AARON PATRICK: Australia faces economic and demographic stagnation, Albanese embarks on diplomatic project

We really are in trouble. Australia should be one of the world’s richest nations. Instead, her long-term prospects are economic and demographic stagnation.

The grim outlook was confirmed on Monday by the federal Treasury’s Intergenerational Report, a once-in-four-years stocktake of the nation’s future.

Although packed with arcane data, the central messages are simple. Australians aren’t reproducing enough to sustain a properly functioning economy. In about 35 years, Australia will cross a terrifying threshold when deaths overtake births.

Unless someone can work out how to reverse the declining fertility rate (Bob Katter suggests a $70,000 baby bonus), Australia will be left with a choice: shrink or import some of the millions of foreigners desperate for Aussie sun, surf and free healthcare.

While this population turning point draws closer every year, Australian ingenuity has gone walkabout. Known to experts by the ugly term productivity, the regular efficiency improvements that make individuals richer are disappearing.

Using what looks like an over-optimistic annual productivity increase of 1.2 per cent, Treasury predicts the average Australian will earn $149,500 in 2065, up from $96,500 today. Using the 0.8 per cent average of the past 20 years — which some economists think is unsustainable — the average income will be $136,600 in the ‘60s.

Australians will be a little better off. They’ll also be funding a government with far more debt in absolute and relative terms while trying to manage the social consequences of a large immigration program.

No nation crisis?

The productivity problem is not new. It is a driver of the recessions many Australians are experiencing in their own personal economies. The reason a recession does not appear in the national statistics is because of the 300,000 or so immigrants added to the population last financial year, and more in proceeding years.

If politics reflected the plight of the people, Australia’s per-person living standards decline would be treated as a national crisis. Ministerial decisions would be issued weekly. The prime minister would not rest until Australians were wealthier again.

Instead, Anthony Albanese is in New York where he will receive an award from the Atlantic Council think tank for being a good “global citizen”, the kind of recognition that global elites specialise in sharing with each other.

He will also launch a multi-million-dollar diplomatic campaign with Foreign Minister Penny Wong to secure a vanity seat on the UN Security Council.

Fortunately, for Mr Albanese and Ms Wong’s election prospects — less so for the Jews — Australia slipped in behind the UN house view last September and “recognised” the nation of Palestine.

While the prime minister plays global statesman, Australia faces 40 years of Budget deficits, slowing growth and a population conundrum.

He left the talking to Treasurer Jim Chalmers, who excels at it.

Dr Chalmers’ Budget deficits are contributing to the inflation making many Australians poorer. Instead of acknowledging his shared culpability, he chose to engage in philosophical observations that would have gone down well at the Atlantic Council.

“If people are unmoored economically, generationally, they feel disconnected from and disregarded in our politics,” he said. “At worst that’s what we’re seeing now. At best it’s what’s at stake.”

Rather than psycho-analyse his fellow countrymen, Dr Chalmers could try to convince his leader and Cabinet colleagues to read Treasury’s 352-page national prognosis.

They could all then come up with treatments that live up to Dr Chalmers’ strange claim this year that he introduced “the broadest productivity push in a budget since the 1990s”.

Because, as the opinion polls show, many voters no longer believe what Mr Albanese says. If Dr Chalmers keeps telling them how great he is, and interest rates and prices continue to rise, they may struggle to buy that story too.