The young are losing out as the great Australian wealth gap grows wider
Published by The Age, Sunday 17 September
Malcolm Turnbull be warned: the wealth gap between young and old Australians is getting wider and it could transform our politics.
New data from the Australian Bureau of Statistics shows young people are not accumulating wealth at the same pace as their parents and grandparents. And failed government policies are partly to blame.
The evidence is stark. Today’s households headed by 65-74-year-olds are almost $500,000 richer on average than households of that age 12 years ago. Households headed by 45-54-year-olds are $400,000 richer.
But this economic progress has not extended to Australia’s young. Households headed by 25-34-year-olds are only $40,000 richer than households of that age 12 years ago.
Is this because young people are frittering their money away on trips to Bali and avocado brunches? Put simply, no.
In fact, young households are saving much more than in the 1990s and most of the 2000s, as are most age groups. The significant exception are 35-44-year-olds, who on average are eating into their savings to pay the bills.
The main cause of the Great Australian Wealth Gap is the house-price boom.
Rising property prices over the past few decades, and sharp rises in Sydney and Melbourne over the past few years, have made people who own a home much wealthier. And the big winners are older people who were lucky enough to buy a house before the boom.
But those rising prices mean younger Australians are finding it harder to buy their first home and to begin accumulating wealth as their parents did.
More and more young people are relying on help from their parents to get into the property market. Nice if you have access to “the Bank of Mum and Dad”. But many young Australians don’t.
So it’s not surprising that home ownership rates have fallen most among young people with low incomes.
Our politicians can’t escape responsibility for Australia’s housing affordability problem. The damage being done to young people is at least partly a failure of government policy.
Governments in Spring Street and Macquarie Street have been reluctant to make the hard decisions to increase housing density in the middle-ring suburbs of Melbourne and Sydney that would allow first homebuyers to live within a manageable commute of their work.
And the federal government’s housing affordability package, unveiled amid much fanfare in the May budget, merely tinkered at the edges, barely changing negative gearing and the capital gains tax concessions that favour property investors at the expense of first homebuyers.
So why should Malcolm Turnbull be worried? Because young Australians may let out their frustrations at the ballot box – and young Australians tend to lean left.
The signs are everywhere that Australia’s young are becoming more politically engaged. The proportion of 18-years-olds who voted leapt from 50 per cent in the 2013 federal election to about 70 per in 2016. And 65,000 more 18-24-year-olds signed onto the electoral roll in the lead-up to the same-sex marriage survey.
As for their political leanings, according to the Australian Election Study, Australians under the age of 34 are 7 percentage points less likely to vote for the Coalition and 7 percentage points more likely to vote for the Greens than the national average.
The “youth quake” at the June 2017 British election provides a warning for the Coalition about where politics can go when a generation feels the system is not working for them.
Young Britons, hit with the triple-whammy of stagnating incomes, rising university fees and falling home ownership rates (sound familiar?), voted overwhelming for Jeremy Corbyn’s Labour Party.
One post-poll survey found more than 60 per cent of under-30s voted Labour and only 20 per cent voted Conservative.
Back home, young Australians are right to be concerned about their economic future. The new ABS wealth figures are just another piece of evidence that our young are falling behind.
Politicians should remember that young people vote too. A party that can show it is listening could well be rewarded at the ballot box.