TICK, TICK, TICK...

Battle will rage between young and old (The Australian, October 05, 2004)

On the idle hill of summer,
Sleepy with the flow of streams,
Far I hear the steady drummer
Drumming like a noise in dreams.

(A.E. Housman, A Shropshire Lad)

Housman was warning, in 1896, about the approaching Great War between nations. The steady drumbeat in this election campaign heralds a coming war between the generations.

Our summer has been the extraordinary spell of economic growth, now entering its 14th year, and its harvest a run of rich budget surpluses. Some of these have been used wisely, to reduce public debt.

But not any more. This election has been a bidding war between John Howard and Mark Latham to see who can make the most irresponsible, open-ended spending commitments to an ageing population. In the early stages Howard was looking comfortably ahead, but Latham has moved to the front of the field with Medicare Gold.

The idea of generational warfare is not fanciful. Central bankers are not noted for flights of hyperbole and here is what Reserve Bank of Australia governor Ian Macfarlane had to say to the Pursuing Opportunity and Prosperity Conference, run by The Australian and the Melbourne Institute: "If we are not careful, there is a potential for conflict between generations. The young may resent the tax burden imposed on them to pay for the pensions and health expenditure of the old. This will particularly be the case if they see the old as owning most of the community's assets.

"At the same time, people -- retirees in particular -- are likely to be feeling less secure as they may be disappointed with the rates of return they are receiving on their savings. It seems to me that the community has not yet come to terms with the fact that nominal rates of return on financial and real assets are likely to be much lower over the coming decade or so than over the previous two decades."

The usual (and only) acceptably polite response to this looming problem is that immigration will save us all, but isn't there something a little sordid about an immigration policy designed to ensure there are lots of hard-working, dark-skinned types paying for the long and comfortable retirements of white folks?