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Does history repeat itself? If you believe the great American writer Mark Twain it doesn’t, but at best it sometimes rhymes. English essayist Max Beerbohm went one step further. According to him, it is only the historians repeating one another.

And yet, despite the widespread claims of history’s one-way street, Australia’s present has an eerie resemblance to the past. Not Australia’s past, to be sure. For anyone with a remote memory of Europe’s 1980s, contemporary Australia must seem like a weird kind of time-travelling experience.

Not in the superficial sense, of course. Australians have been spared the return of the shoulder pads; we are not spending endless hours reassembling Rubik’s cubes; and we can only hope that Rick Astley’s comeback attempts won’t go anywhere.

Australia is living through a European 1980s revival. The 1980s in countries like Germany, Austria and Italy were a pleasant era to live. They were not perfect, of course, but the economy grew steadily, unemployment was low and manageable and social cohesion was strong.

If this reminds you of today’s Australia, it should. Australia is enjoying a feel-good phase, just like the one Europe experienced 20 to 30 years earlier. It is all the more remarkable since the rest of the developed world, on both sides of the Atlantic, is battling the consequences of the GFC. Tellingly, only the Australians have abbreviated the western world’s deepest crisis in decades with an acronym as if it was something that didn’t need spelling out.

Such smugness is the breeding ground of complacent policymaking. The higher you hold your head up, the less you see the pitfalls along the way. The more you ignore the real challenges of the future, the more time you dedicate to distracting side shows. The main reason why Europe is in such a bad shape today is precisely the lack of awareness of its real predicament in the 1980s.

Back in the 1980s, it was already abundantly clear for anyone with open eyes that Europe was heading for difficult times. Experts were warning of the effects of an ageing society. They were pointing at the growing education gap between the native population and migrant newcomers. They were warning of the long-term effects of the welfare state.

The writing was on the wall, but the Europeans rather painted it over and pretended to solve the more important things. They were worried about the forests dying; they were concerned that robots could dehumanise the workplace and alienate workers; they were afraid of the use of growth hormones in cattle farming. Genuine concerns, certainly, but not quite the actual problems of the continent.

Europe was preoccupied with all sorts of real and imaginary scandals. It happened with the glee of someone who occasionally needs a distraction from his all-too-comfortable life. Anyway, it was far more pleasant to discuss the rampant sexism in advertising than to actually reform the tax system, tackle the growth of a disaffected underclass, or consolidate public finances. It was an indulgence that Europe believed it could afford. As it turns out a generation later, it could not.

We are now watching history repeating itself in a different place. Australia is in an extremely fortunate situation as the only Western economy weathering the storms of financial crisis almost unscathed. Australia’s unemployment rate is less than half that of the US; total debt is not even a quarter of Germany’s; the economy will keep on growing when the rest of the world fears a double-dip recession.

Once again, Australia can pride itself as being the ‘lucky country’. It seems to grant Australian politicians in this year’s election campaign a luxury. Instead of having to crack tough nuts, they feel safe to go for the low-hanging fruit. No wonder last Sunday’s TV duel was full of the usual platitudes of ‘hard-working families’, ‘moving forward’ and ‘sustainable Australia’. But although it was mentioned umpteen times, ‘fair dinkum’ it was not.

Just as the Europeans of times past believed they were able to pick their issues and ignore their actual homework, their Australian cousins are about to disregard the actual tasks ahead of them. There are at least three.

First, Australia has to make a hard choice about where it sees itself in the region. If China’s rise continues, how will Australia define its position vis-à-vis the Chinese? It is an issue of economic importance, national identity and strategic alliances.

Second, how is Australia preparing itself for its ageing society? Europe wasted at least three decades in the preparation of the gargantuan demographic shift, but Australians are just about to repeat their mistakes if no action is taken on work participation and the retirement age.

Third, could Australia convert its population growth into a fundamental renewal and extension of its often inadequate infrastructure? It is bizarre that the growing population has come to be discussed as an impediment to our future prospects, when in fact it could be the source of growth for generations to come.

Through their economic good luck, Australians have been lulled into a false sense of safety. They feel invincible in the wake of a recent strong economic performance. They think they can afford the luxury of saying ‘no’ to further growth.

To any European still remembering the 1980s, this has the same nostalgic quality as shoulder pads, Rubik’s cubes and those daggy Rick Astley songs. But actually, we would want to see the return of none of these.

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21 Comments

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Don Callanan wrote:

I recall the various pundits in the late 1980s and early 1990s lambasting Australia for having an "old" economy (See Europe's lesson too late?, July 29).

The call was for more service industries, less mining and farming. Who's friggen laughing now?

29 Jul 2010 8:03 AM

Darren Leyden wrote:

As always, Oliver has put forward an insightful and interesting article (See Europe's lesson too late?, July 29).

The one item I would like to question, though, is the opinion on population growth.

While I do believe Australia could support a larger population I do believe there has to be some upper limit. Growth is not something which has no upper bound. There is only so much land, water and energy available – and surely the upper limit of human population is a matter of facts, not opinion?

Growth, much like debt, seems to be a self-perpetuating cycle, where each turn of the wheel solves the problems generated by the one before. But like debt, the growth wheel can't turn forever.

There is a limit to the amount of debt you can carry before it becomes unserviceable – at which point you default.

We could view a human population in these terms – where the people are the debt needing to be serviced with food, water, and some level of quality of life, and the resources of the country are the cashflow to service them. So what happens when we have a once-in-a-generation drought and come up short?

Defaulting on a cash debt isn't the end of the world. But how do you default on a debt that consists of people?

I think saying that we need growth is the simple answer to our issues of an aging population and economic prosperity. The difficult question we will need to face some day is how to deal with these issues when growth is forcibly removed from our list of choices.

Anyone who lived in Brisbane during 'the great water crisis' will know what I mean. One-and-a-half million people came within a year or so of having no reliable water supply.

For years we only flushed our toilets for number 2's, had 3 minute showers and tried to catch the water in buckets to put on our gardens.

Is more growth a solution to this kind of problem?

29 Jul 2010 9:20 AM

David Marchant wrote:

Oliver, I totally agree.

This is good commentary on this 'vanilla' election campaign, where leadership is lacking and the big issues which need to be discussed as a society are being ignored (See Europe's lesson too late?, July 29).

The immigration or population debate has been a sad political ploy to mop up the residual Pauline Hanson crowd; and the lack of alternative power generation and usage strategies (such as interim gas with a move to nuclear, the role of renewables, strategies for spreading out the base load) are being swept away lest someone say something controversial, which might spark debate.

There are community discussions, policy decisions to be made by government to give business and industry direction, and long lead times on these and other important issues which are being totally ignored by our present politicians. Their arrogance and lack of understanding of their communities' needs is breath-taking.

29 Jul 2010 9:38 AM

Anton Porzig wrote:

We get the government we deserve – and boy, are we going to get it (See Europe's lesson too late?, July 29).

29 Jul 2010 10:44 AM

M W wrote:

An excellent article from Hartwich – at least, the first two-thirds are (See Europe's lesson too late?, July 29).

But "growth"? Hartwich implies firstly that we must have it, and secondly, that it's good. But we don't, and it's now in fact bad.

Small, planned families are the norm these days. As individuals we don't feel now that we need a squad of kids to look after us in our old age. But at the national level, we seem stuck with the equivalent thinking.

We need to plan the Australian family. We need to live poorer during our working life so that we can have a self-funded retirement, rather than depending on an increasing army of young to carry us in idle comfort.

We may need to work longer if we want to live longer. (As the old rich used to say after WW1, 'you just can't get the good servants these days'). We need also to question our assumption that economically-measurable growth is a good thing.

Much of it is nonsense anyway. For example, replacement of something old that broke is 'new wealth'. We need to come to terms with the screaming reality that the earth is finite, and that human population growth is destroying it.

But we will be as blind as we choose.

29 Jul 2010 11:08 AM

Leith van Onselen wrote:

Oliver, I strongly disagree with you on the population debate (See Europe's lesson too late?, July 29).

The issue of an ageing population will need to be addressed at some point, irrespective of the level of immigration. Simply importing more workers to cover the retirement of the baby boomers only delays the ageing problem – and it pushes the problem onto future generations.

What will be your solution in 30 years' time, when the current pool of migrants grows old, retires and needs taxpayer support? Let me guess, more immigration and an even larger Australian population?

From a narrow economic perspective, immigration is good only if it raises the real average incomes of the pre-existing population (that is, the GDP per capita).

Measured this way, Australia did not escape the recent global recession as per capita GDP growth was negative in 2009. What's the point of inflating the GDP pie through population growth if everybody's share of that pie falls?

Let's not forget that Australia earns its way in the world mainly by selling its fixed mineral resources. Having more people means less resources per capita.

A growing population also means that we must deplete our mineral resources faster, just to maintain a constant standard of living. This doesn't sound like a smart approach to me.

Then there are the serious costs of high population growth – environmental degradation, water scarcity, increased pollution and congestion, and lower housing affordability. What makes you think that these externalities can be managed successfully by future governments, given their appalling record to date?

The government should focus on policies aimed at boosting workforce participation and productivity, rather than continually relying on ever-increasing population growth to keep the Australian economy growing.

It is living standards that matter most, and on this count, rapid population growth is an overwhelming negative for Australia.

29 Jul 2010 11:24 AM

Guy Hamilton wrote:

Congratulations on an excellent piece (See Europe's lesson too late?, July 29).

The election campaign has been banal, with the parties fighting for the 'middle' and avoiding the 'hard' issues.

As long as the media avoids the appropriate questions the candidates can avoid having to give the important answers.

29 Jul 2010 11:45 AM

Joseph Stewart wrote:

What used to stun me, when I worked in IT and executive recruitment, was the blatant age bias of clients. Eighty per cent of clients would choose an under-qualified 35-year-old over a hard-hitting, competent 45 to 50-year-old.

We have tides of very competent, fit, powerful candidates who won't be hired because they are over 45.

When you hear the cry 'we need more migrants! We've a skills shortage!' it really means "we want cheap labor we can abuse!" (See Europe's lesson too late?, July 29.)

I have clients screaming for young, under-qualified cheap import labor and meanwhile, tens of candidates on my books who are 'too old'. We're crying a skills shortage? Are you kidding me? We don't have a skills shortage, we have age discrimination in refusing to look at brilliant candidates who are over 45.

The excuses I hear boil down to complaints such as 'they won't work 60-70 hours a week for pittance', and 'they might show up inept, incompetent inefficient hiring managers for what they really are'.

So, in order to get a commission cheque, I have had to send across under-qualified non-english speakers who'll put up with awful pay and conditions and let themselves be bullied into terrible quality of life.

This is why I left recruitment. And it's why this cry of 'skills shortage' is ridiculous.

29 Jul 2010 12:42 PM

Rob Setcca wrote:

Traditionally, young generations always shouldered the responsibility of their ageing parents, and therefore, lived within their means to ensure survival down the track.

Whereas now, we no longer feel the need to put something away for tomorrow, as the tax payer of the future will pick up the tab (See Europe's lesson too late?, July 29).

Is that good? Is that clever? Is that the way to become competitive against developing nations that don't give anything to their ageing populations?

The answer lies squarely with the flawed retirement model. It worked beautifully while baby boomers were thriving, working and consuming. But that phase is now cornering and about to face the other way.

The boomers will place massive drains on the tax payer, medical resources, etc, and will be quick to sell off much of their assets to create desperately needed liquidity.

From there, we will need even more people here to support the tired model of paying pensions. Something has to give.

Taxes have been paid for centuries, but pensions have only been around for one lifetime. It's too bad for those that paid taxes in the past and got no paid retirement in return!

29 Jul 2010 12:45 PM

Colin Twigg wrote:

Oliver, it's good to see that at least some of your readers are thinking.

I'm not so sure about your 'growth perspective' though (See Europe's lesson too late?, July 29).

Dick Smith has a show on the ABC in a couple of weeks time that may get a few people thinking. One of his comments when promoting the show was that if population growth is to come, the wealthy will become wealthier and the average earner's wages will become less. Have I heard this somewhere before? Oh wait – we're all living it now!

'Viva la growth', the captains of industry are crying. Well, of course they would when they are being paid up to 300 times the average earnings. They won't have to worry about their standard of living.

We all need to learn the lessons put in front of us. We need to making the appropriate decisions. Continually putting ourselves before our next generation's well-being and exhausting a finite planet doesn't sound quite right.

One day science may not be able to overcome the obstacles we put in our own way.

29 Jul 2010 12:50 PM

Steve Batten wrote:

Good piece (See Europe's lesson too late?, July 29).

I see a lot of the commentary that focuses on the growth issue, which is mainly anti-growth and pro-"sustainability".

It's a nice approach, and in theory we should be able to develop a sustainable economy that is not reliant on population growth – rather than the current pyramid scheme of continual expansion.

I say 'in theory' because I don't know of anywhere that has actually managed it for an extended period. In most cases it ends up looking like Japan: population growth stops and the economy stagnates or actively tanks.

Optimistically, maybe we will be the first ones to do it right. Realistically, the optimist is probably kidding himself.

29 Jul 2010 12:54 PM

S L wrote:

The actual skills shortage may well have been exaggerated save for rural mining areas (See Europe's lesson too late?, July 29).

Politicians should look at hard evidence such as signs of excessive wage growth – not rhetorics from business. Irrespective of actual conditions, employers inherently have a vested interest to undermine the negotiation position of workers.

Doing so cannibalises small business funding and consumption in the real economy. Policies should be based on facts and hard evidence.

In this short-sightedness, business owners can potentially choke off the very source of their income, thinking that they are protecting their storage of existing wealth (property).

The issue is not whether we need a bigger population – it is that we should not expand without doing the infrastructure building and other preparations first.

29 Jul 2010 1:38 PM

Bill Edlinger wrote:

Is Hartwich for real? (See Europe's lesson too late?, July 29.)

We are very closely linked to China and as usual top CEOs are leading the way in this area. This relationship will only strengthen as China buys everything we dig up.

Secondly, has Hartwich not heard of superannuation – something the Europeans did not and still do not have? Europeans believe that they have a right to a pension and so do some Australians who do not save enough for themselves for a decent retirement.

I agree with other respondents regarding the growth in population.

29 Jul 2010 1:46 PM

Wayne Cant wrote:

There are some good points all round here, both in the article and the comments (See Europe's lesson too late?, July 29).

An especially good point from Joseph Stewart who lays bare the basis for the business lobby's cry for more migrants (See Skills shortage smugness, Conversation contribution, July 29).

Enlarging the market is the lazy avenue to higher revenue for businesses unable to grow their market share or increase their profits through increased productivity.

But the whole migration debate, for me, has put the cart before the horse. I personally, despite being a WASP Australian of about 6 generations' descent, don't know anyone that is opposed to migration or a big population per se.

I do know plenty that are fed up with heavy traffic, over-burdened facilities, waiting lists longer than your arm and water restrictions.

Governments and business need to ensure that the infrastructure needed to sustain their vision of a big Australia is in place to support the people that are here.

Whipping up xenophobic fervour is a lazy way to cover the real problem of governments failing miserably to implement their mandated task of ensuring the country can sustain the growth it needs. This, in turn, is the most damning evidence that what Joseph says is exactly the case.

The fact that we live on the driest continent on earth is most often conveniently left out of the debate by the power brokers who predominantly inhabit the lush south-east corner of the country.

Our scientists have no trouble working out how many cattle can be sustained in a paddock – why is it any harder to apply the same principles to the ability of the country to carry human stock?

Wake up, Australia. We are currently in the middle of a bland campaign by two poll-driven elites intent on entrenching themselves in positions of privilege by currying favour with the wealthy and doing very little that is in the national interest.

I'm yet to talk to anyone who's happy to vote for either of the rabble that have put themselves forward as candidates for election to government. This is a damning indictment of our system.

29 Jul 2010 2:05 PM

Denis Hickey wrote:

In my mind, all the issues covered in the article Europe's lesson too late? (July 29) and the readers' responses relate to the fact that we are driven by economic rationalism.

Both our politicians and our own misguided needs are driven this way. When quality of life is truly measured in other than material terms, we might be able to move on and environmental rationalism take over.

Who wants to live in a horrible world looking over our shoulders at our neighbours, both at home and abroad?

29 Jul 2010 2:23 PM

Neil Halliday wrote:

Continual population growth – this would a disaster for the planet, and eventually for Australia (See Europe's lesson too late?, July 29).

The solution is proper management of the world's resources by a central global planning authority, with individual nations' financial regulators confined to micro-management of their own economies.

The desired goal of opportunity and prosperity for all is hanging in the balance.

29 Jul 2010 2:24 PM

Kieran Miller wrote:

I didn't realise we were the only nation to have abbreviated the name of the financial crisis to "GFC" (See Europe's lesson too late?, July 29).

The again, we Aussies love abbreviating to short acronyms. The hardest part of any new job is learning the acronyms.

The first people I heard use the term "GFC" were those expert financial commentators Roy and HG.

29 Jul 2010 4:14 PM

Sean Gurney wrote:

China is sitting on more minerals than Australia ever had, yet it buys our stuff and sells the value-added material back to us – even though they could dig up their own for a fraction of the cost (See Europe's lesson too late?, July 29).

Why is this? They can afford it and they are willing to endure the cost if it means that when the rest of the world runs out, they will own the world's last source of mineral resources – and therefore effectively own the world.

Whether it takes 50 years, 100 years, or 500 years, they have the patience to wait. Why do you think they're so keen on owning Tibet? I'll give you a clue: it's not for the monks.

The big question for Australia is, what is our plan for when our resources run out?

Ageing is not much of an issue so long as we are healthy enough to work productively and competitively into 'old' age. The emphasis here should be on health – since I know of some 70-plus-year-old former orchid growers who are fitter than my 21-year-old cross country running self!

The only real concern businesses have about older people is their health. If there was a standardised way to declare that they are open to change, have a clean bill of health, energy to work all day, etc. that would be a godsend.

Another big question for Australia: What are we doing to boost preventative healthcare and reduce ageism in our country?

Economic growth actually needs no population growth and no consumption growth to occur. Economic growth is the cumulative result of a growth in individual businesses. As such, we only need an increase in the factors that make businesses grow: more clients and/or more transaction value per client and/or more transactions per year.

One more big question for Australia: What are we doing to boost clients, transaction values and the number of transactions per year for Australian businesses?

What I would give for those three questions to be answered in addition to well implemented policies that address them.

29 Jul 2010 5:36 PM

Zelko Mustac wrote:

Whilst Europeans (France and Greece, for example) have sneered at the Anglo-American model of private enterprise and minimal state intervention, and prized their welfare state and massive state intervention, their profligacy and lack of entrepreneurial verve has now come home to roost (See Europe's lesson too late?, July 29).

The issue that Australian commentators fail to address is that of gross national product per capita. It is no good bringing in semi-literate or non-English speakers under the presumption they will boost gross national product per capita.

They will not. And they they will add to the pool of cheap labour and reduce the incomes of our indigenous poor. Immigration, if it brings in highly qualified, relatively young, fluent English speakers will add to gross national product per capita.

Immigration is not an answer in and of itself. It just as easily adds to the numbers of welfare recipients, unemployed and unemployable as is commensurate with their skills. We need a high quality and ipso facto small immigration number. We don't need to crowd our hospitals, welfare services and state schools.

A proper immigration debate is long overdue and the mistake is to fail to differentiate between GNP from a big Australia and GNP per capita from a poor and crowded Australia.

29 Jul 2010 6:38 PM

S Hart wrote:

Regardless of population growth, economic growth is essential, unless decide to start arbitrarily cutting short people's ever-lengthening lifespans (See Europe's lesson too late?, July 29).

Moreover economic growth tends to come about when we develop better technology and techniques to increase efficiency. The idea that economic growth is anti-egalitarian is directly at odds with observable facts.

30 Jul 2010 0:37 AM

Mike Lloyd wrote:

Anti-immigration debates deeply concern me (See Europe's lesson too late?, July 29).

Australia has a relatively high immigration rate and one of the strongest economies in the world. There goes the simple argument that immigration is bad for the economy.

Australia does have a lack of infrastructure in some areas, and the south-eastern corner started to run out of water a couple of years back – but these are essentially engineering problems and, as has been proven in Victoria, there are engineering solutions such as building new roads, improving water supplies etc.

As a corollary, if your house is too small for your growing family, you can either stop having new kids, or extend or a buy a bigger house.

Luckily for Australia, the majority of families tend to select the second option rather restricting the number of children they have. Unfortunately, however, some of our politicians are nominating the first option as the answer to some of our current infrastructure problems. This is defeatist at best.

1 Aug 2010 8:01 PM

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