person to person, and are imposed by fickle fate rather than individual choice. Whearas super is all about funding “wants” in retirement, healthcare is about funding “needs”. Does it make sense that everyone should have to have a health account with a few hundred thousand in it, when most people won’t actually need that much, but an unfortunate few will need much, much more?
A savings scheme does make a certain amount of sense, in that it allows that taxpayers of today to fund their own future healthcare rather than relying of the taxpayers of tomorrow to do so. However for healthcare, the savings scheme should be a few, very large national accounts rather than one per individual.
These large accounts can simply be built from government revenue, a la the Future Fund, which additionally allows the contributions to be gradually scaled up over time – a generational timescale. Essentially funding of Medicare should be decoupled, over time, from the consolidated revenue, so that the “Medicare account” is funded today at the amount it will cost tomorrow (for some suitable value of “tomorrow”, determined by much fancy econometrics
How do you protect such a scheme from being underfunded or raided by some political vandals over the time scales we’re talking about? Buggered if I know.
For people who can afford it, there should definitely be compulsory self-insurance.
Hi Possum
Congrats on the site – I hope it works out well….
I’ll also comment on the health aspect of this part of the thread.
Broadly, I agree with Caf. A feature of Australian welfare policy (I am including health in this just to make a point) is that it isn’t funded actuarially. That is, today’s generation doesn’t directly set aside, through taxes or other levies, money for its own retirement/health costs. The SGF was set-up to correct this for retirement income, but isn’t large enough to ensure that publicly provide pensions won’t have to be drawn on as well, even for those that have worked their entire lives. There has been no attempt to fund healthcare actuarially. When there aren’t demographic “bulges” – this isn’t a big deal – general revenue would be adequate, without having to raise taxes or make schemes less generous (I’m not going to comment here on the tendency for nominal health spending to grow faster than nominal GDP – separate policies are needed to address that).
However, as we know, there is a demographic bulge (the baby boomers) and they won’t have paid enough taxes to provide for their own retirement and future health. In addition, this could get worse over the next decade or two, if boomers in retirement agitate for more generous pensions/health care – and are successful because both major political parties will target their votes.
We really needed a Health Future Fund, when the boomers were in their prime working ages – now if one is set up, the incidence will also fall on current X and Ys. I think it is inevitable that tax rates will have to increase in the future, because I don’t believe that the political will to reduce expenditure exists.
On a positive note – the concerns expressed by the CIS are a bit exaggerated. First, Australia’s population is not aging as rapidly as many other industrialised countries. Second, welfare policy isn’t as generous as in many other countries. Third, there is a large private health and pensions industry sitting alongside the public schemes. That is why the intergenerational report was fairly sanguine – Australia faces a fiscal gap by around 2045 (I don’t have that year exactly right) of between 3 and 4 per cent of GDP. Now, we can also argue about whether the paramaters underlying that projection are accurate – and it will still need to be closed – but it isn’t that big a deal. Let’s face it – many European countries currently run budget deficits larger than that!!! Overall, Australia’s public finances are in very good shape – so as a country, we are in a very good position to face the upcoming demographic challenges.
No 9
Can we now have Labor supporters cease their endless denigration of Peter Costello?
@ 10 Generic Person
Posted September 15, 2008 at 5:52 pm | Permalink
“No 9
Can we now have Labor supporters cease their endless denigration of Peter Costello?”
Why?
No 11
See No 9’s glowing report of Australia’s public finances – diligently presided over by the greatest and longest serving treasurer in our history: Peter Costello.
For a start, I’m not an endless denigrator of anyone. I’m more than happy to acknowledge that the Howard Government (particularly in the early years) managed public finances well.
However, things are more complicated than you imply with your post. First, a lot of hard work on the public finances was also done under Hawke-Keating. The budget black hole that Costello made much of was just 1 per cent of GDP from memory – and that was largely due to the mid-cyle slowdown of the mid-1990s. Second, apart from their first budget, Howard and Costello allowed growth in tax-revenue to do most of the work for them – over the full course of the government they have showed relatively little expenditure constraint. It would have taken a pretty incompetent government to run budget deficits during the current commodity price boom. Third, I think fiscal policy should have been more counter-cyclical during the last 4 or 5 years. Simply spewing out the extra revenue in terms of tax cuts and spending has done little for Australia’s longer term prospects. That is not to say that Labor would have spent the money more wisely had they been in government, but there is a big difference between presiding over a boom and being responsible for it.
Overall, I think Costello was a good but not great treasurer – his reform credentials do not stack up with Hawke-Keating (tariff reform, financial deregulation, the float, National Competition Policy, the move to enterprise bargaining, HECS – I could go on). That said, Howard-Costello will be looked on more favourably than Fraser-Howard (though the negative shocks were greater in the early period) and Whitlam-et al. Only time will tell how Rudd/Swan will do – but so far I have seen little to suggest they will be a genuinely reformist goverment – but I also don’t expect public finances to deteriorate under their watch.
Hi Possums,
Just saying hello on your new site.
If spine transplant become a reality there are two scenerios that should be investigated – A good spine for Peter Costello!!
- Keep Peter Costello OFF the donor list…LOL!!!
Wheres my gravitar?
I have wondered over the last decade if the deregulation of our financial system would lead to people going into more and more debt with the plastic card and also 100% mortgages for bigger houses – with no colateral of their own to get damaged the inidvidual will stretch the enveloppe to whatever limit is not put on them – then things turn sour and they face going bust and complain. This is a downhill slide that few resist and neither party want to stop. The US situation shows that greed outperforms responsibility in all financial areas. Would any government want to reintroduce regulations that require a person to put up 10 or 20% colateral for a mortgage or plasma tube?
20% collateral is getting pretty unrealistic these days. On a normal home in the suburbs at current prices that’d require a deposit of $90k.