GOVERNMENT debt in Australia has fluctuated furiously in all the time we have had public finance, so it should not be a big item in an inter-generational report.

Other things are much more important. When you look at them, future generations would much prefer a pile of debt and those things protected than no debt and those things lost.

The most important thing to pass on to future generations is having the planetary resource in good shape. Without that, living standards can only decline.

Australia cannot on its own deal with the planet’s atmosphere, but it can do its bit to build a worldwide effort.

Next, we must ensure that we pass on a better Australian environment, just as the previous generation did for us.

From the early 1970s on, governments have restrained environmental pillage. Legislation demanding cleaner conduct by business and individuals has been put in place. Areas of environmental significance have been protected.

It has not been all brilliant, but we are more aware of endangered species.

An intergenerational report would monitor performance and warn of the dangers.

Then we must pass on Australia’s agricultural base and its enormous capacity to produce food, especially for export. Instead of obsessing about the ageing population such a report would worry more about the increasing population and how it threatens that food-producing and food-exporting capacity.

On the same point, it would reveal the threat to prosperity posed by the huge infrastructure burden caused by the fact Australia’s population is increasing faster than nearly all industrialised countries.

It would point to the decreasing livability of large cities poorly served by public transport and how people’s time (as precious as their money) is being swallowed by commuting times.

A solid intergenerational report would point to the shameful decline in housing affordability and propose measures to deal with it. And those are not the measures proposed by self-serving industry. Rather it is to slow immigration.

The latest Real Estate Institute of Australia’s affordability report out this week has first-home buyers at 15 per cent of the market, compared to an historic trend of 20 per cent. So we are saying to a quarter of the next generation to forget the dream of home ownership.

Other trends in government behaviour are worse than incurring debt (especially if the borrowed money is spent wisely giving better returns than the low interest at which it is borrowed).

One is spending money, especially borrowed money, unwisely or spending more money on non-capital items than you raise. That is the problem with Australia’s public finances right now, as the 2015 report points out. But the solution is to raise more money (fairly) and cut spending on rubbish. That is not happening.

But there is more to intergenerational equity that getting the Budget in order. And you do not get intergenerational equity if you get the Budget in order by shrinking the public sector just for the sake of it.

A good intergenerational report would point out the following disturbing trends for intergenerational equity. In its attempt to get the Budget under control the Government is shifting spending, especially in health and education, from the public sector to the private sector.

In doing so it loses economies of scale and the advantage of large buying power. An individual buying pharmaceuticals, hospital treatment, or schooling will get done over. A government, on the other hand, has buying power to bargain with and economies of scale. This is why the US spends more on health for poorer outcomes than most European countries, Australia, New Zealand and Canada.

A government that goes down this path may fix its Budget but will make the future of its people poorer.

Also it will impaire the health and education of many young Australians whose parents cannot afford the increased cost of private education and health.

Preventative health – immunization and dealing with obesity; early childhood intervention and domestic violence affect the future generation. They require government action.

If you want to be fair to the next generation you cannot wash your hands of these things. And if a government sets off a trend towards greater inequality, the whole of the next generation will be poorer. Inequality harms the wealthy as much as the poor. Higher inequality harms productivity.

Engaging in wars that have nothing to do with us has had an enormous impact on the prosperity of future Australians. The repatriation costs and the security costs caused by making ourselves an enemy will be with us for generations. And yet we are at it again.

A good intergenerational report would bemoan the way Australia is depleting the scientific and other research base upon which future research and consequent prosperity is built.

Right now the continued funding of $150 million in scientific research is blocked in the Senate – tied to other irrelevant legislation. It is pig-headed vandalism. Scientific-research capacity is built up generation by generation. It only takes a small part of one generation to disrupt it to inflict great cost on future generations.

Similarly, depleting the skill and knowledge base in public administration is a false economy and denies future generations things that were passed to this generation.

Handing valuable revenue to foreign shareholders in the form of lower corporate tax denies future Australians that money.

On aging and retirement, it is idiocy to give away more in superannuation concessions to relatively wealthy Australians than they save in pension costs.

If aging is a problem for government finances, why does the government hand out pensions without means-testing the family home which might be worth millions and which is then handed on unscathed to richly undeserving kids.

Australia is one of the best places on earth to live because generations of Australians have built up a stock of social capital; an immense system of public infrastructure; and institutions, commissions and authorities that contribute enormously to the public good.

They should be built up and kept in good shape for the next generation, not shrunk or destroyed just to get the Budget back in order without raising any extra tax. That path is simply not fair to subsequent generations.

CRISPIN HULL
This article first appeared in The Canberra Times and Fairfax Media on 7 March 2015.
www.crispinhull.com.au