We continue to punish the young, to offload our problems onto future generations and to reduce opportunity by encouraging and enshrining a class-based nation, writes Ian Verrender.

A nation of egalitarians or a divided bunch of sectarians engaged in class warfare?

Treasurer Joe Hockey last week invoked the C word - class - as his stoic budget defence ground on into its second month.

The Treasurer appears genuinely dismayed by the extent and breadth of community opposition to his maiden financial statement. But his efforts to portray the hostility as a predictable response from political reactionaries was dealt a cruel blow by the Australian Financial Review.

Just hours before Hockey's address to the Sydney Institute, Hamish Douglass, chief executive of financial services group Magellan in a lunch time address, urged the new Treasurer to rein in tax rorts for the rich so funds could be redirected to the poor.

The reports, carried in the same edition of the AFR, served to highlight the growing community unease over the Government's ideological push.

But a new fissure has opened up in the political and economic landscape, defined not so much by wealth, but by generation.

The generational divide, for decades enshrined by governments of all political persuasions, has taken on new meaning.

Unemployed youth will be denied benefits for six months, under the proposed new "earn or learn" test. Those that choose higher education will be slugged far more than their forebears and will spend many years paying down education debts. And when it comes to buying property, only those from wealthy families - with the prospect of an inheritance - will ever be able to contemplate owning a home.

We appear to be in a state of regression, to a time prior to the 1970s when only those from privileged backgrounds could entertain the prospect of pursuing professional careers, when one's background determined one's future.

It is an odd stance for several reasons. First, the vast majority of those now driving the agenda for higher education fees and greater debt burden on the youth either paid absolutely nothing or a minimal amount for their undergraduate degrees, given fees were introduced only in 1989.

Regardless of their current political leanings, they happily embraced the Whitlam-era philosophy of free education. And not one has offered to repay the cost of that free education (with or without interest) to back their conviction.

Second, given the challenges facing the nation - an ageing population that will need to be supported by a smaller proportion of those of working age along with new technology that can instantly transport jobs around the globe - it should be a priority that we ensure the next generation is able to adapt and thrive in the modern world.

Official unemployment figures last week show a concerning rise in youth joblessness, with more than 18.5 per cent out of work. Even worse, the participation rate - those actively seeking work - dropped to 53.1 per cent. Had all those unemployed been looking, the numbers would have been far worse.

Alarming as those figures are, they need to be put into perspective. It is always difficult for those immediately out of school and with little experience to find work. In August 2008, youth unemployment dropped to 12.6 per cent with 58 per cent participation. So there has been a significant deterioration since then.

But 2008 was about as good as it has ever been. In the winter of 1983, youth unemployment rose above 24 per cent and hit 25 per cent in the winter of 1992.

Predictably, last week's youth employment numbers sparked calls from business lobby groups for the abolition of Fair Work Australia and lower wages for younger workers, citing the deteriorating numbers in the past six years as evidence, while conveniently overlooking the longer term trends.

What the business lobby should focus on are methods to lift labour force skills, in an era where improved productivity will become increasing vital. That involves a greater investment in education, not cuts.

Another interesting study emerged from the soon-to-be-gutted Australian Bureau of Statistics this week on household debt, which highlighted the deteriorating plight of our youth.

With $1.85 trillion on tick, Australian households are among the world's most indebted no matter how you measure it; in terms of income, assets and historically. The ABS numbers showed that 75 per cent of that debt related to real estate compared to 50 per cent back in 1990, indicating just how much property values have surged.

In addition, the breakdown also showed a jump in student loans. Average student loan debt per household jumped from $13,900 in 2003 to $17,200 in 2012.

That trend is likely to accelerate given the Federal Government's proposal to allow universities to charge market rates, which, if the UK experience is anything to go by, is likely to see an overall rise in tertiary education costs.

On top of that, a change to the interest charges on higher education loans - from the inflation rate to the government bond rate - will substantially add to the interest burden placed upon the young.

Those choosing not pursue a higher education will find themselves without an income or safety net for six months. While there is no doubt that welfare fraud exists, the danger posed by these proposed new measures is that any savings from welfare payment reduction could well be outweighed by higher crime rates and associated social problems.

Perhaps the greatest failing from the recent budget was the Government's failure to address our galloping real estate market, which has concentrated wealth within households that own property.

Australia's property obsession was highlighted by recent analysis from investment bank UBS that estimated up to 95 per cent of current new lending by our major banks has been directed into residential real estate.

During the past 30 years, financial deregulation - which flooded the economy with cheap cash - and government policies designed to encourage property speculation - negative gearing, capital gains tax reductions and the exemption of the family home from all tax - have helped contribute to an explosion in property values.

Housing serves a social function, so it is not without value. But apart from supporting the construction industry, it is largely non-productive.

The International Monetary Fund last week announced increased surveillance of global property markets in a study that identified Belgium, Canada and Australia as the three developed countries where property was the least affordable.

Had the Government wound back some of the tax incentives driving Australian real estate markets in its budget, it could have narrowed the deficit and made housing more affordable.

Instead, it opted to strip welfare payments and tax benefits from lower and middle income earners. But the tax lurks on property remain, ensuring continued speculation, higher prices and a greater concentration of wealth to those who come from property owning families.

It also significantly adds to the cost of doing business. High residential property values require increased wages to pay rent or service loans. That also forces up the price of commercial real estate in major urban areas in a direct impost on business.

If the business lobby was serious about lowering costs, it should take aim, not at wages, but the root cause for Australia's high cost base.

Instead, we continue to punish the young, to offload the problem onto future generations and to reduce opportunity by encouraging and enshrining a class-based nation.

Ian Verrender is the ABC's business editor. View his full profile here.