By Leith van Onselen

The AFR’s Brian Toohey – a long time champion for inter-generational fairness – published a timely article over the weekend arguing that young Australians are getting a raw deal:

…housing and education costs are higher than for earlier generations, their real wages are falling and full-time employment is much less common and more insecure – if they have not yet been made redundant by a robot, that is. This is a growing problem for the major political parties. At present, however, many politicians remain fixated on pampering an ageing population. Although Treasurer Joe Hockey confirmed on Tuesday that the budget deficit is getting worse, a bipartisan refusal to make well-off retirees do more to fend for themselves means young people will have to pay more tax down the track. …the budget shortfall can be funded by winding back super concessions. The concessions are of most benefit to high-income earners.

Toohey is, of course, spot on. Australia’s youth are facing bleak prospects, with labour underutilisation for 15-24 year olds running at an incredible 30% (see next chart).

The total number of jobs for those aged 15-24 has also fallen since the GFC, with full-time jobs most badly affected, despite the strong growth of the population over that period:

Despite these inconvenient truths, the Abbott Government (supported by the Labor Opposition) has done nothing to address the failings of the economic model for young Australians.

So far, there has been no action to unwind the highly distorting taxation regime that mis-allocates national savings into mortgages, along with the myriad of other tax concessions – which represent 8% of GDP, the highest of their kind in the OECD – that drive the politico-housing complex economic model.

Nor have either party genuinely sought to: unwind the public guarantees for the nation’s banks that have prevented markets from-restoring balance to the system; abolish the state government restrictions on housing supply; wind-back the record high immigration levels (including unfettered use of 457 visas) and un-policed foreign buying activity of existing real estate. Together, these policies have acted to degrade our national political economy and future standards of living for the expressed purpose of boosting baby-boomer dominated property-owner wealth, in the process making homes more expensive for Australia’s youth.



Callam Pickering at Business Spectator has picked-up on these themes today, noting that decades of housing policy incompetence have conspired to lock younger Australian’s out of home ownership:

The great Australian dream is no longer achievable for most young Australians. Housing multiples are at record highs and household debt has peaked at 173 per cent of gross disposable income — almost without peer among developed countries… Over the past twenty years, home ownership rates have plummeted, particularly for those under the age of 45. We are increasingly a country of landlords and renters. So what does government housing policy achieve? It is effectively an intergenerational wealth distribution vehicle that channels money from the renters (usually the young) towards existing owners (often ‘baby boomers’ or older Australians). …our politicians know exactly what they are doing. Members of federal parliament have accumulated around $300 million in residential property and 94 per cent of MPs own investment properties… Any reform to housing policy which benefits taxpayers and the broader business community must come at their personal expense… High land prices damage Australia’s competitiveness and create barriers to entry for new businesses. It burdens households with higher living costs and higher wages are needed to offset that burden (further weighing on competitiveness)… Housing policy in Australia is an absolute con job that has benefited one generation while impoverishing another.

Rather than address these fundamental policy flaws, all we have received so far from the Abbott Government is attempted cuts to unemployment benefits and a radical overhaul of education funding that will dramatically increase the cost of higher education for future students.

To add insult to injury, Australia’s youth will then be required to pay increasing proportions of their income as tax at the same tame as their access to government benefits and services are eroded.

And let’s not even begin on the failure to address climate change the massive wealth transfers from future households to polluters embedded in Direct Action.

It is generational war on a massive scale. We’ve some push back on the Budget but where’s the outrage?

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