Three headlines within the past seven days from The Australian, the ABC and The Sydney Morning Herald respectively give a good indication of Australia's future direction and challenges. The question of terrorist attacks may very well be real but they will ultimately reduce the well being of the nation principally through the over diversion of resources rather than through the direct loss of lives and property.

Since the middle of the previous term of the Coalition Government the Federal Treasurer, Peter Costello, has referred to the burden on the nation's resources of caring for an aging population as we move toward the second half of this century.  And this past week is quoted by the ABC observing, "Demography is destiny, our destiny has been set by the changing fertility rate since the 1960s; it's set in stone; we can't walk away from it; we can't change it."

He went on to comment that the government is dealing with the coming tide by making health care more cost-efficient and is considering raising taxes as well as addressing other concerns engendered by the increasing proportion of the ageing such as working to improve economic productivity. Just what are the specifics of what the Federal Treasurer is alluding to wasn't delineated.

What is clear, however, is that it's looming to become a big problem. According to a draft report released by the Productivity Commission,  Economic Implications of an Ageing Australia, by 2045 twenty-five percent of Australia's population will be 65 or older, nearly twice as many as now, while caring for the aged will require the equivalent of 7% of the estimated GDP. Put simply, over the next forty years the cost to the Australian economy is estimated to be two trillion dollars $2x10¹². Concurrently Australia's economic growth is predicted by the Productivity Commission to decline to half its current per capita rate by 2025 despite Mr Costello's assurances that the government is working to improve economic productivity.

One of the approaches that the Federal Government is not taking, is to develop a program of increased support for Australian research and development. Once again the Australian Vice-Chancellors' Committee, hardly a wild-eyed radical association, has pleaded with the Federal Government to "...now move to ensure the effective delivery of its higher education commitments, particularly through increased investments in universities, proper support for research and development and the removal of intrusive red-tape. It has the ideal opportunity to do this in the 2005 Commonwealth Budget."

And as though trying to lift the scales from the eyes of the Prime Minister, John Howard, and his Minister for Education, Science and Training, Brendan Nelson, the AVCC's President, Di Yerbury explains, "Universities' primary mission is to give the very best support to Australian society by driving innovation, excelling in research and providing high quality teaching and learning for our students. This mission is increasingly important to ensure Australia competes effectively in our globalised economy."

How much notice will be paid to the AVCCs entreaties is debatable, The Australian's Samantha Maiden reports that "Public spending on unis [is] to fall sharply." The Productivity Commission in its Economic Implications of an Ageing Australia estimates that sources other than federal funding will account for 66% of contributions to universities' expenditure (it currently amounts to just over half).

Either Professor Yerbury's assessment of the universities' mission is markedly wide of the mark or the Federal Government remains grossly deficient in meeting its obligation to Australia's future generations.

All the while Australia's current account deficit grows and shows signs of accelerating. This past September Harry Robinson in an opinion piece for TFW wrote on the possible musings of an insomniac Federal Treasurer and the current account deficit (CAD?). Now Mr Costello has gone public agreeing that the record $13.7 billion current account deficit for the September quarter is not really a good thing. In fact it amounts to just over 6.5% of GDP for the quarter.

Australia's net overseas debt has now risen to $406 billion, i.e. 50 per cent of annual GDP - a record proportion. In simple terms the current account deficit - the trade deficit plus interest payments to foreigners - went up just under $2 billion, or 16 per cent compared to the June quarter, and the annual deficit rose to just under $50 billion a new high as well.

The Sydney Morning Herald's Mat Wade writes, "Export volumes fell 3.2 per cent last quarter as import volumes rose almost 1 per cent, meaning the nation's trade performance will drag on growth for the 13th consecutive quarter. Australia's weak trade performance will subtract 0.8 of a percentage point from economic growth in the quarter..." Wade then goes on to report, "A University of Sydney economist, Associate Professor Dick Bryan, said the deficit was 'a manifestation of debt-driven consumption'. Some economists say the scale of the current account deficit highlights two dangerous economic imbalances: spending has run ahead of the economy's productive capacity, and a decline in Australia's international competitiveness. The huge deficit came despite the best trade prices for decades and a buoyant world economy - both positive for exporters."

So while the Prime Minister is talking up pre-emptive strikes against perceived danger abroad the dry rot creeping on the nation's well being is all but neglected.  If Professor Yerbury says it like it is, i.e. "Universities' primary mission is to give the very best support to Australian society by driving innovation, excelling in research and providing high quality teaching and learning for our students. This mission is increasingly important to ensure Australia competes effectively in our globalised economy," then it's well past time that the Coalition Government got serious about revitalising the university sector as one manifestation that it's prepared to get "real" as far as putting the nation above party.

Alex Reisner

The Funneled Web