The generation gap has implications for all levels of government

Over the past few months two personal events have brought home the message of the National Centre for Social and Economic Modelling (NATSEM) report on the "intergenerational divide" more effectively than either ABC media coverage or the text of the report itself. The first was an ironic pair of flyers that came through my suburban mailbox and the second a small inheritance.

The flyers were odd. Among the bills, real estate catalogues, and local newspapers, the first arrived on a Wednesday. With a stark photograph of the local park last summer, cracked dry earth and dying trees, the flyer called on the local government to renovate the park and ensure that sufficient water is provided to the grounds to keep it in its usual, luxurious state. The local residents' action group that distributed it talked about the need for municipal investment in the park, and said the local government had already agreed to draft a plan but had not yet committed to the complete renovation being called for. The key message was that:

[our group] wants Council to know the community is serious about getting things done. To keep this in Council's mind, with your help we will be an active voice pressing for demands to be finalised, and work and works started and finished.

Two days later, a sly young thing slipped another flyer in my mailbox. This one mirrored the first, complete with the same headline message ("I know what you didn't do last summer"), same photograph, but distinctly different text. In part, it read:

While Council has already bent over backwards to accommodate our middle-class welfare demands, this has only fuelled our avariciousness.

[our group] wants Council to know who really runs this municipality: wealthy middle-class people like us. To keep this in Council's mind, with your help we can be a disproportionate voice in gobbling up community resources.

Northcote, a now fashionable inner-city suburb of Melbourne, may be gentrifying but not without some protests about the new people next door. I chuckled at the parody but wondered if some of my neighbours did as well. At school events for my eldest, and at the day-care for the little one, I can't help but notice how a lot of the parents look like my parents, rather than my peers.

The inheritance was also unexpected, and therefore very sad, but the small amount of money it afforded my wife and I placed us in a dilemma. One the one hand, as 30-something renters with white-collar jobs, the money immediately represented the seed for a home deposit, replete with mental images of white picket fence and John Howard watching grandfatherly from one side. On the other, in an inflationary market, with $25,000 of consolidated HECS debt and 16 years of income forgone between us, the respectable sum was too small for even the modest little bungalow that had finally solid for over half-a-million-plus.

Weighing the benefits of a term deposit versus the incentive discount of paying off some HECS in a lump sum, we took the smart choice and repaid the Commonwealth for my education. As a decision it was rational, considered, and certainly a much better return on investment. It was not the stuff of an LJ Hooker advertisement, however. Regardless of how hard they try, the federal government can't get Generation X to run into the house, spouse waiting expectantly by the sink, calling: "Honey! The HECS is paid off!", to general merriment and the popping of corks.

And here's the rub. As the NATSEM report makes clear, Generation X is failing to keep up with the boomers. While we're the most educated generation ever, this has come with a high personal cost in terms of accumulated debt but also the double shift of compulsory superannuation and taxation to support the generation that came before. Throw in uncertain work tenure, double incomes (low and late birth-rates), and general increases in all manner of fees and charges, and there's a good explanation for the discomfort that many in my age group feel about our financial future and the tendency for once-staple life events like home ownership to be viewed with some doubt. People with short-term contracts eye that long-term contract with reasonable suspicion.

Overall, this isn't a new thesis but the statistical modelling, ironically, places it in a language we can all understand. Essentially, in a very focused and specific way, this report reiterates what Mark Davis expressed so eloquently in Gangland: Cultural Elites and the New Generationalism, namely, that as the Boomers age and have lower birth rates than their parents, the tendency for what is considered to be "young" moves upwards. As the average age in workplaces rise, senior management and positions of responsibility are harder for younger people to access. This creates what Reserve Bank governor Ian Macfarlane warned about when he referred to the potential for intergenerational conflict.

The conflict is real. At one level, NATSEM highlights the friction that is emerging at the intersection between the desire for retiring boomers to maintain their lifestyle at the expense of taxpayers 20 or 30 years their junior, and the neo-liberal movement to increase fees and charges on welfare and social development services. Peter Costello attempted to soften us up with the Intergenerational Report – a warning to the young that they're going to be paying more and more, and to the elderly that maybe they should be nicer to the slackers hanging around the bus stop. It's lucky social surveys show us to be increasingly post-materialist.

On a more personal level, the conflict plays out in workplaces and social settings where the "young" (sometimes people in their 40s), eye the positions and salaries of the boomer glut. Combined with fiscal constraint, this type of intergenerational tension is pernicious. For Generation X, their continual infantalisation leads to resentment, and ruthlessness. For the Boomers, it generates continual unease about their position and the motivations of younger people around them.

In my workplace, this is evident by the average age of staff but also in the way that decreasing funding to higher education plays itself out in the day-to-day operations of universities. Take the Australian Research Council (ARC), for example. The ARC disburses funds from the Commonwealth to researchers in Australia's universities on the basis of competitive applications. Money is tight, application numbers are high and therefore success rates are low and falling. In the last round of grants, Political Science not only fared very poorly but the disproportionate tendency for disbursements was to towards those with "track records", namely: professors and associate professors. Thus, as the money goes down and average age goes up, structural tendencies inevitably bias towards those who've been through the mill, proven themselves, and are deemed worthy of another dip in the pot. While we can all see the logic of this, industrial harmony is not an output of such a system.

This isn't a simply a problem for Australia's universities. The Victorian Public Service is currently eyeing its "retirement bulge" with growing alarm. The current proposals (to encourage workers to stay on past 55) will only delay the eventual labour shortage, while doing little to ease workplace tensions and the frustrated career expectations of those young 40 and 50-year-olds. The VPS is not alone in this, and private sector organisations are similarly affected.

Where we're going to feel the pinch is in local government. Pressed hard by increasingly politically active local residents to increase services, while squeezed for money, our cities and shires are set to be the level of government that will fare badly by this demographic trend. Because local government is dependent on municipal rates for their budgets, there is a tendency for this sector to see ratepayers (home owners, the boomers) as their major constituency and the group that councils need to service well. This has the tendency to subtly disenfranchise those Xers who don't, and maybe never will, directly pay rates. As this group grows in number, the great strength of local government over many years – its intimate size and claims to greater democratic legitimacy because of the relative closeness of councils to their populations – is under a real and growing threat.

The Municipal Association of Victoria's Chairman, Brad Matheson, is one who is clearly aware of this problem. In calling for the Commonwealth to directly fund local government and break their reliance on rate incomes, Matheson, knowingly or not, has touched on the key reform that will restructure our municipalities in such a way as to overcome some of the caustic intergenerational tensions. Better for the conflict to be writ large at the federal level, with the lines of demarcation clear, than a Lord of the Flies scenario in the 800 local-government bodies around the nation.

Populations age and change slowly but these trends are irresistible. We need to plan now for the way the boomer-Xer transition will play out, or commit ourselves to decades of social conflict. Time appears to be running out, the Council's just announced a major redevelopment of the park.