Economist warns of first generation poorer than parents
LONDON: The highly educated Gen-Z, born after 1995, is set to be the first cohort worse off than its parents as insecure work, housing shortages and global warming derail their prospects, economist Alison Pennington says.
Youth unemployment remains more than double the national rate, while rising student debt, fewer full-time jobs and soaring rental housing costs leave young people precariously placed, Pennington, a senior adviser to the Labor government, says in her new book “Gen F’d?”
Ms Penington says the book is a call to arms to help young Australians reclaim their future. She reckons they have shown “incredible resilience” in the face of serious challenges, but it’s no longer sustainable and change is needed.
Below is a lightly edited transcript of an interview conducted via Zoom.
How did you come up with the title for this book?
I wanted to tap into what I think is a widely felt condition for a lot of young people where they live week-to-week and can’t actually imagine obtaining the resources they need to secure their lives long term. But it’s also the climate crisis and the sense that we’re hurtling towards an ever more difficult situation for humanity. So I think that a lot of young people feel like they are Gen F’d.
I put a question mark at the end of the title because it’s important to me and my writing to not present doom and gloom.
What are the possible solutions that we are talking about here?
We have to diagnose what hasn’t worked, and in the last few decades there’s been this faux universalism in youth politics. This stream of quite often middle upper class, university-educated, selected voices who become the voice of all. I think it’s turned off a lot of young people.
A big point of the book is that our capacity to connect with each other is being eroded by spending too much time close to screens. So ’Gen F’d?’ is really a call first and foremost to rebuild social bonds. Humans need those bonds in order to maintain a sense of self accountability.
One reason we have seen a growing generational divide is that policies benefit senior citizens at the expense of young people
We spend over $14 billion in housing tax concessions every year that could be spent on developing alternative policies that start to deal with the affordability crisis. And then if you add in the $5b in Commonwealth rent assistance you have almost $20b. That could be spent developing good high-quality public and social housing akin to the Scandinavian countries that have much more sophisticated approaches to dealing with income and wealth inequality.
But also acknowledging that houses shouldn’t be treated as commodities, people need homes to live in.
How difficult is it to change the tax system?
The superannuation debate was very revealing because it showed even when the government framed a tiny tweak on the gravy train of tax concessions that only targeted the top 0.5 per cent, it still sparked the most impassioned vitriol across media.
What are we missing in how we do things?
We believe that a lawyer should be paying more tax than a nurse or a teacher or a cleaner. We understand that if you have more you can give a little more. But we don’t apply the same progressivity to the wealth accumulated without lifting a finger.
A dollar earned from work is over 10 times more likely to be taxed than a dollar earned through a capital gain. And if we truly were a nation that was encouraging hard work and effort, then it is absurd that we are allowing these multi-billion dollar riches to accumulate outside of the taxation system.
What are the possible side effects of this rising inequality?
There’s so much research internationally that rising inequality is poison for an economy. It poisons economic growth, productivity, social cohesion, and it gives rise to alt-right movements. And we are seeing those elements rearing their heads concerningly more and more.
Where should government start?
It’ll be difficult to get around the absurd treatment of wealth and income in the tax system. I think pressure on governments will be mounting to respond to the inequality of the situation.
