It's always been hard to get ahead as a young person. To stand on the cusp of adulthood, imagine owning a home, contemplate starting a family. As such, it can be bemusing, even frustrating to hear the younger generation claiming that life is harder today than it was for their elders.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
It seems obvious that those at the start of their careers, and with little to no savings, have less purchasing power than those who've been in the workforce for decades and are closer to retirement.
But it's true that this stage of life used to have a brighter horizon with each passing generation. Today's young Australians are in danger of falling behind.
A new Grattan Institute report, Generation gap: ensuring a fair go for younger Australians, shows younger generations are not making the same economic gains as their predecessors.
Although Australia's strong economic growth has led to growing wealth and incomes, older Australians are now richer than before, while younger ones are not. And, contrary to the popular narrative of feckless avocado brunches and an excess of lattes, young people's profligate spending is not to blame.
In fact, while every age group is spending more on essentials such as housing, young people are cutting back on non-essentials: among them alcohol, clothing, furnishings and recreation. While young people have more diverse job opportunities than ever, the employment landscape has changed enough that job security is increasingly out of reach for many.
It's hard to deny that, as pointed out by one of the institute's senior policy advisors, Australia's tax and welfare system supports an implicit generational bargain. This means that that younger, working-age Australians are funding the retirement of the older generation, with no guarantee that they will be able to reap similar rewards in years to come.
The report also points out that a series of tax policy decisions in recent decades, such as tax-free superannuation income in retirement and refundable franking credits, mean older Australians pay a lot less income tax than they once did. So the discourse around the financial gap between generations is fundamentally flawed, as it's getting harder to make a meaningful comparison between working-age Australians, and those heading into or already enjoying retirement.
While young people have more diverse job opportunities than ever, the employment landscape has changed enough that job security is increasingly out of reach for many.
Much of the current situation highlighted by the report has been created by government decisions. These can just as easily be reversed, through reducing tax breaks for those who need them the least, or changes in planning rules to encourage higher-density living closer to the city centres.
But for this to happen, the discourse around young versus old needs to change. There is a certain mean-mindedness in implying that all generations should suffer the same or similar hardships as those who came before them. It's easy to mock the young and carefree, as they enjoy all the privileges afforded to them by the modern and globalised world we live in. But they are not doing things much differently to previous generations, and most have similar aspirations.
Why make it harder for the next generation to make their way through the world, while making it easier for those who have already walked the same path?