Generation Less: How Australia is Cheating the Young
Melbourne, VIC; Black Inc. Redback 2016
A country that makes no room for the young is a country that will forfeit a fair future. This must not become Australia.
Today’s young Australians are the first generation since the Great Depression to be worse off than their parents. And so, just as we have seen the gap between rich and poor widen over recent decades, we’re beginning to see young and old pull apart in ways that will wear at our common bonds.
It’s time to decide what kind of future we want for this country. Will it be one where young Australians enjoy the same opportunities to build stable, secure lives as their parents and grandparents had? And can we do right by the elderly without making second-class citizens of the young.
Urgent and convincing, Generation Less investigates the life prospects of young Australians. It looks at their emotional life, their access to credit, education and fulfilling jobs, and considers whether they will ever be able to buy a house. A wake-up call for young and old alike, Generation Less is a smart, funny and ground-breaking blueprint for a fairer future.
It was only a matter of time until the mainstream media would allow for coverage of one of the most pressing issues facing Australian society: Generational inequity. So far this year, two notable authors have presented a series of logical and coherent arguments for the case that the youth of Australia have been systematically disenfranchised.
The first is Richard Cooke, who penned an op-ed in The Monthly titled The Boomer Supremacy: The Dominance of Boomers is Becoming Total.
But the sheer numbers, wealth and cultural influence of the boomers have kept policies such as these in place long after their calamitous effects should have been recognised. Negative gearing – allowing losses on rental properties to be tax deductible against an investor’s other income – has been the engine through which Australian property has become some of the most expensive in the world. It has been retained for decades, under the fig leaf that an attempt to wind it back in the 1980s led to increased rents. That was in Sydney and Perth only, and was likely the result of other factors. But this flimsy excuse has made it immovable. In reality, the policy is just popular with the investor class, allowing property owners to avoid tax and push their equity higher at the same time. It has never meant lower rents or an increase in housing stock. Multiple properties have become the norm. “We’re seeing an older generation [that has] benefited from a combination of quite generous tax and welfare treatment and has also been in the right place at the right time as interest rates came down,” the economist John Daley told Lateline in June last year. “Therefore asset prices rose and we have a quite wealthy older generation, indeed an older generation that’s much more wealthy today than people of that age, say, 20 years ago. And that’s the generation that’s got money now to invest in … investor housing.”
As Ben Oquist of the Australia Institute explained in February, “the under 30s [are] taking approximately 1% of the benefit of [capital gains discount and negative gearing] tax breaks worth $7.7 billion a year”.
Cooke's article went viral for a few weeks, adding to discussion of changes to negative gearing rules at a federal level. Labor announced that it would grandfather existing negatively geared investments and remove future tax concessions for existing housing, in order mitigate the ongoing wealth transfer from young to old.
The response by Liberal PM Turnbull was swift: there would be no changes to existing legislation. The justification was the 'damage' that would be done to the housing market, including the claim that it would cause rents to increase. Cooke recognises that the key conflict of these competing interest groups cannot be reconciled without one side losing. Housing affordability can only mean one thing: a drop in prices. The boomers won the day and the same rort has been left perfectly intact.
I first heard Miss Rayner on Triple J's Hack program, known for its youth-branded grievance-mongering and presentation of political issues through the standard emotional and progressive ABC lens. Recent episodes have covered pressing issues such as Centrelink payment processing delays and where the major parties stand on gay 'marriage'. It appeared that Hack would be a fora suitable for Rayner to explain her thesis. But not so.
Having described her key arguments, the host Tom Tilley proceeded to claim that her points were born of pessimism, going so far as to describe her book as a 'sob story'. It is curious that the superficial and harmless protestations that are usually talked about on the show such as the injustice of the use of police drug-sniffer dogs at music festivals and insufficiently generous student welfare are promoted and made out to be of the utmost importance, while this issue was carelessly cast aside and not engaged with on a serious level.
Unfortunately, both Cooke and Rayner fail to mention the elephant in the room, namely immigration and race. Like many other challenges and crises nations face, from war to famine to natural disasters, the cost of sacrificing the opportunities of the young for the comfort of the old need not be irreversible. What is irreversible however, will be the demographic displacement of white Australians, who are sustainably reproducing, with highly fecund vibrants from the global south. These aliens will need to be imported, it is argued, in order to fund the largesse of our social services to the old.
As both Cooke and Rayner explore, there is more to the story than house prices. Declining economic opportunity, job insecurity (thanks for the growth Hawke and Keating!), offshoring, growing budget deficits and looming future public service, Medicare and Social Service liabilities will create a future radically different to the inflationary credit boom period from the post-war period to today that has become 'the new normal'.
As a member of Generation Less, the solidarity of these grievances connects me with many others of the same plight. Few of the options available to young people are very reassuring, nor do many that spring to mind present a wholesome and achievable alternative on an individual or national level. I present them thusly:
Option 1: Inherit from aforementioned baby boomers
Unfortunately, this is not a strategy. Even for those expecting to inherit, there are substantial risks involved, not least of which is the forced sale or downsized of the family home to fund the lifestyle your parents 'deserve' after their working lives
Option 2: Get rich
This is an option that can solve many problems in life. The problem being of course, that it is not a 'solution' in so far as expensive housing is unlikely to inspire a desire to get rich, since these 'riches', or anything under $3 million can only provide poverty (Blacktown, NSW has a median of $1m), or mediocrity (Wollstonecraft, NSW has a median of $2.2 million). One must be rich by the standards of the rest of the Western World to live an ordinary middle-class life in an Australian capital city.
For many men, the luxury of richesse and the security of one's progeny is a just reward for a life sacrificed to Mammon. A three bedroom Californian bungalow that your children are likely to be embarrassed to live in, much like the one you grew up in, is unlikely to put the wind in your sails that you would need to make such a sacrifice. In any event, this option is only available to a tiny fraction of young people.
Option 3: Expatriate
This may be the most logical on an individual level, but the most catastrophic on the national or social level. The middle-class professionals who have the money and agency to start a new life overseas are exactly the people we need to contribute to our nation. Tempting as it may be for some, the drain of this type of person, like rats fleeing the ship, is to be avoided at all costs.
Option 4: Be childless
The stylish suicide. There is nothing more sad than the childless couple or single, insisting that their failed career, art project or b-side album has given their lives meaning while they pretend their wine habit is a mark of refinement rather than failure. This is not an option.
Option 5: Apartment living
This is the end of the Australian dream. The parks and backyards, bush reserves, cricket ovals and empty suburban streets that form childhood friendships, allow community barbecues and put us in touch with nature are to be replaced with the loneliness of isolated 'privacy' and contrived shared experience through having watched the same American TV shows. The kind of rootless cosmopolitanism encouraged and facilitated by the high rise developments that are colonising historical suburbs represent nothing other than the smothering of whatever remnants of Australian metropolitan culture still exist.
Option 6: Rural or coastal living
Despite the fact that by international standards prices are still very high in regional areas, moving to the country remains a viable option for many young people who want to start families and escape the price tag, the gifts, and the vibrancy of the city. The immediate problem is obviously employment and a lack of services, but these are things that have been overcome by the committed and determined.
The problem with this strategy, is that it is short-term. White flight is a temporary solution, a reaction to the symptom rather than the problem itself. Relinquishing control of our cities, by vacating the seats of power that lay within them, would only speed up our dispossession and set ourselves up for a much greater failure in the future.
Option 7: Rent and Repatriate
This is the only feasible option, and if done right, could restore balance to an imbalanced market. The stratospheric valuations of property would come crashing down if there was no-one to purchase these assets. The strategy of the landed boomer class is yet to enter its final stage: sale of assets to fund retirement lifestyles. The extremely low yields (3-4%) on capital city rents have shown that the capital values can go as high as you like, due to a number of factors in our banking system which could be another article in itself, but what renters are able to afford has an absolute ceiling. The refusal, en mass, of our generation to go a million dollars into debt to buy boomer assets will initiate a deflationary period that will up-end the status quo.
The problem with this strategy is that it would be undermined by a sufficiently large migration programme. What would really ring the death knell of high property prices is the returning of all visitors to their home countries.
Our solution must be both social and political. We aim for nothing less than the total restoration of our historical birthright as the inheritors of a nation and the future of its people.