Tomorrow's taxpayers pay for today's policy mistakes

Making matters far worse is that a new forecast by The Economist says the World’s population will peak at 9.7 trillion in 2064. Australia's population (ignoring immigration) would peak earlier than that. Australian women are currently only having 1.63 children on average - so population reduction is only a matter of time. Many other countries have replacement rates far lower than Australia's. Some African countries' replacement rates are multiple of 1.63.

In Australia, this means more older people per head of young people - who might migrate to younger countries to avoid paying through their taxes for the extravagance of their parents and grand-parents' generations - who SKIN - Spent Kids Inheritance Now.

Most parents want to leave a positive legacy to their children and grand-children

It all stems from housing security of which today's 20, 30 and 40 somethings have seen move further and further away since Cathy ran down that straight at Homebush. Without housing security, relationships are harder to maintain or establish. Questions as whether to have a child or a sibling for them is reconsidered, and the newly minted grown-ups of this Millenium lurch to middle age with an itch that cant be scratched.
More and more sadly, have descended into domestic violence, mental health and substance challenges too.Too many have abandoned the prospect of buttoning down a roof over their head that is both affordable and can be relied upon. That day ....that day that the message arrives.... punted by a landlord who wants to sell or renovate, or perhaps the camel's last straw that increases the rent, sends it over and forces the expense, effort and risk to move. The change has come ever so quickly you might think, but wages barely moved in the low rate era whilst house prices ran harder than Ms. Freeman. Choices narrowed, compromises ensued and in this Olympic year, it is stark, the price that those born after the Moscow boycott, are just beginning to pay. Now pile on climate change, war in Eu and Me and you and me and them all now pay more for everything you see.

Previously there was choice, now there is competition. Around 2010, the Aud was at parity, today it's 65c or a yankee ton is a buck 50 aussie. We were all living it large it seems - what happened ? The GFC, China's appetite for resources then Covid, Gov stimuli, inflation and all overtopped by rising interest rates have conspired to create a situation that is so fluid all of us are flying blind. What is plain to see though is that those with the assets are winning and those with debt are trailing. The pace of change is a changing. Life is accelerating where technology and concentration spans drive our society. Tech and concentration now there's a PhD. in the parking garage with the keys in it.

So what of our right honorables in the shade of the Brindabella's. The red variety has done well in Aust to return a surplus and keep the leader for more than 5 mins, ship is ship shape mostly. Bruise free little sunset cruise so far for AA of the Camperdown A's and his line-up, but the weather is turning. The youngsters are restless and they deserve better. Fix the imbalance.

In the above article and comments there has been no mention of the Future Fund which I thought was commenced to pay for future pensions. Even if insufficient it is still an important asset for future use.

Keith, only future Commonwealth public service pensions. Not all pensions.

Don't forget the 72 F35 fighters and the nuclear submarines paid for by this generation to protect the younger generation from the Com**** from the North. Unfortunately the nuclear subs delivered in 10 years time will be as effective as a tinny with 2 torpedo tubes attached to its side. ham

Geoff D, the higher interest rates furphy has been dispelled. Consider the average wage at that time, average cost of a house at that time and you have a particular multiple of income to houses, plus a certain percentage of wages being spent on paying it off.

Now, compare this (with inflation factored in for both wages and house prices) and you'll see that the "18% interest rates" are comparable to 7% interest rates today on the same, average house, with the same, average wage, because the former have raced ahead of inflation and wage growth. It is simply "more expensive" to get a comparable house, and it is further out from the CBD.

Ergo, housing is more expensive today and isn't as near to the city, because in the older days, most houses were, by definition, nearer by virtue of the fact that further out had not yet even been developed.

But the boomers will continue to muddy the waters with the 18% furphy.

"higher interest rates furphy has been dispelled" ... "18% furphy":

Not only interest rate but interest rate multiplied by initial mortgage principal, presuming same mortgage term.

'Mortgage affordability worst since 1990 for house buyers' [ by a whisker ]
https://www.smh.com.au/property/news/mortgage-affordability-worst-since-1990-for-house-buyers-20230503-p5d58h.html

Save money, avoid mortgages, pay cash.

So there's not much sympathy for the next generations? Yours and my children and grandchildren. Maybe then you won't be caught out in the future when they elect governments representing their interests, not ours, and reduce taxes and cut pensions. Especially given the levels of debt they'll be carrying on their HECS and homes. Just saying.....

Geoff D - the argument "interest rate since my day were high" argument doesn't fly. Plenty of commentary written over last fee years debunks this. Depending on city, etc, mortgagebis roughly 11 times household income. In the 80's, that was 4 times

Step one in solving this problem should be dramatically decreasing the amount of money age pensioners can have under the assets test and still getting a part of full age pension. Halving it would be a decent start so that instead of paying couple with their own home and $470k in other assets a pension of $44k a year they instead got a lot less and used some of their own money. Our current system of paying a part pension to a couple with their own paid off home and a million dollars in other assets is even more ridiculous.

Agree. Including the family home in the assets test, and changing the asset test thresholds would make a big difference.
I know retirees aware that if they downsize They lose part or all of their pension. That also has a cost as they struggle to maintain their home as they age. It’s also keeping nice family homes not available for younger families.
It would also partially address the inequity where some people have gained massively more wealth in their home based on where their home is and development in their area.

I thought Australia was doing better than most countries by having the asset test and no universal aged pension

It sounds like its an intergenerational issue for someone to retire today and have their pension paid by future taxpayers. Presumably it was inequitable for this same person when they were working to pay the age pension of people from previous generations. How will that inequity be solved?
We had net assets in 2007, so the current Federal Government debt has been built up over a short timeframe, driven by GFC and Covid spending. This spending was done to save jobs and help workers of the day. It would seem equitable for this debt to be repaid by the generations that benefitted.
I'll guess there is a decent crossover between the people calling for us to stop using gas, and the people complaining about the loss of revenue that results. Not saying we shouldn't be looking after the environment, but there's some obvious costs to it all. Maybe if us and other countries use nuclear energy we can replace the revenue from coal and gas that way.

I agree completely with your comment "Presumably it was inequitable for this same person when they were working to pay the age pension of people from previous generations"

The "baby boomers" taxation paid for the pensions of the previous generation AND the Baby Boomers were required to pay for their own "pension" in the form of superannuation. It would seem equitable for the next generation to make SOME contribution to the pensions of the baby boomers.

And, as a bonus to the younger generation, you get all the infrastructure that the baby boomers paid for. Just look at the roads, schools, hospitals, navy ships, etc that you have "inherited". Do you expect to get them all given to you? It seems equitable to me (as a baby boomer) to ask you to contribute to my pension. I did it for my forebears, and you are getting the infrastructure that I paid for

I agree 100% with the comments of JohnS. That's life! Plus my generation had much higher interest rates to contend with - more than double today's rates!

"It would seem equitable for the next generation to make SOME contribution to the pensions of the baby boomers.".

They already do, it's called "tax". That thing that boomers bleat that "I paid all my life" is also being paid by Gen-X, Y and everyone else after them.

And infrastructure doesn't last forever, it needs maintenance, replacing and technological updates. Again, through tax. Get off your high horse and stop thinking your generation was "more special".

Chris you seem to have missed the point that Cam and others are making, namely that no generation is "more special" or privileged when it comes to paying taxes that fund the goods services that are expected of governments such as pensions and aged care (typically for the preceding generation(s)), public infrastructure and all the other things that are funded by taxes.