By MILLIE MUROI, Economics Writer
Whenever I write about intergenerational fairness, or lack thereof, there are a heartening number of supportive responses. But, without fail, there’s always a handful who (perhaps to try to make me feel better), point out they had it harder.
But these people are missing a few things laid bare in one of Deloitte Access Economics’ latest reports written about – and for a change, almost exclusively by – young people.
It’s not wrong to say previous generations had it hard. And within any generation, there are people who have been flung through the wringer more than their peers because of individual circumstances and plain old luck.
The biggest mistake, according to the report, is assuming today’s young people (Millennials and Gen Z) are behind only because they are young – and that they will eventually catch up.
Deloitte Access Economics associate director Rhiannon Yetsenga, lead author of the report, says sitting back and waiting for the problem to be resolved – or waiting for young people to climb into positions of power – is not an option.
“We can’t afford to wait,” she says. “The future of Australia is being shaped by decisions that are being made today … and we need to make sure it works for the very people who will inherit that future.”
There’s clear evidence from the report that some of the most consequential parts of our lives have changed.
Despite being the most educated generation, young people’s incomes have been growing more slowly than older cohorts and grinding backwards since the pandemic. Despite being the most digitally connected generation, Australians aged 15 to 24 have shifted from being the least lonely to the loneliest age group in just a decade.
It’s easy to blame the latter on young Australians being chronically online: nearly nine in 10 young people aged 18 to 34 are on social media, more than any other age group. And nearly two in five say it’s easier to connect with people online than in person.
But delve into the research and the young people surveyed say social media is useful for maintaining existing connections, such as with friends or family, rather than developing new ones. They also emphasise online connections alone are not enough to form a sense of belonging.
Perhaps it’s not social media usage most responsible for young people’s growing loneliness.
One of the biggest changes across the past few decades has been the monumental increase in the cost of housing: something that has enriched a large share of older Australians at the expense of younger people.
“Australia’s housing crisis is locking out prospective buyers and driving up costs for renters, leaving young people with fewer pathways to secure housing,” Deloitte’s report states.
Not only does the average Australian home now cost 16.5 times the average household income (up from 9.5 times in 1990), but for young Australians aged 21 to 34 living in our capital cities, rent chews up nearly half of their average wage.
That’s far beyond the 30 per cent figure which generally means people are experiencing housing affordability stress.
It’s no wonder only about one-third of 25 to 29-year-olds own a home, down from more than half in 1981: it has become almost impossible to save a deposit without family help. And it’s no wonder their mental health has taken a hit when their financial stability is on the rocks.
Nearly two in three Gen Z Australians report living paycheck to paycheck despite cutting back spending more than any other age group in 2023-24.
With cost of living pressures – and the dream (very literally) of homeownership drifting further away – it’s little surprise that more young people are taking on multiple jobs, hitting a record share of 7.6 per cent in December 2024.
Money might not buy happiness, but it buys stability and the ability to build relationships and a support network.
With most renters (who are mostly under the age of 35) on rolling monthly or one-year contracts, and vacancy rates stuck at historical lows across the country, there’s very little security.
And with property prices and rents constantly surging, and higher-density buildings being knocked back, many young people are being priced out and forced further away from their family and friends. That’s a bad thing for everyone.
As Yetsenga points out, having young people in cities means they’re closer to work and costing the government less by reducing the need to build more expensive infrastructure further out from the city.
The constant uprooting – and simply the threat of it – is costing time, energy and mental bandwidth, and making it difficult for young people to build and maintain relationships.
It’s probably one of the key reasons young people are less likely to be married and more likely to delay having children. Financial stress, insecure housing and being further away from family also aren’t compelling reasons to introduce a child into the world.
Of course, having fewer or no children is not necessarily bad if it’s purely a personal preference.
But it’s an issue if younger generations are being barred from having kids because of external pressures.
A drop-off in the number of children is also consequential for older Australians as they enter aged care and make more hospital visits. Not only does it limit the number of future health and aged care workers, but it also means there will be fewer workers to tax to pay for these essential services.
Yetsenga also points out full-time work weeks were designed when it was common to have someone at home to do most household chores and child-rearing.
She raises questions about whether a childcare system where children need to be picked up at 3pm is fit for purpose, especially at the same time as there is a big push to make office attendance mandatory despite most young people explicitly saying this isn’t what they want and that they require flexibility.
These are all things we need to act on. But chief among them is the housing market.
As the report notes, there is support across the political spectrum aimed at helping first homebuyers, but the “fixation on short-sighted political wins” fails to fix the biggest barriers.
The problem is that most of these barriers are in place to protect the interests of existing property owners at the expense of those who just weren’t born early enough.
Zoning laws, for example, which place restrictions on density in certain areas, are largely put – and kept – in place by homeowners who want to protect the value of their property or gatekeep their suburbs from apartment blocks and construction. Understandable … if we weren’t facing a housing crisis.
Then, there are the even more baffling tax concessions we provide to investors (including those with multiple properties) which incentivise them to treat housing as a wealth-building tool.
The capital gains tax discount – where only 50 per cent of the profit from the sale of a property held for than 12 months is taxed – is far too generous, especially for existing dwellings, and makes it more difficult for first homebuyers to get a foothold in the market by pushing up demand and therefore property prices.
For many young people, the only ticket out of financial insecurity and renting is money gifted to them by family.
At the very least, we need longer rental contracts to give renters the reassurance they can establish their roots in a place without fear they’ll be ripped away within months. It would also save many of them days or weeks every year worrying, searching for a new lease, inspecting and applying for rentals, and moving their belongings.
Young people today are the first generation at risk of being stuck with living standards below that of their parents and grandparents. For those who say they had it harder back in the day, too: we shouldn’t be aspiring for that.
