Grandfathering the Australian Dream

The Australia Institute’s Richard Denniss has penned a ripping piece in The Monthly examining how the political and economic cards have been stacked against young Australians. Below are some key extracts:

The Liberal Party of Robert Menzies wanted all Australians to own their own home. The Liberal Party of Malcolm Turnbull wants us all to be landlords…

It is not just the high price of housing that prevents many from “settling down”. Over the past few decades Australian society, and the labour market in particular, has been fundamentally reshaped in ways that prevent workers and employers making long-term investments in each other…

After decades of labour market reform to make Australian workplaces far more “flexible” and decades of tax reform to make investment in rental housing “more attractive” it is now much harder for young Australians to form the kind of traditional families that conservatives often like to romanticise. It is no accident that it is now virtually impossible for young families to repay a mortgage on a single average income while one parent stays home to raise the kids. This is the inevitable consequence of those tax and labour reforms…

Australians in their 20s didn’t grow up in the laid-back land of the sickie, the smoko or the long weekend. They grew up with their parents coping with split shifts, unpredictable hours and weekend work…

With this in mind, it’s easy to see why young people have low expectations of both the public sector and those in public life… It is easy to blame young people for not caring about the state of our democracy. But it is also easy for young people to blame their democracy for never caring about them…

So perhaps it should come as no surprise that, come budget time, a parliament (that has only one member under 30, and knows young people are less likely to vote than older Australians) decides year after year to deliver something extra for the “grey vote” while lecturing the young about the need to search harder for jobs that don’t exist, and save harder for houses they’ll never be able to afford…

While we are regularly told that retirees who live in their own home need at least $50,000 per year to live “with dignity”, apparently young people, who may be raising kids and saving for a house on an income well below that, need to start repaying a [HECS] debt that older citizens never had to repay in the first place.

Of course, HECS-HELP repayments aren’t the only costs loaded upon the young. They are also pressured to buy private health insurance they don’t need to make it cheaper for older people who need it a lot. (Imagine if we made older people pay more for their car insurance to help keep prices low for younger people.) And young people must put 9.25% of their income into superannuation in order to ensure they can “fund their own retirement”. But they must also pay enough income tax to fund the retirement of those who didn’t have to save for their retirements…

What has been created is a two-tier political system…

Twenty years of deregulation (or “light touch” regulation), privatisation, contracting out, tax cuts, spending cuts and welfare reform have created a radically different Australian economy and society to the one that remains burned into the memories of older voters and politicians…

Full article here.

Unconventional Economist
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  1. BrentonMEMBER

    Spot on, a ripping piece!!

    When the crash happens, they will reap what they sow with this willful negligence. Those same youth will universally bear the brunt of the resultant unemployment and will be the ones taking to the streets, likely with Molotov cocktails.

    • Not in Australia. The youth know they need to be nice to their parents if they want somewhere to sleep.

      • Plus the oldies are sitting on piles of intergenerational wealth telling their kids they can have what’s left when they’re gone, so be nice.

      • Yet if the economy tanks, house prices fall, and much of the wealth of older generations is wiped out, they may suddenly find that the youth have little reason to be nice to them anymore. Then they will be in for a rude shock.

        Yet younger generations will still remember what a bunch of smug, self-righteous pricks the baby boomers were when they thought they had an insurmountable advantage over them. Never forget!

    • The culprits of our impending social demise are being listed and highlighted. My wish is that none of this line up can use the excuse “no one saw it coming” …

    • Actually the article is almost total bullshit. A lazy piece of journalism written with no knowledge of economic facts. This has been a war on the productive and especially a war on industry involved in real production. The economy has been seized by the FIRE sector and most of the population went along with it because, very short term, they could have more goodies. It’s true that following generations are going to pay some of the price but a massive price has already been paid especially by rural and regional communities and in the end by manufacturers. In the process, as others have pointed out the prudent have been right royally shafted as well.
      Interpreting the whole thing as some sort of war on younger generations is missing the whole point and the result will be an even worse final outcome.

  2. GeordieMEMBER

    In order to save, my wife has returned to work three days a week. The only way we can do this is through the use of childcare, a service for which we gladly use as I believe it is for the betterment of my kids and wife.

    However, childcare is 16% of our combined income after tax and all government subsidies. The net result for our family 12.5% increase in income when compared to a single income. Pretty sweet deal, eh?

    • BrentonMEMBER

      Not to mention that that measly 12.5% has long since been swallowed by CPI; decades ago.

    • How much of the extra 12% is consumed by other costs like the cost for your wife to travel to her job and indirect costs like more takeaway meals?

      • GeordieMEMBER

        Very little additional cost, thankfully, otherwise we’d be hard pressed to justify it.

      • BrentonMEMBER

        The problem is that it is not even the costs that are visible and can be budgeted for. There has been creeping inflation over the years that has made it absolutely necessary to have a dual income family now.

      • Good to hear – I had an experience where CityLink came for everything not claimed by childcare.

    • Jumping jack flash

      To counter the exorbitant costs of vacation care my wife and I arrange a weekly payment plan.
      They don’t like it, but its either that or they don’t get paid.

      To make matters worse my wife works casual hours where her employer(s) will call her that morning to ask her to come in to work that day.
      Fairly standard arrangement in the new normal of workforce casualisation. The employers asked for it, they got it.

      Childare, curiously, even though they most certainly make use of casual labour, cannot cope with this for whatever reason.

      So we rock up to vacation care the morning my wife needs to work, dump off the kids, and then pay them the grand total of $20 a week, weeks after the school holidays are long over.

      I can almost hear the steam escaping from their ears when their administration people call us wondering why their bill of $300 for 2 days of childcare (including all their stupid administration costs) hasn’t been paid in full and all they received was $20.

  3. Uni degrees are too numerous and too costly these days.

    With things like Khan Academy, education should be getting cheaper.

    • Education is a global bubble. Technology is going to shake things up, and the political storm on US campuses (google Bret Weinstein at Evergreen for the latest US college scandal) will accelerate that… employers want reasonable, thinking graduates with skills, not radical extremists, not exam fudgers, and not illiterate/inarticulate babies. Ultimately employers won’t care if people got their degree from an online or low cost uni, as long as they have the skills. And the property lobby will be happy if people graduate without massive student debt…. more opportunity for massive mortgages. It’s getting to the point where it’s one or the other!

      • Jumping jack flash

        doubt it.
        The “technology” has been around for decades and it has probably made employers crave degrees more than ever.

        the potential is there of course but it will take a generational shift in thinking.

    • Jumping jack flash

      Agreed, but the problem is credibility.
      Khan academy is great, however many employers don’t recognise anything other than uni degrees as being credible training.

      So many job ads state “tertiary qualified in whatever” as a prerequisite.

      Youtube is also fantastic. Many a uni assignment was completed after watching a youtube video because the lecturer explained the subject matter in the most complicated way imaginable.

      • Khan academy just made it easier for people to BS their interview. Very few people actually fully understand the causes and are actually tested unlike University degrees.

    • absolutely Uni degrees should be getting cheaper. After all for most of the undergraduate offering by Uni’s is a copy and paste exercise from year to another. Ask yourself how much of the curriculum has really changed over 20 years for economics or commerce undergrad degrees. Absolutely fark all and nothing like the increase in fees. The increase in fees has all been spent on superannuation and above CPI wage increases.
      Having just finished a Grad Dip I was shocked by the amount of times the lecturer saying “ah, I must fix that in my lecture notes”. Very very clear a copy and paste job.

  4. Reading this as a 31 year old is both interesting due to its succinct accuracy, and depressing at the same time….

    • I predict in a few years time you will notice you that you have studied hard, worked hard, and saved hard for 20 years and ended up with only 10 years’ worth of savings due to inflation. That is when you realise that governments are forcing you to gamble your life savings, and you will jump all-in and perfectly time the top the of the market.

    • Ha. I known the crash is about to happen as I’m on the brink of buying my 1st home.
      Just found out bub #2 on the way, i could hold off the nesting urges for #1, but I’m fighting a losing war now.
      I have to xmas to be in, so expect Jan to be armageddon.

  5. I really like John Howard’s reworking of history at the recent Menzies commemoration dinner. Referring to Menzies’ policies of govt intervention in the economy and industry. greater regulation of the economy, deficit budgeting and higher top rates of tax, Howard said they were policies suitable to the times. Really? They had a capitaist system now and they had one then. Whats changed? According to Mr Howard you can pursue a set of policies at variance from your idol but still claim to represent the “forgotten people” in the footsteps of Menzies. All you need to do say “times have changed” even though in reality the system is still the same.

    • Howard is a lying, evil sonofabitch, and the worst PM this country has ever had. My grandchildren will be suffering as a result of his vileness. That’s if my kids decide to have any children of their own and can find a house to raise them in.

      He should never be allowed to forget that he was ejected by his own electorate. Every time he speaks anywhere, that statement should be part of the introduction….”Allow me to present a failed politician who lost his seat as PM…”. Bastard.

    • SweeperMEMBER

      Notice how he waited for Fraser to pass before attempting to claim the Menzies legacy.
      Fraser would never have allowed Howard to claim Menzies.

    • SweeperMEMBER

      “Howard said they were policies suitable to the times”
      “suitable for the times” really means the egalitarian country as it was before Paul Keating tore everything to shreds. He has a point actually: the Australia Keating left Howard was vastly worse in almost every way than the one Chifley left Menzies

      • really? There is no better personification of “right place and right time” than Howard and Costello.
        Those two literally could have slept through entire career and the country would have ended up in the same if not better position. Howard and Costello benefited from the rising tide lifting all boats.

      • SweeperMEMBER

        Well yeh if you were a recently rewarded bank executive or foreign shareholder of CBA making a mint following Keating’s generous gift on behalf of the taxpayer. But not so much if you were a working stiff whose wage share of GDP had plummeted under the Keating disaster. It’s all good though; just load up on debt in Keatings banking casino and dump your foregone pay increases in to the stock market and pray to market forces (assuming you can get a full time job after Keating and his mate Fraser shifted the goal posts from full employment to inflation targeting).

      • Fair bit of divergence to your original point but lets go with it. CBA was sold at a market price at the time. You can’t blame Keating for not having the foresight to hold CBA in public ownership till now. You can’t blame him for leverage ratios globally going nuts and CBA becoming more valuable for participating, after all it is its’ business model. Talk about hindsight investment. Get out of the rear view mirror.
        Edit: where is the criticism of Howard and Costello for Qantas / Telstra – both would’ve been better to hold onto and sold today than when those two were in charge. Can we use hindsight there? OR What about their introduction of the capital gains discount which has single handedly farked entire generations of australians by enabling leveraged up investors to fark over the kids by preventing them from having homes of their own. Howard and Costello wrecked this country.

      • SweeperMEMBER

        Market price?
        CBA was sold at a discount to a valuation which assumed no earnings growth.
        That is even assuming no earnings growth – that is, no earnings growth in an oligopolistic market, which had just been radically deregulated by the guy who sold it, coming out of a recession in a low interest rate yet high nominal growth environment – the taxpayer was dudded. You have to be taking the piss. I suppose you think he should also have sold Telstra to BHP and the banks as he was planning to do before he was voted out?
        Yes I blame Keating 100% for deregulating the funding side and credit side of the pre-existing banks and introducing foreign banks which singlehandedly has led to the out of control household debt.

      • SweeperMEMBER

        Keating sold Qantas (along with CSL, Australian Airlines, defence housing…) and he wanted to sell Telstra to BHP and the banks. There was virtually nothing left for Howard to sell except for a few buildings in Canberra.

      • SweeperMEMBER

        CGT discount is the only thing the unreconstructed Keatingites can ever point to. Even though the discount only replaced indexation which was originally introduced with an early 80s inflation rate in mind. And yes I think it is bad policy. But it is nothing compared to what Keating did.

      • be careful you don’t look too hard in that rear view mirror, should you steam it up you wont know where you are going

      • SweeperMEMBER

        Good to know the present is not a creation of the past.
        And that if it is, and if it is ugly, it can only be because of an LNP government, because, at all times, you have to support the red team.

      • matthew hoodMEMBER

        Sweeper, just wanting to know your thoughts more about Chifley leaving Oz in a bad way for Menzies.

      • SweeperMEMBER

        I don’t think he did. I was making the point that the Australia Chifley left Menzies was far better than the one Keating left Howard. In other words Menzies operated within the social democratic parameters established by his 2 predecessors. Howard operated within the neoliberal parameters established by Keating. I probably didn’t make that point clearly.

      • No! Sweeper is correct. However the rot had set in before Keating. There were already 25 years worth of economic distortion resulting in severe CAD’s and heavy indebtedness by the time keating came along. He had the choice of really making some difficult decisions or setting the debt/FIRE machine into gear and hitting the accelerator. He chose the easy path that would get him elected again and he could go on pretending he was the great saviour. Howard and Costello followed by slamming the debt accelerator to the floor.
        Ideology does not replace facts. Note that Sleeper and I probably started at different ends of the political spectrum (althugh i don’t think I fit in any traditional political spectrum).(Flawse for dictator)
        I’m making the odd assumption but I feel we both believe that some facts ought be considered otherwise we will continue headlong down the road to perdition.

  6. Won’t only be the youth with Molotov cocktails. A lot of boomers like myself are disgusted at how things are and will be in the front line with you.
    Edit: oops, meant to reply to Brenton.

    • BrentonMEMBER

      Good to hear and I’m sure you’re right! There will be a lot of angry boomers watching their retirement evaporate before their eyes.

  7. ” It is easy to blame young people for not caring about the state of our democracy. But it is also easy for young people to blame their democracy for never caring about them…”

    Gen Y is the largest voting bloc in the country. If they really care about this stuff it is within their power to do something about it.

    • BrentonMEMBER

      For a long time they’ve been told how hard their parents had it and that they’re all a bunch of princesses drunk on smashed avo. Those Gen Y are hitting their 30s now and are starting to wonder if their parents have just been talking shit this whole time.

      It’s no coincidence that there is suddenly a chorus of political voices seeking to ‘address’ housing affordability, at both the federal and state level. The problem is that there are no real solutions left, it’s all gone on too long. We will see how the next federal election plays out.

      • Ronin8317MEMBER

        Every single solution to make housing ‘more affordable’ ends up pushing up house prices. Take the new announcement from the NSW premier on removing stamp duty for properties up to 650K : all those sub-650K houses will now go up in price.

    • Few people of any age group really give a RA. Everyone votes for ‘what’s in it for me” That is why the country has become what it is.

    • This is the last desperate act to prop up the housing market so her colleagues can sell out before the Australia’s Great Recession begins. All I hear are the bleating of lambs to the slaughter as the greater fools decide now is the perfect time to buy. Baa….. It would be interesting to see which politicians are selling out about now, and whether any changes in rhetoric coincide with particular settlement dates. Damn i’m getting cynical these days…..

    • BrentonMEMBER

      What a joke!! Housing set to become more un-affordable with the new “Affordable Housing” package.

  8. What many of us have known for a long time is now starting be introduced to the broader public. Bit by bit it is creeping into the narrative. Of course, those of us who have spent many an evening trying to explain this to others won’t be recognised by those we tried to enlighten. They’ll still pick up The Australian, or tune into Q&A, and then repeat that version of the new normal back to us. Life will go on, but at least others may be a bit closer to reality. Let’s hope that the politicians and policymakers can also come and join us.

  9. Cheers, UE 😉

    Is there anywhere outside of twitter or the comments here we can send you “you gotta see this” links?

  10. What slips the minds of most boomers is that it was high inflation (and wage growth) that smashed their mortgages in the 80s

    People I know that bought houses in that period, including my parents, don’t seem to understand that it wasn’t their superhuman efforts to save money and avoidance of avocados that enabled them to clear their mortgages so quickly

    I ask them what they earned in 1980, and what they earned in 1990 and often I find their wages increased by 2.5 times

    I then look at wage increases in my job over the past ten years and I can see it adds up to a total of 28%.. so boomers were 9x better off over the decade

    Interest rates can drop to 0% and we’ll still be here paying off our mortgages until infinity

    • Nailed it, it was the high wage inflation that helped this generation massively. Also previous generations enjoyed better job security and didn’t have to compete with overseas workers.

      • Actually the main contributor is debt that future generations are STARTING to pay for now. The wages thing was incidental.

  11. reusachtigeMEMBER

    Oh boo hoo! Typical young people whinging because they don’t have the strive for success in them like older generations do. A good war with the draft will sort them all out!!

    • Why don’t we just nuke them from orbit Reusa? I mean – why spend money on transport to send these guys off to the front line? Why not just nuke ourselves, and save everyone the bother…

    • Ronin8317MEMBER

      Of course, property owners would be exempt from the draft because they’re ‘beautiful people’ and the bed rock of our economy.

  12. Kinda funny, was listening to Steve Price a couple of weeks back and he read out what Menzies said about home ownership. For all the old rodent’s hero worship, he really tore off on another path.

  13. “With this in mind, it’s easy to see why young people have low expectations of both the public sector and those in public life… It is easy to blame young people for not caring about the state of our democracy. But it is also easy for young people to blame their democracy for never caring about them…”

    As a society, we have lost faith in religion, the government, the companies that we work and buy things from. So what is left? Where do we turn? Who embodies the values our society should be adopting?

    • For some reason this Chuck Palahniuk quote comes to mind:

      “We’re the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War’s a spiritual war… our Great Depression is our lives.”

      I hope my generation, Gen Y, doesn’t settle into nihilism and cynicism (something I’ve been guilty of at times). If we lose faith in democracy and do nothing to make it work then, given labour replacing capital is becoming ever more concentrated and prevalent, we’re choosing the default future: feudalism.

      What is left? Not much, but enough. It’s true: we’ve been handed a shitty state of affairs and a very narrow window of opportunity to change course. But the only thing we can change is the future, so let’s make an effort of it.

      Where do we turn? Towards reality. We make sure we’re informed and expect the same of our peers. We vote. We seize the political power now within our grasp and use it wisely.

      Who embodies the values we should adopt? Nobody. This is something we must decide for ourselves.

      I don’t know how to make the above happen in practical terms. Personally, I’ve been engaging in small subversive acts but this might not scale. I’m not even sure if my activity will ultimately be of consequence. But, from my perspective, I can only see two possible futures: we can do nothing and accept the default, or we can fight for change.

      Either way, we will be making a choice.

      • “We make sure we’re informed”

        Jesus. This is why you won’t get anywhere. It’s just another blanket statement to make you sound intelligent and energised.

        Informed about what? And what conclusions are expected from that information?

        Fuckin bunch of posers. Just give up. Gen x sucks too but we don’t say things like “we make sure we’re informed”.

        You’re a bunch of fuckin idiots.

  14. Yep ‘grandfathering’ is boomer speak for pulling up the bridge across the moat once we’re all over…it’s fkn disgusting what those pricks have got away with and continue to lobby for…

    • Agree, but further, then boomers in corporate, PR, media, politics and commentary have youth etc. focus upon and demonise ‘immigrants’ who have few if any rights to protect themselves from confected criticism that some media outlets obsess with.

    • Grandfathering will not stand the pressure that will be brought to bear on both it and its political supporters.

      It will die in the pre election vote buying, the younger people will vote in record numbers in 2019. Why ? because by then they will have lost their subprime cars and I phones. That is important stuff and will make a huge difference.

  15. The younger generations are gutless morons and won’t do shit. Anyway a lot of them are on board with the ponzi anyway. Notice how Labor isn’t winning by that much. This isn’t a war that’s terribly generational anymore.

    Every week there’s a gen y who works at maccas and has a few mil in debt and 5 investment properties in the news.

    • Anyone in last 30-40 years who has worked hard and saved hard has been f*cked over by inflation. You can’t blame younger generations for refusing to work hard, or for following the same high debt path to riches that has worked for last few decades.

      • Not blaming them. Just calling them pussies. Maybe if I poke and prod enough they’ll fight.

    • I’m not getting the connection between your assertion that younger generations won’t do much, and Labor being only slightly ahead. The only way I can imagine someone might think these are connected is if they’re an imbecile living in a black and white world; one where supporting a political party is the same as barracking for a football team.

      Don’t get me wrong: I like these sorts of people. They’re useful.

      • It takes more than a 4-5% difference in votes for major neoliberal parties to think there’ll be any sort of revolution, and molotov cocktails being thrown around. Get back to me when the Greens or Socialist Alliance or something is polling at 20-30%. Ya idiot.

  16. – If the young people of Australia aren’t able to buy a house then who is going to buy those fancy & overpriced houses from e.g. the baby boomers ?

  17. I’m pretty happy about the NSW Stamp Duty changes. It gives FHBs a much needed advantage over investors, without actually hurting house prices. It’s a clever strategy, though there are relatively few levers like that still remaining. 50 year mortgages perhaps?