The PM’s about to offer selfish Boomers like me a chance at redemption

On Anzac Day, as we remember the generations who gave their all for their country, take a moment to think about how our generations will be remembered.

Will we be revered too? Or will we be reviled?

If you are, like me, an Australian aged between roughly 45 and 80, you are in a group likely to be reviled by our children’s and grandchildren’s generations. We will be held culpable for what economist Ken Henry has described as “intergenerational bastardry”.

Unless the system is changed, we will be damned. For looting the environment, hoarding the national housing stock, rorting the tax system and leaving behind a national debt for the next generations to service.

“Once you accept that the next generation and the one after that are going to be worse off, holy hell!,” says Henry, “That’s a helluva change.” It’s a breach of the unwritten social compact – that each generation will be better off than the one before.

Anthony Albanese, long derided for reform timidity, has decided that it’s gone far enough. A formal decision in the inner sanctum of the cabinet’s budget subcommittee is expected next week. But his recent rhetoric is so consistent that we can assume safely that his mind is made up.

In recent weeks, he has repeatedly told us that “intergenerational equity” will be a theme of the budget. He’s told us that there’s a need for “younger people to have a stake in the economy”.

Specifically, this will find budget expression in reforms to negative gearing and capital gains tax. Long speculated, the prime minister is now committed. It will be the biggest political risk of his prime ministership to date.

It won’t be reckless. It’s expected that existing investments will be protected, by so-called “grandfathering”. But it will be a threshold moment.

Albanese will be attempting to exorcise the ghost of Bill Shorten’s quixotic 2019 tilt at the windmill of intergenerational bastardry. Its blades chopped him to pieces. Labor was haunted.

Albanese is offering our generations a chance at redemption. He was born in 1963, around the midpoint of the two postwar generations. The Baby Boomer generation was born between 1946 and 1964. Gen X was born between 1965 and 1980.

Some of us will welcome his attempt to make at least some redress. The policy change won’t solve the housing shortage. Governments, state and federal, are working on that separately, too slowly.

But changes to the tax treatment of investment property will be designed to shift the balance of availability, reducing the powerful incentives for investors so as to allow more opportunity for first home buyers.

The resistance will be ferocious. Our contemporary analogue to the steadfast selflessness of the Anzac generations is the whining selfishness of the ransack generations. For, if unreformed, that is how we will be remembered.

Our generations have avoided serving in war thanks to the historical aberration of Pax Americana, now ended, with the exception, beyond the professional military, of fewer than 20,000 Aussies conscripted into the Vietnam War.

Our generations have been living through our tax-advantaged retirements in our multimillion dollar homes while buying up investment properties in between overseas holidays, leaving the next generations to navigate unaffordable real estate prices and to ferret out holidays in a shrinking list of habitable climates.

We will clutch our swollen super balances while demanding the pension as well, and more government spending on aged care for our final phase, while boring everyone senseless with our ever-lengthening litany of health complaints. With treatment to be paid for by Medicare and government-subsidised private health insurance, naturally.

While congratulating ourselves on being investment geniuses all we’ve done is profit from a national failure of housing policy and exploit the panderings of politicians offering concessions to win our votes. This is a huge generalisation, unfair to many, but it is uncomfortably recognisable.

And it’s borne out by empirical evidence. If you were buying a house in 1990, the median-priced house in Sydney cost about seven times the median income. Today it’s 13 times. We can’t blame the kids for that. It’s our generations’ creation.

As for government benefits and concessions, ANU economist Professor Robert Breunig’s verdict: “The evidence is stark: the Australian government’s relative expenditure on older Australians has increased significantly in recent decades, funded by those of working age.”

Breunig’s work also found that retired Australians enjoy an after-tax income one-third higher than Australians aged 18 to 30. In other words, retired people get much more income than a great many working people. Which is perverse. It’s the working-age people who have the biggest financial needs, paying for housing and children especially.

Naturally, we’ll try to make excuses to the kids. It wasn’t me, it was the governments, all those politicians who made poor policy decisions.

True, prime ministers will be blamed. But we are all guilty. Whenever the slightest change is proposed to rebalance the system, a deafening chorus of self-entitled whingeing whines its way across the land.

It’s the wailing of the well-off demanding special bonuses and favours from the Commonwealth while they spend thousands every year on schemes to minimise their contributions.

It is nauseating. Remember when the Albanese government proposed last year that people with over $3 million in their superannuation accounts should continue to receive a tax concession, but at the reduced rate of 15 per cent instead of 30? This was nothing more than a minor tidying of a system out of control. It would affect only the 0.3 per cent of wealthiest super account holders.

Australia’s superannuation set-up was designed to allow working people a dignified retirement. Yet it’s been abused as a tax shelter for the rich and it has been taken as an absolute entitlement; there were 30 people last year with $100 million or more in their super accounts, all harvesting 30 per cent tax concessions.

But when a government proposes even the least housekeeping, the entitled generations set off furious campaigns. In the knowledge that they can intimidate governments and oppositions. Bill Shorten RIP.

Albanese routinely is criticised for reform timidity. His risk aversion is a rational response to the electorate’s preferences. He and Treasurer Jim Chalmers did withstand the campaign against the reduced concession on $3 million super balances after making a couple of tweaks. They passed the changes into law by negotiating with the Greens.

The Coalition opposed the change, protecting its last bastion of support. The only demographic in which a majority voted for the Coalition last year was old men.

With its current leader, Angus Taylor, we can expect that the Coalition will again fight against even the mildest reforms to investor privileges. He would inevitably have the help of the media arm of the Liberal Party, as Malcolm Turnbull calls it – the Murdoch media.

Albanese is now in a strong position. He has a large majority. The Coalition is in disarray. Albanese has as long as two years to the next election in which to settle the electorate. And intergenerational bastardry is creating generations of hopelessness.

And, in recent weeks, Albanese has handled the global fuel crisis well. He’s been successful in shopping for fuel and fertiliser, active in smoothing distribution snags and reassuring in his rhetoric, despite Coalition panic-mongering. He may not be loved, but he’s not loathed. Most importantly, he has earned some public trust.

The only consolation available to the ransack generations is that, having stripped out so much of the treasure from our country, we will be leaving much of it to our kids. It’s estimated that our generations will leave some $3.5 trillion to our kids as we die off over the next 25 years.

But what about the many millions who aren’t so lucky as to inherit houses, or property portfolios? The Australians who’ve never heard of family trusts.

This is a recipe for a brutal, US-style inequality. It would represent the death of any kind of fairness or equality in Australia. It would be a nation torn. It would not be the Australia that we’ve known. It would be a dire inheritance. And our generations would be reviled for the destruction of Australian society.

Breaking with his leader, the Liberals’ Andrew Hastie has spoken the truth. He’s said he’s open to reform to negative gearing and capital gains tax because “I just think we need to overhaul the whole system. We either fix the system, or it’s torn down by people like Pauline Hanson.” Hastie, note, is a Millennial, a generation younger than his leader.

It’s reform or ruin. Lest we forget.

Peter Hartcher is political and international editor. He writes a world column each Tuesday.

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