November 18, 2003 | Graham

High taxes lower fertility – it’s official

Expert reports should always stand on their own merits, but if you are going to cast a critical eye over them it helps to work out who commissioned them. In the case of yesterday’s NATSEM report “Income and Wealth of Generation X” it is the AMP, whose major business is selling investment products to Australians. Getting younger Australians into investment products is good business for the AMP because they pay fees for longer, and you have to spend less recruiting replacement clients boosting its income and cutting costs simultaneously. So the first thing I did was cast a critical eye over the claim that Gen X is less well off than the Baby Boomers.
This claim seems to rest on the case that they pay more for housing and education than the boomers did, and that they will need to support the boomers in their old age. This is most dramatically illustrated by a graph (p 12) showing that in 1986 the 25 to 39 year olds held 27% of all wealth, while now they only hold 19%. But what if this is a result of choice rather than circumstance? They say that 30 is now the new 20, as younger people hold off adulthood until later in life – a rational result of the expectation that they will live longer and therefore don’t have to grow up as quickly.
As a result Gen Xers live at home longer and are less likely to own a house. Take another look at the graph and the dates which it spans. Every other age group either increased their wealth or kept it steady over that time scale. Given that the percentage of older people in the population has increased; that house prices have boomed in the interim; and that Gen X have yet to buy the house because they are still living at home and the change can probably be explained without assuming they are somehow doing worse than earlier cohorts. This wouldn’t suit the AMP though, would it?
Another agenda also appears to be running here, quite independently of the need to sell investment products, and that is the fixation of some with the idea that university education ought to be completely free or at least substantially cheaper. NATSEM Director Professor Anne Harding ran this line with a new angle, which is reflected in the report. She blamed HECS debts for the decline in fertility amongst educated women – “It’s possible that we may see major declines in fertility amongst university-educated women if they have to struggle with very high HECS debts”. This is interesting, because for quite some time now the more educated a woman, the more likely she is to have fewer children for quite logical reasons which have nothing to do with the cost of living and everything to do with choice.
I doubt whether you will find too many taking up Harding’s line. When you think about it, the only way to eliminate HECS debt is to increase taxes to provide more funding for universities. But then a HECS debt is in effect an hypothecated tax on tertiary educated Australians. If HECS debts lead to lower fertility, then so too must higher taxes. The sound you can hear is a dog chasing its tail.

Posted by Graham at 1:06 pm | Comments (2) |
Filed under: Uncategorized


  1. Dear PM, John Howard,
    Please read the webpage written by your Minister for Education,
    Science and Training, Brendan Nelson…
    Insulting Education Policy
    The content of this “Education” policy is considered very insulting to the
    intelligence of most University lecturers and academic staff… It has been
    common knowledge that University funding has hardly increased over
    the past decade in proportion to the growth of student enrolments. As a
    full time lecturer for the past 5.5 years, I can tell you from experience that
    most University staff members are overworked and being forced to teach
    more students than they can handle… eg. Last year, I taught over 180
    students per week for 3 subjects in one semester BY MYSELF without
    the aid of additional tutors. It’s even worse this year, where I am in
    charge of teaching over 220 students (and 50+ students in Malaysia)
    by myself… on average, the workload on University lecturers has more
    than DOUBLED in the past 10 years, and the words of your minister,
    Brendan Nelson, are nothing but a “slap in the face” to hard-working
    teachers and academics who wish to preserve their job security and
    keep their salaries.
    Basically, that new policy is “Union Busting” and aims to remove the
    “representative” voice of the majority of academics in an attempt to
    “improve efficiency”… (what an insult)… If you think ONE person teaching
    220 students per week (sometimes even working as late as midnight
    just to get assignments and exams prepared and marked on time)…
    is NOT efficient enough, then all you politicians are totally out of touch
    with reality and you just don’t know how hard it is to maintain high quality
    education levels on our current “shoestring” University budget.
    Deterioration of Quality of Education
    Even local TAFE colleges are closing down practical courses in metal
    work and fitting/turning (with industrial production machines), because
    they simply can’t afford to keep maintaining & upgrading their machinery
    due to the limited Government funding. Australia’s “value adding”
    productivity only contributes to about 8% of our GDP (earnings), which is
    the LOWEST performance for any of the OECD countries. It looks like
    Australian “value adding” manufacturing is going to die out.
    Why is it that government funding to Universities has not increased in the
    last 8 years, despite the fact that the number of student enrolments have
    more than doubled? This has created enormous pressure on teachers
    and lecturers, as most of them are now unable to provide sufficient
    help for struggling students let alone cope with the large numbers of
    assignments and exams they must take home and mark. Personally, I
    am solely responsible for teaching about 225 student engineers each
    week! Another Civil Engineering friend is single-handedly teaching
    approximately 320 students, yes, on his own! This forces him to allow
    all students to pass his subject, without any assessments or feedback
    on how they are performing during the semester. Would you trust one
    of his students to design a suspension bridge that you will have to drive
    your car over? (if he has not been examined and tested appropriately?)
    Would you trust your life to a mechanical engineer who designed the
    brakes of your car, if he hasn’t been tested and proven “fit” for the job
    of designing machines safely and reliably?
    Worsening Standards of Living in Australia
    At least Aussies can keep educating themselves on how to renovate
    their homes in 101+ ways, with the dozens of “home improvement”
    shows on TV… so that they can sell their homes for rip-off prices and
    the Reserve Bank can keep printing more money to back up over
    inflated Home Loans issued by Banks. The real-estate bubble
    can’t get any bigger, simply because there are not enough people with
    high-enough earnings to keep houses growing in value… Selling houses
    for double their value does NOTHING to improve the standard of living
    in Australia. In fact, over-valued house prices and more money being
    printed will lead to hyperinflation and a seriously depressed economy,
    like that of the US. The truth is, over the years, there has been a gradual
    decline and reduction in the availability and affordability of essential
    infrastructure and hospital/education services to ordinary tax-payers.
    There has also been a gradual reduction in manufacturing and value
    adding activity in this country.
    The Reason behind the Poverty
    Many big-shot corporate executives (and politicians) seem obsessed
    with getting as rich as possible and living lives of shameless luxury and
    excessive pleasure-seeking, at the cost of hard-working people who do
    not have much money to save due to the high costs of living in Australia.
    Like I have told you in previous Emails, Australia is following the
    disastrous course of “privatizing everything”, including all the tax-payer
    owned assets and utilities companies… The US has done that with most
    of it’s public infrasture already, and look at the complete mess the US is
    in today! So many power station failures (because many privately owned
    corporations are only concerned with making a quick buck and running
    away with a lot of money, without investing money into infrastructure
    upgrades/maintenance and repairs)… The Australian Government
    should get away from selling away all of its assets (just for a quick buck),
    because the new owners are only interested in profit (charging higher
    prices to get rich quick, and putting in as little money as possible into
    maintaining and/or improving their services). That’s why the US is in
    such a big mess. The Enron Energy company collapsed, because its
    director’s got too greedy. The same story goes for OneTel (here in
    Australia), and even Ansett (which got abused by its Air New Zealand
    owners). Whenever you have private owners involved, their main
    motive for being there is NOT to improve services or reduce the cost of
    such services, but to make a quick buck and abandon the company to
    retire early, fat and rich, in the Bahamas.
    Our government should NOT try to privatize (sell off) Universities and
    other publicly owned assets (like airports, council bus services and
    even Australia Post), because standards of service and value for money
    have always worsened, here, and in similar cases overseas. What
    next? Let’s sell off our High Schools, and maybe even the Police? Why
    not privatize the Police Force, so that whoever can pay them the most
    must be in the right, and Police can be paid to arrest anybody a rich man
    doesn’t like. You see where it is leading? All this cost cutting and
    privatization? It is simply destroying Australia’s standard of living and
    making things more expensive for ordinary people to afford. The average
    Australian spends upwards of 82% of his/her before-tax income on paying
    for essential “costs of living”, such as rent/mortgage, car maintenance and
    fuel (mainly used for going to/from work), and compulsory household bills
    (phone, power, water, sewage, council garbage collection, emergency fire
    and rescue levy), etc.
    Let me give you a quick reality check Mr Howard. The Australian Burueau of
    Statistics (ABS) reported last year that the AVERAGE Aussie taxpayer only
    earns $31,500 per year (gross) before tax. (Remember, 50% of people
    earn less than this)… Now let’s look at our cost of living with numbers:
    $31,500 GROSS pay (before tax)
    now from this, subtract all the following MINIMUM expenses:
    – $5,800 (compulsory income tax)
    – $6,000 (food expenses, breakfast, lunch & dinner for ONE person)
    – $14,300 (mortgage on an average $200,000 house @ 6.1%pa )
    – $600 (home & contents insurance for a $200,000 property)
    – $1,000 (council rates)
    – $4,000 (general household bills: telephone, power, water, sewage)
    – $2,000 (car fuel to get to work – assuming only 1 car fully paid)
    – $400 (comprehensive car insurance)
    – $400 (car maintenance and repair – twice a year)
    – $424 (3rd party compulsory insurance & 1 year car registration)
    – $3424 EARNINGS
    Yes, the AVERAGE Australian LOSES $3424 per year after their BASIC
    costs of living are deducted. This does NOT include other costs such
    as repayment for a car loan, entertainment, or even the occasional
    holiday. Even if such an AVERAGE Australian does NOT have a house
    mortgage to pay off, assuming an average weekly rent of $140 per week
    ($7280 per year) and no home insurance, that EARNINGS figure would
    only be $4196, or about $4200 per year in DISPOSABLE INCOME,
    which that person can save or invest to improve himself.
    Ok, if the BEST an Average AUSSIE can save is $4196 per year, then
    that amounts to a net daily profit of $4196 / 365 = $11.50 cents per day.
    That is barely enough to buy a McDonald’s or KFC snack for two…
    Oh, and I forgot to mention the $6.00 per month account keeping fees
    charged by banks, which amounts to about $72 wasted per year .
    Is it any wonder why Australians are so careful with their money and they
    don’t want to spend it? The very high cost of living in Australia is what is
    pressuring people to avoid raising children, because children are very
    expensive to support. When people don’t spend, businesses just close
    down and sack more people, or if they’re smart, they head off overseas.
    That’s where most of our best talent and brains are going… overseas…
    Look at all the famous Australian Hollywood actors/actresses, engineers,
    inventors, scientists and business people who have left this place.
    Is it any wonder why so many formerly Australian-owned businesses
    are selling out to overseas buyers? Aussie business owners are so
    tired of struggling (paying two-thirds of their earnings to the tax office)
    that they would rather sell off Australian control of their company, so they
    can get out of this country and retire. eg. Why do many of the big name
    tennis stars keep their money offshore? All the banks here seem to keep
    increasing their fees and charges, eating away at all our little savings…
    Why did the Treasury end up with a HUGE budget surplus of about
    $7 billion dollars? Did you also know that the Australian Government
    collected (in tax) money equivalent to 43% of Australia’s Gross Domestic
    Product? Where is all that money going? Why are politicians continually
    getting higher and higher pay rises? (many in excess of $200,000 per
    year – where ministers and senators have up to 14 to 20 times the
    DISPOSABLE income of the ordinary Average Aussie)… while Australia’s
    hospitals, educational institutions and road systems and not being
    maintained and upgraded?
    The worldwide problem of Globalisation
    Please read:
    and you will learn the truth about why the US is in the worst economic
    depression in history. Australia is following the same path at the US it
    seems… None of the leaders here seem to care about anything else
    except getting as filthy rich as possible, even if it means ripping off hard
    working taxpayers who do all the work in society. Watch out for
    March or April 2004… Larouche has predicted a major stockmarket
    crash in the US (the largest crash in history is soon to come), and
    most people are still in denial they they are living in a economic
    depression… (Larouche had successfully predicted the last 4 major
    stockmarket crashes in world history, and this time, he is certain the
    world monetary financial crisis is inevitable – banks and most of the
    world governments just cannot pay back their debts)
    A question of Incentive
    Why should the Government politicians have to care at all? They are
    all going to be multimillionairres when they retire ($1.5 million super
    payouts, at the taxpayer’s expense)… and if monopolistic energy and
    telecommunications company’s wish to charge an arm and a leg to
    rip us all off, then why should the Government come to the aid of the
    ordinary struggling tax-payer? Because the Government ends up
    collecting more money in tax from that privatized corporation that raised
    it’s prices unnecessarily… (eg. Why are Telstra monthly phone line
    rentals now around $25 per month, when they used to be only $13 per
    month a few years ago? Who else COMPETES with Telstra in providing
    phone line installation for houses? So clearly, Telstra is still a monopoly
    organization and faces no pressure to lower its prices)… so the truth is,
    the RICH WILL KEEP GETTING RICHER (from not doing extra work) and
    the vast majority of Aussies will keep GETTING POORER, feeling more
    financially hopeless as there is no more control over the ever increasing
    necessary costs of living… inflation is increasing at a MUCH faster rate
    than our DISPOSABLE INCOMES, and things are simply getting worse as
    the years go by… Why should the Government stop Banks from charging
    ever increasing fees (legalized theft) from our savings accounts, which
    is NOT done by many major banks overseas? Why? Because the ATO
    gets to collect MORE tax from such banks who rip off their customers,
    and more money is available for politicians to award themselves pay
    rises every month.
    Sky-rocketing house prices are also not justifiable… and pretty soon, it
    will be impossible for the average Aussie to afford a new home, let alone
    a deposit on a house, the way stamp duty and charges keep rising. Just
    look at the news stories lately. Most young Australians cannot afford to
    even move out of their parent’s home and buy their own house, let alone
    afford a wedding celebration. The costs of living have become too high
    for most people without a “white collar” stable job. The majority of the
    wage/salary earners in this country have been reduced to a “slave” class
    destined to spend the rest of their lives spending almost everything they
    earn and work hard for, on basic (essential) costs of living, while all the
    wealth and profit they generate goes to the coffers of a few rich business
    owners, banks and politicians. Australia is fast becoming an
    UNcommon-wealth nation, because most people do not have any
    savings, nor any potential for savings, under our current tax laws and
    over-pricing society.
    I grew up in Australia since the age of 2 (since 1974) and I have only seen
    our standard of living continue to get worse over the years. There are so
    many poor people now in this country, and I see many businesses
    selling out to overseas owners and abandoning this country to work
    overseas, where conditions and taxes are fair and reasonable. At least
    there, they feel like they can save some money for their retirement.
    The Solution
    Remember, the BEST that the average Australian can earn each year is:
    – $3424 (debt)…
    This is really a crying shame for such a resource-rich country with so
    much potential for productivity and economic growth.
    Get rid of unproductive jobs which do not involve PHYSICAL WORK or
    value adding. eg. too many politicians that are not doing anything useful,
    Bankers, Financers, Share-market speculators who trade nothing but
    paper (which keeps increasing in value)… Australia should follow the
    path of China’s economic progress by VALUE ADDING… forget following
    the Americans and the British… they don’t do much value adding anymore
    and they aim to maintain their control of the entire global financial world
    by manipulating currency values to their advantage, via the IMF/World
    Bank… in effect, adjusting the “value” of other currencies relative to theirs
    so they can exploit poorer countries and purchase products dirt cheap,
    at the expense of the hard work of people in developing countries who
    look up to the US and the UK for leadership. The “free trade” policies of
    the G7 (most developed) countries amounts to nothing more than
    legalized slavery and looting, taking advantage of people in poorer
    countries. Get rid of this unfair modern-day slavery system that enriches
    the laziest pleasure-seeking countries (the US, UK, Australia, and other
    Western-like nations). Return to the Gold-standard, where every
    currency is FIXED in value, relative to every other currency.
    For example, if I work 2 hours to buy a product that retails at AU$250
    here, a British person (with their higher UK pound currency) can come
    here and buy that product with only UK100 pounds, which would have
    cost him only less than 1 hour of hard work to earn, if he was doing the
    same job I am doing in the UK. In other words, why does the 1 hour of
    work by that UK person equal 2 hours of work for me? Are the British
    people just “better people” than Australians? Clearly, the much higher
    currency value of the pound gives the British a huge buying advantage.
    That’s how unfair the foreign exchange system is! And if I am going to
    the Philippines, why does my $1 equal around 20 of their peso (dollars)?
    Why does it cost me the equivalent of under 10c Australian to buy a can
    of Coke in Philippines? When I pay $1.40 for it here? Clearly, the world
    currency market was designed to allow the wealthier nations to exploit
    the hard work and efforts of people in the developing and poorer
    countries, so that people in the richer countries (with the higher currency
    values) don’t have to work as hard… That clearly goes against all
    principles of fairness and “equality” of all men.
    But watch carefully as the US economy sinks deeper and deeping into
    history’s worst depression… Australia is following closely behind, and
    we can expect more protests, strikes and social breakdown as people
    will find it harder to find work and pay off their essential costs of living.
    The super-rich bankers and financiers who control our monetary
    systems would rather say: “Screw the people, they must pay back their
    debts or let them die! So what if society stops functioning, as long as
    we get back our money with interest!” (Money earned from “interest”,
    which is not generated from value-adding, physical work… “interest”
    charges added to money that does not even belong to them, but which
    was printed by the country’s Reserve Bank)
    What Politicians must do…
    Lately, the organizations that protested against the Governments pay
    conditions & policies include: nurses, high school teachers, doctors,
    police and now, University lecturers! Don’t you think you had better give
    us Aussies a little breathing space so we can TRY to enjoy some
    rewards of our hard work, how little they may be? If you don’t, your
    government will quickly be voted out of office, I can guarantee you that.
    Your job, and the job of EVERY politician… is not to seek ways on how
    to shortchange taxpayers so you can all get increasing salaries, but to
    KEEP AUSTRALIANS HAPPY… and leave them with at least 50% of
    their income to SAVE as disposable income. Without any disposable
    income, people will only get deeper and deeper into debt, and become
    unable to support local businesses with regular spending activity.

    Comment by Dr Sam C — November 29, 2003 @ 2:47 am

  2. A very interesting and honest letter by an
    Expatriate Aussie living in Hong Kong…

    Comment by Dr Sam C — November 29, 2003 @ 3:13 am

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