Young Australians will be paying for the Morrison Government’s excesses long after this Government is gone, writes Tarric Brooker.
AS AUSTRALIA ENTERS a highly uncertain 2021 with a once-in-a-century pandemic still ravaging the world beyond our shores, the hype surrounding the Aussie economy continues to build within elements of the media.
It really has to be asked, do young Australians really have that much to look forward to in the future promised by the Morrison Government?
In the final few weeks of the 2020 parliamentary calendar, two key policies emerged as focuses for the Morrison Government for the beginning of 2021: the removal of responsible lending standards legislation; and giving first home buyers the ability to access their superannuation in order to buy a home.
...The best form of welfare is actually a negatively geared Sydney investment property, where the government gives you a tax deduction to lose money on your investment week in, week out.
Both policies are unlikely to improve the economy significantly, if at all, in net terms. Yet despite the nation’s economy facing far greater issues and many still lingering problems related to the pandemic to be addressed, the Morrison Government is nonetheless committed to pursuing these changes.
But why would the Federal Government place such a heavy emphasis on these policies, at a time when, according to the Small Business Association, there are warnings of up to 415,000 small businesses being forced to close their doors for the final time?
Housing prices — it is arguably just that simple.
Despite all the Liberal Party rhetoric about free markets and their general opposition toward government intervention in the economy, Australia’s extremely high housing prices are seemingly protected as if they were the most sacred of sacred cows.
'They will never let a housing crash happen in this country...
The path they've put us on ... will mean home ownership rates are going to keep falling over the next ten, 15, 20 years. That's bad news for liberal democracy. We don't have a crash but instead have a massive gap between those who have a house and those that don't.'
After years of the Coalition telling Australian’s that the "best form of welfare is a job", the evidence suggests that the best form of welfare is actually a negatively geared Sydney investment property, where the government gives you a tax deduction to lose money on your investment week in, week out.
According to a working paper by Dr Cameron Murray and Joshua Ryan-Collins, over the past decade, the average Sydney home has often gained more value in a year than the average worker earned from their job.
In several boom years for the Sydney property market, prices rose by one and half times more than the average worker earned in a year.
So where does this leave young Australians?
Quite a challenging place for some, to be blunt for a moment.
If the Morrison Government gets the 10% annual housing price growth Treasurer Josh Frydenberg was talking up in September 2018 as a way to boost economic growth, saving for a home deposit would become an even longer process.
Meanwhile, the Government’s cost of borrowing has risen significantly from a low base. Three months ago the Federal Government could borrow for ten years at an interest rate of just 0.73%; this week the rate rose to as high as 1.12%.
While this is still below the rate of 1.18% set this time a year ago, before the pandemic began to impact Australia, it represents a potentially concerning trend for Australia’s taxpayers and mortgage holders.
In the United States, experts are already warning of the possibility of rising American mortgage rates in 2021, if government borrowing costs continue to rise.
With the possibility of de facto government-backed rises in housing prices on one hand and a recovery plan based on income tax cuts and tax breaks for businesses on the other, it feels like young Australians have been well and truly thrown under the bus.
Generation Y and Generation Z will be paying for this Government’s pandemic response cash splash for decades to come, despite some never being eligible to benefit from it even if they need the help.
Yet at the same time, corporate profits boomed on the back of JobKeeper support payments, executive bonuses were paid in the millions and billions of dollars were issued in dividends to shareholders.
As Australia heads into this new decade and a new era, the nation's young have arguably been abandoned in favour of the pursuit of higher housing prices and the Coalition’s ideological agenda that ironically espouses minimal government intervention in the economy.
Where the tides of the struggles of the global economy will take us, no one can know for certain. But there are things we do know for certain. The young people of Australia will be paying for the Morrison Government’s excesses long after this Government is but a memory and there will be consequences for disenfranchising entire generations of young Australians.
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