Assets for the next generation

1. Innovative home ownership schemes to respond to Australia’s housing affordability crisis.
2. The establishment of Nest-Egg Accounts, so that families can pass on an endowment of money and assets to their children.
3. The creation of Lifelong Learning Accounts to meet the growing costs of adult education and retraining.
4. The development of Employee Share Ownership Plans to increase worker participation and ownership.
5. The introduction of Matched Savings Accounts to help low income people save and accumulate assets (and break the poverty cycle).

In the new economy, there are no more jobs for life. People move in and out of careers and the workforce on a regular basis. T

he best form of financial security is a portfolio of assets, resources to fall back on during the tough times. The Keating Government gave Australians retirement security through its superannuation reforms - compulsory savings of $500 billion, rising to $1000 billion in 2010.

Labor’s ownership agenda aims to build on this achievement. We want to extend savings and asset accumulation to other parts of the lifecycle: families planning and providing for their children’s future, young adults entering the home ownership market, people meeting the costs of lifelong learning, workers moving in and out of employment.

Financial security is important for all age groups, not just retirees. As a nation, we need new incentives and new programs to help young people save for the future.

For all the talk about an ageing society, it is the next generation that faces the greatest economic challenge.

Last month NATSEM reported that in coming decades, the proportion of household wealth held by 25-44 year olds in Australia will more fall from 23 percent in 2000 to 10.2 percent in 2030. This is a huge shift in the nation’s asset base up the age ladder.

A child born today will enter a relatively asset-free generation. In large part, this is due to declining rates of home ownership among younger Australians. NATSEM has forecast that over the next 20 years, the proportion of 30-34 year olds with a mortgage will fall from 40 percent to just 15.

Unless something is done, our legacy to our children will be the lowest rate of home ownership and relative wealth in the nation’s history.

Most families, of course, know the problem. They want to put money aside for the next generation but, under the current system, they receive no incentive or encouragement to do so.

For all its rhetoric about families, the Howard Government has done nothing to help families save for their children.

Nest-Egg Accounts

A major gap in Australia’s economic system could be addressed by Nest Egg accounts - a long-term savings plan for families. When a child is born, the government would open a Nest-Egg Account and make a deposit of say $500.