Morrison declares total war on youth

By Leith van Onselen

Treasurer Scott Morrison’s speech Thursday to Bloomberg in Sydney contained a lot of bluster on welfare spending, dividing modern Australians between the “taxed and the taxed-nots”, while seemingly blaming the rise in welfare spending on younger Australians:

“A generation has grown up not ever having known a recession, of seeing unemployment rates at more than ten percent, with one million Australians out of work or mortgage rates at 18 per cent or where inflation is actually a problem, rather than an aspiration.

In addition, a generation has grown up in an environment where receiving payments from the Government is not seen as the reserve of those who unfortunately will be forever dependent on support or in need of a hand up, but a common and expected component of their income over their entire life cycle.

On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations. More Australians are also likely today to be net beneficiaries of the Government than contributors – never paying more tax than they receive in government payments.

There is a new divide – the taxed and the taxed nots…”

Yet again, Scott Morrison has ignored the actual facts about welfare spending.

Last month’s HILDA survey revealed that welfare reliance for those below retirement age has actually fallen over the past decade:

ScreenHunter_14165 Jul. 26 07.03ScreenHunter_14166 Jul. 26 07.03

Moreover, if Morrison genuinely wants to reduce welfare spending, surely he should focus on the biggest and fastest growing component –  the Aged Pension ($45.7 billion currently rising by $2 billion per year to $52 billion by 2019-20) – which dwarfs the other forms of welfare expenditure (see below chart):

ScreenHunter_14167 Jul. 26 07.17

As shown last month, the home ownership rate for Australians aged 65 and over is 75%, and this cohort has experienced an enormous rise in wealth on the back of rising housing values. And yet for no good reason, housing is largely excluded from the assets test to receive the Aged Pension.

As such, Australia finds itself in the perverse situation whereby older Australians have experienced an unparalleled rise in wealth at the same time as their dependence on the Aged Pension has risen rapidly, and is projected to continue doing so.

Surely, then, any reforms to welfare spending should target the Aged Pension first, since it is by far the biggest and fastest growing component and the most poorly targeted?

It’s also fair to say that very few working-aged people ‘choose’ to go on welfare. Take a look at the below table, which shows that a single Newstart recipient receives a pitiful $37.70 a day:

ScreenHunter_14223 Jul. 29 08.52

This compares to $62.42 per day on the Aged Pension once supplements are factored in, despite most older households (75%) owning a home:

ScreenHunter_14224 Jul. 29 08.52

So Scott, tell me again why younger Australians are responsible for the welfare blow-out and why the Government should further tighten the screws on working-aged recipients, whose numbers are falling and are already paid a pittance?

You also failed to acknowledge that younger Australians fortunate enough to buy a home are saddled with unprecedented mortgage debt, nor that student debt is at record highs, graduate employment opportunities stink, and youth unemployment is endemic.

In short, stop bashing the young and shift your focus to your own over-entitled generation.

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  1. To summarise – “And yet for no good reason, housing is excluded entirely from the assets test to receive the Aged Pension. In short, stop bashing the young and shift your focus to your own over-entitled generation.”

    Welfare for the rich knows no bounds.

    • Why is Person A living in a $2m house with 0 other assets entitled to the pension, while Person B who has just sold their $2m house and living in a $500k flat with $1.5m in the bank not? How many distortions does this create?
      1) encourages elderly not to downsize, infact it increases the incentives to ‘renovate’ and deploy unecessary capital into their house
      2) as supply falls as a result of the above, families with children cannot find appropriate housing close to work
      3) investment in crucial areas falls. in the above example, is it better for the economy for Person A’s situation or Person B’s situation who then invests that $1.5m in say STEM/IT areas which MT brags about all the time?

    • But those boomers had to endure 17% interest rates! How dare you suggest touching their housing wealth.

      Conversation – ended.

      • @casewithscience, just to be the devil’s advocate here, their weekly earnings weren’t even half of what they are now so that would have been pretty hard still

      • A $500K house in my area would have been about $70K in 1989 when rates hit 17%. On a 1989 income that was pretty tough. But those high interest rates were temporary and by late 1991/2 had basically halved, which was great news for everyone who didn’t lose their job. And from there we had slowly but steadily rising real wages and an economy into recovery before the 2000’s saw that home skyrocket in value.

        But today’s youngsters are heading into a sustained period of lowflation (possibly deflation) with stunted wage growth which impacts their ability to pay the principal down over time.

        The older boomers, like my Dad, who bought in the mid to late 60’s when houses were cheap and mortgage rates were ~5.5% got the sweetest deal of all. Yes, they had to save a 20% deposit and show up to the bank well presented in a suit to prove themselves “credit worthy”. But once in, the repayments were significantly smaller compared to the household income than today. Then, in the 1970’s when inflation broke out interest rates rose but they got double digit pay rises, allowing the principal on the mortgage to magically shrink YoY and in my Dad’s case the house was paid off in a decade on one fairly ordinary income.

        Anyway, Dad (top guy, BTW) was always sick and had a pretty difficult and short life so it’s good to know he had some luck! Also it meant when he passed away there was no mortgage and Mum made ends meet with a part time minimum wage job and a top up from the widow’s pension.

    • The idea of including the family home in the assets test is very popular with the commentariat. It offers a convenient way to starve elderly people out of their homes for the fun and profit of the property developers and the rest of the FIRE sector, unless, of course, they are prepared to see the house go to the bank or the government after their death in exchange for a subsistence level income. This policy has the added virtue of not touching the people who really matter: they get their welfare in the form of tax concessions, not the aged pension.

      At this point, someone will bring up reverse mortgages: no one is going to be forced out of their home, but even if the assets test threshold is quite generous, the magic of compound interest can devour the lot. Interest rates on reverse mortgages are very high, and even the 5% recommended by MB will double a debt in less than 14 years. Elderly people will be forced out by the threat of being unable to pay for aged care if they need it, since the bank or the government will already own most of their house, and of disinheriting their children or grandchildren if they live for more than a few years.

      The beneficiaries don’t want to admit to their real motives, so we get a lot of pious cant about intergenerational equity and putting the land to its best use. (Property rights don’t apply to oldies.) If the real objective was to avoid higher taxes on the wages or consumption of younger people, then an inheritance tax would serve just as well or even better and be far less regressive. We already have a 17% tax on inheritances of unused superannuation, unless the heir is the surviving spouse or a genuine dependant. Just extend it to housing and residential land. Such a tax would be very difficult to evade because the new owner needs title to the property. Yes, the children will lose something, but it is better for them than losing everything, and their parents won’t be forced to move away from their family and friends, and from the services that elderly people are likely to need.

      • ErmingtonPlumbingMEMBER

        Though I share the loathing of many of the comentariate here, for the boomer 2GB mentality, you are of course correct Tania to point out the the foolishness of including the family home on the pension assets test,… to do so is just plain fucken dumb and mean.

        You can call out the boomers for being the selfish, over opinionated ignoramus’s they mostly are,…without handing them (and eventually us) over to a rapacious for profit aged care system and various other financial services industry parasites.

      • Though I share the loathing of many of the comentariate here, for the boomer 2GB mentality, you are of course correct Tania to point out the the foolishness of including the family home on the pension assets test,… to do so is just plain fucken dumb and mean.

        How about if they’re sitting on the same amount of cash in the bank, or a stock portfolio, and living in a house they’ve been renting for thirty years ?

      • Non-homeowners already get a more generous assets test, although it can be argued that it should be even higher, due to the way that housing costs have gone up.

    • As you know Scot Morrison is smack bang in the middle of Gen X, as proven in the UK with the full on Gen X govt and will be with the first Gen Y govt. This line of talk is not genreational specific but used as a tool to blame the victims. Also proves that himself and his party have the ignorance born of absolute arrogance.

  2. I am now convinced that Morrison has nothing useful to say. The occasional utterances that seem to make some sense are nothing but a smokescreen to blur a clear view of his rabid ideology. While he obviously possesses an intellect, he lacks any significant measure of intelligence. The manner in which he repeatedly attacks the weakest in society, using lies and deceit to do so while protecting the interests of the wealthiest, is disgraceful and betrays his true agenda.

      • Bingo! Ignorance you could forgive but willfull ignorance, slight delusion and full frontal arrogance are not desired resume line for a treasurer! But for a property lobbyist……?

      • ceteris paribusMEMBER

        But young Scott is spoken of very highly in all the upper echelons of finance and real estate!

    • He’s never had anything useful to say or add. A morally bankrupt fool like the rest of the idiots that make up this circus of a government. Ready to smash the poor and defenseless in society while pissing tens of billions away on useless and pointless defence crap, ignoring tax concessions to big business and the wealthy. He will have more blood on his hands as we are going down the same path as the UK where people are starting to suffer from malnutrition and are now committing suicide.

  3. Are there not close to 1 million unemployed now?

    As for BoJ and other central banks wanting inflation, have helicopter money or UBI.

    And does Newstart only cost $5.3 billion per year?

    Jesus Christ they could stop requiring unemployed to apply for 5-10 jobs per week when the LNP are hell bent on giving the jobs to 457 visa workers!

  4. reusachtigeMEMBER

    Scott is a total ledgend and is protecting the right sort of people over the typical leeching young!

    • That’s right Reusa – I mean – I don’t even know why investors even bother to have kids – the little darlings are born with this sense of entitlement to those tits – you know? “Waaaah! I’m hungry, where’s my tit?” “Waaah, I soiled myself!” “Waaah, I’m tired” … Waaah – me-me-me! Why don’t they start working to earn that from the begining?

      And it only gets worse as they grow up.

      • You should see them by the time they become politicians, real estate agents and baby boomers “whaaaa where’s my teat, I worked harder and smarter for that teat just by being born, whaaaa”

  5. More people receive government payments because of Howard era changes to Family Tax Benefit A and B, Childcare Benefit and the Childcare Rebate. More people pay no tax because of Howard era changes to marginal tax rates, superannuation contribution rules and the treatment of family trusts.

    • Shush you! don’t tarnish that aura on the Australian Reagan that is Howard! Howard could do nothing wrong and did nothing wrong! It was all beautiful then, birds were singing (odes to him) in the sky, real-estate was plentiful, and mining was just taking off.. as I said, paradise, mate! 🙂

      • “and mining was just taking off..”

        And as Mr H pointed out, why would the mining boom ever end?

    • Exactly right. Howard’s welfare increases were a vote grabber based on mining boom revenue. Now the boom has gone and party has got buckley’s trying to take benefits away

  6. The amount of oldies that think they deserve their pension because they paid taxes when they were working is a joke. It’s like they think the gov sets aside an account for everyone which holds the tax you pay when you’re working and then pays it back to you in pensions when you retire. How’s that for entitlement?

    • ErmingtonPlumbingMEMBER

      I hade a massive argument with my father inlaw recently over that very point. (he was on a rant about “dole bludgers”)

      He had clearly “earned” his pension he went on,… through his payment of taxes. (hes got a house worth over a million bucks)

      And yet refuses to acknowledge his grandchildren probably wont recieve the same or that all other forms of wealfare dont go to bludgers.

      It was the “young people dont want to work” that really gave me the shits and had us having to leave way before we would have otherwise.

      My wife says angrily on the way home in the car,… “Hes fucking got Emphysema, why do you have to go after him like that!”

      I reply ” Because Im sticking up for our Fucking kids!,… and you should too!”

      No politicts at family gatherings?,..fuck that!

      • My dad, his brother in law, and myself are in deep agreement that the sky is blue. Beyond that it’s pistols at ten paces. It is all usually fuelled by the fantastic reds they can afford to provide.
        My beef is not that they have more than I will, it I that they won’t acknowledge that the world has changed and that the opportunities that allowed them to prosper have gone.

      • Even StevenMEMBER

        Stupidity and ignorance should always be tackled. Suffering an illness does not give someone a free pass on the above.

      • Ha that’s hilarious – it is exactly the same with me against my dad, his brother in law, my other aunty and my (young) cousins. The cousins are typical Ozzie anti-education outer suburban tax avoidance tradies (they even have family trusts FFS) heavily geared and indebted, new cars, shiny toys. I am from the same class and place as them, but unfortunately went to uni and became a lawyer (bum move) and I live in the inner city and rent so they all think essentially I am a loser 🙂

        Makes for interesting Christmases/birthdays! I can usually swing Dad around because he is an old lefty at heart and not keen on middle class welfare (even though he is slightly susceptible to the 17% interest rate self pity)

        He essentially knows the game is rigged these days though – he left school at 17 (1972) went on the dole and then went surfing for 7 years. Didn’t bother with a real job until 24-5, no quals. Bought first house at 26 🙂

      • @emess

        I often wonder at what point in time my view of the world will become frozen, or just how much of it is frozen now.

      • @emess if my kids argue with me over such topics, GOOD! That means they are aware of what’s going on and are educating themselves on such matters. So bring it on!

  7. If you’re into pooches, Scomo is the blithe bulldog that is barking just because dogs bark when they see squirrels.

    He’s been desexed yet is still barking because he has been trained to bark everytime Mr Brown and Paddington come past in their way to the local soup kitchen to receive some sustenance.

    The wrong tree is getting sick and tired of the continual barking.
    It won’t be long before the bulldog is moved around back.

  8. FHBG should be raised to $500k and cannot be leveraged. That would be fair – in relative terms 🙂

  9. “more Australians today are likely to go through their entire lives without ever paying tax”
    I know people who have been earning middle-class incomes for years, yet fall into the category of never having paid tax, because they maxed out on negative gearing ever since their arrival in Australia.

  10. IMHO the primary responsibility to Self for all young Australian’s should be to leave Australia.
    It’s not simply a matter of cutting the apron strings but rather it’s the process by which individual Australian’s develop a deeper understanding of their own real world value, their Global value. Your global value belongs to you, it’s not a gift bestowed upon you for bending your knee to your betters. Fealty is the key stone of elitist oppression, it offers all an OK life in exchange for your dreams and in place of what’s fair.
    Take the great Aussie concept of Fair-Go / Fair-Share since it’s neither fair nor share, the general populace is left with nothing but … Go. That’s what I tell all young Aussies, Go, go Now, leave Australia and understand your real value, once you know your real value you can refuse to sell yourself short. You can refuse to sell your services for these soon to be worthless AUD, you can demand to be compensated with items of real tangible and enduring value.

    • I agree in principle, but go where and how? For most young people they have neither the means, or family background (say, being eligible for Euro or UK visa) to be able to just up stumps and go. They don’t have the work experience or relevant education to be able to command job opportunites even if they can leave. If you ran a business overseas would you employ your average young Australian?

    • Running away is always an option for the best and brightest. Similar diaspora begot Greece post WWII, the best left & now the place is completely run by vested interests. Just don’t expect a warm return.

  11. We are we having a pointless discussion comparing one set of welfare payments to the other? See for the whole picture.
    In A$ billions
    Assistance to the aged 57,637 Assistance to veterans and dependents 6,790 Assistance to people with disabilities 27,724
    Assistance to families with children 38,808 Assistance to the unemployed and the sick 10,810 Other welfare programs 1,527 Assistance for Indigenous Australians 2,148 General Administration 3,662
    Total social security and welfare 149,107

    Source: Australian Government, ‘Statement 5: expenses and net capital investment’, Budget strategy and outlook: budget paper no. 1; 2015–16, p. 5-27, accessed 17 November 2015. Each of these categories includes both payments and services. The four largest categories of expenditure are:
    •Assistance to the aged: this category makes up 39.4 per cent of all social security and welfare spending (2015–16). The two largest expenses in this category are income support for seniors ($44.2 billion in 2015–16) and residential and flexible care ($10.2 billion in 2015–16).[8]
    •Assistance to families with children: this category makes up 24.7 per cent of all social security and welfare spending (2015–16). The largest expenses in this category are Family Tax Benefit ($20.2 billion in 2015–16), child care fee assistance ($7.3 billion in 2015–16), and parents’ income support ($5.7 billion in 2015–16).[9]
    •Assistance to people with disabilities: this category makes up 19.2 per cent of all social security and welfare spending. The largest expenses in this category are income support payments to people with disability ($17.1 billion in 2015–16) and income support payments to carers ($8.1 billion in 2015–16). This category also includes the NDIS. The cost of the NDIS is projected to grow from $1.1 billion in 2015–16 to $19.2 billion in 2018–19.[10]
    •Assistance to the unemployed and the sick: this category makes up 7.4 per cent of all social security and welfare spending (2015–16).[11] It includes income support payments to unemployed people, such as Newstart Allowance and Youth Allowance (Other).

    This is where the MB commentary leaves me cold. Instead of jibbering about the young and the old. Let’s have a mature, yes a mature, discussion about the tardy treatment meted out to the unemployed without constantly making divisive ageist comments. If I wanted to act like a dick then I could say that the $38 billion paid to families should be compared to the measly $10 billion paid to unemployed. But I won’t because it serves no purpose than to tease the clickbait audience. You really need to up the quality of your papers if you want to be taken seriously. This old versus young nonsense is puerile.

  12. A generation has grown up not ever having known … how to rort the living-away-from-home allowance in Canberra, how to go on tax-payer funded junkets overseas, how to nod and wink to colleagues for a Consular posting after politics, or how to sell your vote to a lobby group for a corporate “job” after politics, how to get a lifetime Gold Pass and pension of unbelievable generosity.

    There is a new divide … the self-serving, trough-snouting, morally corrupt, asparagus-spined political class, and the rort-nots.

    • Most self proclaimed Christians I have known do behave like this, everything for show and 100% hypocrisy . Just look at the USA for eg.

  13. The plummeting eroi on oil production has caused most of our living standards drop. Energy is 10x more expensive than it was to pump out of the ground. This flows through the system as ever increasing debt to maintain the lifestyle. Another 10 years should see us totally ruined. Hang on its swearing day? Totally fucked.

  14. This guy gets it:

    This is the same nonsense the Libs have been spouting since Abbott. Scotty’s comments are all talk of over-reliance on welfare and “handout generations” (the rebranding of “leaners”), with no reference to the vast wealth inequality created by two decades of brainless Boomer-boosting policy.

    We often hear about the “expectations” of the young, yet we have a situation where the majority of our country’s money (with the assistance of deck-stacking personal tax and super policies and blind luck) has been allowed to accumulate in the already well-off class that is ABOUT TO RETIRE.

    This creates huge problems.

    Firstly, it stops people having children, as young people never become financially secure enough to start families – so we need to rely on immigration, which is a volatile bandaid solution at best (immigrants often arrive in middle age, far too close to retirement, and fill jobs that would have been taken by other young Australians – as a population sustainment strategy it’s got many disadvantages and simply cannot replace births).

    Secondly, a mere two generations ago we had seven taxpayers per retired person, and we’re about to hit TWO. This is a disaster waiting to happen. Those working taxpayers have been saddled with massive debts in education and grossly unaffordable housing (again due to the blind, myopic and selfish policies laid down by the Boomers). How do we think that’s going to turn out, Scotty?

    We cannot survive with such an imbalance of wealth concentrated in our retiring Boomers. We cannot continue policies that allow them to hoard property and wealth. We cannot afford to allow million-dollar homes to be sat on as this group claims pensions – it is just not going to be affordable long term. We need to stop talking about the “entitlement” of our future taxpayers and start taking a long fucking hard look at the entitlement and expectations of our Boomer retirees.

    Before we start talking austerity, how about we start rolling back wealth rorts like negative gearing, capital gains tax concessions and super tax concessions (and no, it doesn’t matter a jot if people made investment decisions assuming these handouts would always be there – this country is not here to prop up people’s personal wealth strategies at everyone else’s expense)? How about we actually address wealth inequality? How about we start looking at how we can give young people a shot at becoming financially stable, so they can start a family, buy an affordable house, and afford to spend – which is what keeps economies rolling. I mean, I don’t think you’re getting this part Scotty – if people cannot afford to consume anything, our consumption based economy does not get the revenue it needs. We have a low inflation problem because no one can afford basic housing and living costs – taking more money away from taxpayers already living on a knife-edge is NOT going to solve this.

    The Boomers have disproportionately benefitted from the housing bubble, the young are disproportionately suffering for it. The real travesty, too, is that now only did the Boomers make the policy decisions that grew the bubble despite warnings – including from our current PM – that the economy would be distorted, but they had much of their wealth handed to them on a platter – their parents were a generation who worked very hard, gave their kids free educations, and frequently passed on the wealth of the family home well before death (often retiring into granny flats or downsizing, giving over family homes or money to buy into a cheap mortgage market). The Boomers have somehow turned this good fortune into an invitation to see their “wealth as their own” – to buy RVs and travel around Australia, to retire in beachfront homes, to draw a pension despite being very well off, as they entertain themselves with the quintessential Boomer hobby: playing the property market.

    It’s all a bit like a party, where the Builders scrimped and did without to buy their kids tickets, and their kids turned up, drank all the beer, ate all the food, racked up a multi-billion dollar tab, and then fobbed it off to future generations – while also demanding those generations work ever longer to give them more free food and beer for the duration of their “comfortable retirements”. The retirements of these future generations somehow never enter into the conversation; most will still be paying off the Boomers’ tab until they retire, and have little hope of seeing to their own security or comfort (your average mortgage in our largest cities will be all but impossible to pay off in a single working lifetime at our current rate of wage growth – and this isn’t even factoring in the massive increase in pension, health and aged care costs the young will face in supporting the Boomers. That alone should be a strong argument against things like university deregulation and austerity). As a generation, the Boomers have quite literally skipped out on the bill.

    Austerity is going to get us absolutely nowhere – try it out, Scotty, and watch it fail miserably like it has failed everywhere it has been tried. If we expect to maintain our standard of living, something’s going to have to give, and if you think that “something” is going to be the non-existent wealth of the young, well – you’ve got another think coming. If you cut the incomes of current taxpayers in favour of maintaining the wealth of past taxpayers (this isn’t just Gen Y either, it’s also Gen X struggling), those current taxpayers are going to remain saddled with unaffordable debt, and are not going to spend money, which will reduce our GDP and scuttle any hope of future growth – and it will also worsen our low birth rate.

    Scotty – your party is basically proposing we sacrifice the future and financial stability of everyone under 50 in order to allow you to continue with the greed-based tax handouts responsible for Boomer housing wealth. That is beyond being daft – there aren’t enough words in this essay of a post to explain how indescribably stupid your plan is.

    So tell me – who needs an expectation adjustment?

    Who is the real “handout generation” here?

    Edit: thanks gilders, much appreciated 🙂

    Edit: since someone made a comment about wanting to use this, anyone is quite welcome to steal it/repost it/claim it as their own/use it if they like.

    • Blaming the “Boomers” as a whole generation is silly. The politicians and the media want ordinary people to blame each other and fight among themselves instead of going after them. This is really class warfare. According to this source, 7.9% of Australians own investment properties. Since the Boomers are about 25% of the population, the vast majority clearly don’t have one and aren’t enjoying the associated rorts.

      Superannuation tax concessions are of very little use if you are on a low wage and can’t afford to save much. You may even be paying higher taxes on your super than on your ordinary income, as well as being gouged on fees. Most Boomers don’t have big superannuation balances. Tax exemptions mean little when you are on a subsistence level income. There is no point in churning, where the government has to give back in welfare what it has taken in tax. A third of retirees are living on less than half the median wage, and a lot of them don’t own their own homes. The aged pension is far from generous by developed country standards, but two thirds of retirees have it as their main source of income.

      It is the politicians who made the laws and policies that hurt younger people. They did it to benefit themselves and their Big Business mates, on whom they depend for election funding and for lucrative careers and investment properties after they leave politics. They don’t give a rats about the average Boomer. The median voter age is now 50. Even the youngest Boomers are older than that. It is younger voters who are keeping the same major party politicians who are hurting them in power. As a generation, you voted for this.

  15. There is a new divide – the taxed and the taxed nots…

    This from the person who just a couple of days earlier caved in to increasing the taxed nottedness of people who can plonk $750K after tax into their tax-free superannuation pensions.

    You just can’t make up irony and hypocrisy like this. It takes years of practice.