Think Forward’s Tom Walker, explains how Australia’s young people are facing similar intergenerational unfairnesses to UK young people on International Intergenerational Fairness Day
Down Under, like any nation, we have our national values and myths. Ours are the ideals of mateship and a “fair go” Or, as our most recent former Prime Minister, Scott Morrison, was fond of saying, “a fair go for those who have a go”. But I’ve come to realise, trying to buy a home, pay off my student loans or deal with the dread of climate change, that a fair go is conditional and doesn’t seem to apply to younger generations and their future (and it most certainly doesn’t apply to First Nations people).
Despite our supposed national aspiration towards fairness, there is growing intergenerational inequality. Older Australians have seemingly drawn the prosperity ladder up behind them. We are grappling with profound economic disparities – perhaps not as severe as the UK or the US – but the trends are clear and unsettling. The net worth of older Australians has skyrocketed over the past decade, and the Baby Boomers are the wealthiest generation in Australia’s history. Meanwhile, the net worth of 15 to 44 year-olds (Gen Z and Millennials) has gone backwards. They are much poorer than younger people were at the same age a decade ago. Someone’s birth year has become a defining indicator of whether they have economic security.
Younger people are getting increasingly frustrated. They are not yet marching in the streets but certainly grumbling amongst themselves. Younger generations see that their futures are increasingly uncertain. They notice it in their daily lives, from record student loan debts, the housing crisis, a decade-long decline in real wages, growing wealth inequality and the impacts of climate change. The unprecedented affluence of millions of older Australians starkly contrasts with younger generations struggling to afford the basics, let alone get ahead.
Think Forward recently completed a survey of almost 1,000 Gen Z and Millennial Australians to understand what they thought of the tax system. We don’t often regard tax as a younger person’s issue. But, the tax system plays a critical, often hidden role in intergenerational inequality. Young people said the tax system holds them back as it rewards the already wealthy over those starting out. They outlined how hard it is to live an economically secure life. The kind of life older generations have.
Government not doing enough for the young
Tellingly, younger generations don’t feel supported by their government, with 87 per cent of survey respondents saying they don’t believe the government is doing enough to help younger people achieve their goals. Young people also reported that they don’t think the costs and benefits of the tax system are shared evenly across generations, with 69 per cent believing that older generations don’t contribute a fair share.
Unfair tax system
The intergenerational inequity in our tax system has come about through deliberate policy decisions by successive governments. Both sides of politics have introduced or supported tax concessions that either directly support older Australians, like tax-free superannuation incomes for those over the age of 60, or help the already wealthy, who are typically older, like a 50% capital gains tax discount or a raft of tax concessions that flow to property investors (cricket isn’t Australia’s national sport, property speculation is). These concessions mean that older, wealthier Australians pay less tax on the same income than younger Australians who rely on income from work alone.
Economic and taxation reform is therefore critical if Millennials and Gen Z are to share in the nation’s wealth (of which there is much to go around, if it wasn’t being hoarded). Our politicians sometimes recognise the issues. But getting them to act is the challenge. Our political and media landscape seems to create leaders lacking vision and courage for major political reform, while the prevailing economic orthodoxy is that tax is terrible, and the only way forward is tax cuts. Our new Labor Government came into power with a small target strategy, not promising too much, through fear of scare campaigns from the conservative side of politics. But still, we had high hopes for our new Prime Minister, Anthony Albanese, who grew up in social housing and, when younger, was cool, progressive, and even DJ’d.
I don’t want to be too harsh too early, but the Labor Government’s lack of ambition is clearly misaligned with the views of Millennials and Gen Z. Younger generations want tax and economic reform and can no longer stomach band-aid solutions. Unfortunately, older Australians are pretty happy with how things are, thank you very much. Ultimately, all the issues facing young people come back to the same sources – persistent short-termism in government outlook and policy and a tax system that rewards rent-seeking and the hoarding of wealth.
In our survey, younger generations didn’t actually call for tax cuts or individualistic responses. They want to build a prosperous society with a fair and robust tax system that allows for the necessary investments in social services. Younger Australians are happy to earn their share by working and creating. But young people need to be let on the ladder.
The good news is Millennials and Gen Z will make up around 40 per cent of voters in Australia’s next election. They will be a powerful group that politicians can either work with or ignore at their peril. Younger voices matter in the tax reform debate, and there is potential to build a movement to transform our tax and economic systems for the better.
That’s where Think Forward comes in. We advocate for a better future, educate young people about the tax system and hold our leaders to account. We want to bring young people together but also work across generations. We hear from many older Australians who are worried about the future too, and want to help. Younger generations are brimming with passion and ideas. If we invest in them to allow for security and confidence, they’ll build a better society for all.