Bludging off the kids

The result, terrifyingly, is that we have close to the highest household debt (mortgages and credit cards) in the OECD, which includes many of the world’s basket cases.

No wonder home ownership is falling sharply for younger Australians and they are nervous about the future.

Younger Australians are also the victims of our inflexible industrial relations system. The Fair Work Commission focuses on protecting older Australians. Youth unemployment is high and rising, with few realistic options or incentives for employers to take on younger workers given their lower productivity and high imposed wages and conditions.

To add to this, our welfare and health systems are providing enormous benefits to older Australians at the expense of young families.

Grattan estimates that older Australians (aged 65 or older) receive more than $30,000 a year in government transfers, up a staggering 50 per cent since 2004. Those aged 25 to 55 pay all of these costs.

This might be acceptable if incomes were rising quickly, as they have in the past. But prospects for increasing real incomes are grim given the falling terms of trade and sluggish labour productivity.

To add growing government debt to this burden is, quite literally, stealing from young people - at a time when they are already being raided. Future debts - or the need to raise taxes at some point in the future - will cost young Australians far more than older Australians.

Grattan estimates that recent deficits have driven up future taxes by almost $40,000 for the average 25 to 35-year-old household, with limited impact on older Australians.

It is the government’s job to explain this diabolical problem, and the solutions.

We need to remedy the unfairness by eliminating government deficits, encouraging growth in the supply of houses through massive investments in transport infrastructure, better targeting health and welfare spending (which mostly goes to older Australians), and continuing to support income, productivity and jobs growth by opening up new markets and eliminating red tape.

Few older Australians would condone stealing from their children and would not expect their children to put up with it. Australians will accept tougher policies if it means our children will be better off.

We need to call Labor’s faux moral grandstanding for what it is, and explain to Australians the real morality tale of our time.