What will it cost to live longer?

SPEAKER_1 (0:00)

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Matt Bevan (0:08)

You ever watch the news and think, whoa, this seems unprecedented?

Ian Verrender (0:12)

Unprecedented.

Carrington Clarke (0:13)

It's unprecedented. This has never happened before.

Ian Verrender (0:16)

This is unprecedented.

Matt Bevan (0:17)

I'm Matt Bevan, and my show, If You're Listening, is about finding times that what's happening now has happened before and figuring out what we can learn from it.

Learning from history, I mean, who could imagine? New episodes every Tuesday and Thursday on ABC Listen, or wherever you get your podcasts.

Carrington Clarke (0:38)

A little thought experiment. What will Australia's economy be like 40 years from now? According to Treasury's latest Intergenerational Report, there will be about 40 million of us. But will they be living better lives than the 28 million kicking around today? And could AI finally turn around Australia's flagging productivity problem? Welcome to ABC Business Daily.

I'm Carrington Clarke.

Ian Verrender (1:05)

And I'm Ian Verrender, the ABC's Chief Business Correspondent.

Carrington Clarke (1:08)

Ian Verrender, thank you so much for joining me on Thought Experiment Day. We're talking about the future Australia. We're supposed to be living longer, hopefully healthier. Unfortunately, you're not at full strength today, but we thank you for joining us with your insights into this report. Let's start with the positive, which is that Australians are expected to be living longer, hopefully more fruitful lives.

But is that where the good news kind of ends with this Intergenerational Report, Ian?

Ian Verrender (1:39)

Look, I guess these Intergenerational Reports, I mean, how difficult is it to try and predict the future? I mean, people out there making a fortune trying to predict what's happening with interest rates next month, and no one can seem to agree on it. So trying to come up with a cogent argument about where we're going to be in 40 years time is almost impossible. But it's a useful exercise nevertheless. And when you don't hit those targets that you thought you were going to hit 20 years ago, as the first report in 2002, and it was what, 24 years ago now, you know, when you don't hit those targets, you have a look and see, well, why didn't we? What changed? What went wrong? And maybe that's a bit of a road map, as it were, to try and figure out, well, here's something that we can fix to ensure that we do get to where we want to be in the future. There's no doubt that we are facing a pretty difficult environment in the next few years. I mean, you just look at what's happening with geopolitical situation at the moment. You know, you've got superpowers at loggerheads, China, Russia, America, trade seemingly falling apart, wars in Europe and the Middle East and elsewhere, of course. So things aren't terrific at the moment.

And of course, when you look at this, I guess, Intergenerational Report about where we're going to be in 40 years time, as you say, there's going to be a lot more of us, but we're all going to be a lot older as well. And that creates a lot of challenges. And it's something that we really need to, I guess, address how we cope with that.

Carrington Clarke (3:16)

I feel like when this all began, and the hints in the title, it was about thinking, what are we going to be leaving to the next generation? What kind of economic circumstances will they be inheriting? And back in 2002, it was about, well, is the budget going to be in better condition? Are our finances going to be in better shape? And one of the things that does strike you when you read this report is that, are we giving up on the concept of a budget surplus? Is, have we just entered a period where we think we're never going to be raising more revenue than we're paying out because of the huge draws on the budget, like things like the NDIS or the pensions as people get older.

And is that a good or a bad thing, Ian? Is that a value judgment?

Ian Verrender (4:07)

Well, you know, you can always fix these kinds of situations, but there are some pretty unpalatable decisions that you have to make to fix them. You know, if you're not bringing in enough tax to cover, you know, your costs, your expenditure, well, you can do one or two things. You can either raise taxes or you can cut your expenditure or a combination of the two. So it's not an impossible task, but it is very difficult. Now, Australians have demonstrated over the past 20 to 30 years that they demand a lot of services from our governments, and they're not prepared to really pay for it. And that is where the problem lies at the moment. So in many ways, looking at where we're going to be in 40 years from now, it's pretty illuminating about what the problem is going to be, and it just really gets down to, can we fix it?