The government’s weekend announcement that it would not be addressing what Treasurer Scott Morrison only a few weeks ago described as the “excesses” of negative gearing, and instead would be attacking Labor’s own modest reform proposals, confirms that we’re in the throes of an economic war on young Australians.
Not the very young, of course — central to Malcolm Turnbull’s negative gearing announcement (or more correctly non-announcement, since it was a Seinfeldian announcement about nothing) was Julian Mignacca of Penshurst in Sydney, who, with his wife, Kim, was lauded by Turnbull for having bought “a place for his little daughter Adison [sic] who we just met who is nearly one. He couldn’t afford to do that if Labor’s reckless change, its reckless new housing tax was ever implemented.”
So Malcolm Turnbull is certainly determined to protect the interests of home-owning one-year-olds.
If you’re 21 or 31, however, you’re out of luck with the middle-aged men who spoke at Penshurst. Australia’s tax system, which is heavily skewed in favour of property investors and against those trying to access housing to live in, will remain intact if the Coalition has its way. That will preserve an environment in which — especially in Sydney and Melbourne — younger people and low-income earners are condemned to perpetual renting, so high are house prices in areas of economic opportunity. Turnbull and Co. have, like so many politicians before them, taken the side of home owners and investors against younger Australians looking to buy a house.
This isn’t merely an issue of fairness for younger people and low-income earners. It is economically and socially dislocative; to access jobs and other economic opportunities, young people and low-income earners must work in areas where they can’t afford to buy, meaning they rent forever or spend much of their time trapped in gridlocked infrastructure trying to commute. And services that need low- and middle-income earning employees — healthcare, childcare, aged care — struggle to attract staff because the people they would normally recruit live dozens of kilometres and 90 minutes away by car.
There’s no actual evidence to back the Coalition’s claims that Labor’s policy will destroy the housing market, cause a sharemarket collapse and ruin the prospects of infants owning multiple properties by the time they start school. Challenged to provide evidence, Treasurer Scott Morrison instead said it was “common sense to know that we need to leave the system as it is”. And asked what the government was doing about housing affordability, Turnbull waffled and invoked the ABCC (anyone who has had a house built will, of course, be familiar with CFMEU thugs coming round and holding up work). It seems the Coalition’s housing affordability policy remains Joe Hockey’s instruction that young people “get a good job”.
But that’s only one area where the government has it in for the young. The formal signing of the Paris climate agreement last week by junior resources minister Greg Hunt only served to highlight that the government’s pitifully unambitious emissions abatement targets aren’t consistent with the goals of that agreement, in addition to the fundamental problem that the government’s current “policy”, Direct Action, won’t even achieve a fraction of those targets even with a massive expansion in its budget.
Indeed, to date, the Coalition’s actions on climate change have consisted of removing an effective, efficient and cheap carbon pricing scheme, dramatically lowering renewable energy investment and bending over backwards to facilitate massive new coal projects that would wipe out whatever other emissions-abatement outcomes it managed to accidentally achieve. Meanwhile, it becomes ever clearer that global warming is proceeding at levels described by experts as “unprecedented” and a “climate emergency”.
Failure to act on climate change is intergenerational theft — theft on a colossal scale. Future generations across the world will have lower standards of living, suffer poorer health outcomes, higher prices and have to deal with more climate refugees and more catastrophic weather events. And future generations of Australians will be living in the developed country most exposed to the impacts of climate change.
Moreover, the use of interventions like Direct Action in and of themselves, beyond the fact that it won’t enable Australia to meet its targets, is also a form of intergenerational theft. Who says? None other than Peter Costello, in the 2007 Intergenerational Report:
“While many consider climate change mitigation is best addressed through market-based mechanisms such as an emissions trading scheme, governments may alternatively elect to purchase abatement activities using budget funding. The potential cost to the budget from adopting the latter approach can rise quite significantly, imposing a substantial tax burden on today’s, and future, generations.”
The perverse thing about the intergenerational war over climate action is that my generation and Baby Boomers, who make up the bulk of the governing class in Australia, are not even gaining a great deal by way of this theft. The nature of climate action is that the costs of taking action increase the longer we delay, meaning our economic gain now is limited but the future costs will continue rising. It’s a kind of malicious theft where we don’t even particularly benefit from what we’ve stolen.
The intergenerational war extends, however, to education as well. Instead of understanding education as an investment in the skills of Australia’s next generation of workers, managers and entrepreneurs, the government’s policy is to abandon the Gonski education funding reforms, protect private school funding while shifting away from public school funding, and (despite many ministers having themselves benefited from free or massively subsidised education) require students to take on a significantly higher debt, at higher interest rates, to pay for their tertiary education.
At the same time — and this is a bipartisan disaster, for which Labor gets its share of blame — the privatisation of vocational training has, in some parts of the country, been a disaster that has left students shortchanged by collapsing “providers”.
The result is that many young people who want the sort of education that can enable them to fully participate in the agile, innovative economy spruiked by Malcolm Turnbull, must take on a massive debt that will end up being six figures by the time it is paid back, even before they have to take on an even bigger debt if they want to own a home 90 minutes’ drive from their place of employment. And at some point, as is now happening in the United States, the economic cost of imposing massive education debts on the young, via rising default rates and lower expenditure, will become apparent. But not yet.
Fortunately, the youth of today will have to work longer, because the retirement age was increased by Labor, and future governments of both stripes will undoubtedly continue to push it higher. Meantime, the economic costs of a cooking planet will continue to mount: lower growth, higher unemployment, less investment, more dislocation, ever tighter government budgets.
It’s a multi-decade sentence of debt imposed by generations — Baby Boomers and Generation X — who have enjoyed the benefits of free or cheap education, subsidised carbon-based power grids and affordable property prices, and who now demand that younger generations accept the discipline of the market that we ourselves never faced.
It’s an intergenerational economic war, and my generation is winning it.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.