This story is from the ABC which I’ve edited it for space. Over the next five years, you’ll hear much more about intergenerational fairness and youth poverty.
I wrote this in The Advertiser seven years ago. Why am I interested in this? Because this will hit younger generations hard.
The tax system that is stacked against young people, as election promises give advantages to wealthy, retired baby boomers over wage earners mount.
“It is definitely harder to get ahead,” says Ms River Pearson, a 28-year-old cleaner living on Victoria’s Mornington Peninsula.
A long, astonishing rise in house prices in a time of record-low interest rates, has led to a massive growth in wealth for people who got in before the boom.
Wage growth has been low. Combined with rising inflation, that means people’s purchasing power, what they can buy with their money, is weaker.
Workers are shouldering a growing share of the tax burden, and tax cuts set to arrive will give the most back to those at the top of the income tree.
Meanwhile, older and wealthier Australians are benefiting from decisions that cost taxpayers billions:
- Superannuation concessions: You pay less tax on money you put into your fund and, once you’ve retired, the money you take out
- Capital gains tax (CGT) discount: You only pay tax on half of the profit made from buying and selling real estate and other assets
- Franking credits: a tax rebate to shareholders who receive dividends that have already incurred company tax. Since 2001, retirees have been entitled to cash refunds of the tax already paid, even if they do not pay tax
- Expansion of the Commonwealth Seniors Health Card: An election promise means people who own their own home and earn $90,000 annually from super will get access to bulk-billed medical appointments and cheap medicines
Treasury produces an intergenerational report every five years. It suggests that by 2040 the cost of the concessions will dwarf what we spend on the age pension. The cost is already far more than double what Australia spends on unemployment benefits.
Almost half of Australians under 35 are now in some form of insecure work.
As the large baby boomer cohort gets older, there is likely to be a growing wave of wealth transfer through inheritances. But far from ending inequality, some experts are concerned it will cement it.
River Pearson isn’t angry about older generations. She lives with her grandfather, who she describes as “my best friend”, and appreciates that people who’ve worked a lifetime deserve a good retirement.
But as she considers buying property, she feels the cards are stacked against her.
“It’s daunting, it’s actually very daunting to think of because it’s such a hard thing to achieve these days in my age bracket with the cost of living going up and wages staying the same,” she says.
“And it’s only going to get worse if it continues to rise.”