Tony Walker, columnist at Fairfax, has done a good job dissecting the resentment towards the baby boomer generation, which has ridden Australia’s long housing boom at the expense of their children and grandchildren:
A lucky generation in a lucky country in danger of scorching its dumb luck has had bestowed on itself the sort of once-in-a-hundred-year windfall that is unlikely to be repeated in all our lifetimes, Millennials included.
The housing boom is the Baby Boomer Klondike. I’m talking about a period of supercharged wealth accumulation that has produced the sort of intergenerational-riches bulge that has distorted the benefits of a record-setting economic expansion to the advantage of one generation and the disadvantage of others…
In other words: Generation X, born between 1965-1980; Y, 1981-1996; the so-called Millennials; and Z, 1997 onwards, have a rather large point in their criticisms of a protected Baby Boomer species…
Among various consequences of the Labor debacle is that overdue reforms of the tax system – such as reining in negative gearing, capping tax-free franking credit returns, and overhauling capital gains tax and family trust concessions – will be off the table for the time being.
This will continue until the government is left with no choice. Budgetary pressures will dictate a re-balancing of an unfair tax system in which younger taxpayers continue to underwrite a wealth transfer to an older generation. The question is not if but when this transfer becomes unsustainable and politically untenable. In the meantime, “OK Boomer” resentment – by whatever description – will continue to grow.
The below charts tell the story.
The older generation has been fortunate to maintain high rates of home ownership while younger generations’ home ownership rates have plummeted:
The older generations have also been fortunate to enjoy the biggest increases in net wealth:
Largely because they have enjoyed the biggest gains in home equity:
Older households now pay much less tax than younger households on the same income:
Younger households are paying greater subsidies to elderly retirees:
And younger Australians have less discretionary income:
Australia had an opportunity to tackle some of these inequities at the May Federal Election, via property tax and franking credit reform, but voted against change.
Hence, resentment will continue to grow.