Generational change is coming to this federal election on May 3. Kos Samaras, pollster & director of the Redbridge Group, made the case in a recent interview with Fran Kelly on the ABC Radio National Hour program.
He says that in 2010, Millennials made up 15-18% of the electoral role. In 2025, Millennials and Gen Z combined will account for 42% of voters. That compares to Baby Boomers at 32%.
The change over the past 15 years has fragmented the political vote. In 2010, 80 seats were decided by preferences. At the last election in 2022, the number increased to more than 130 (Tony Dillon does into more detail on how preferences will determine the winner of this election in his piece this week).
Also, in 2010, eight seats were deemed ‘non-classical contests’, where only the major parties were involved. In 2022, that increased to 27 seats, and Samaras says the number is likely to rise to 40 seats at this election.
A graph showing the difference between labor and non-major partyAI-generated content may be incorrect.
Samaras went on the outline how Millennials and Gen Zers believe the country has major structural issues and the two major political parties “are just throwing band aids at them.”
Samaras acknowledges that the decline in votes towards the major parties has been happening for some time – at the end of World War Two, votes for the two major parties were in the 90% range, which has since fallen to around 67%.
However, he suggests the voter trend away from Labor and the Coalition is accelerating thanks to the rise of Millennials and Gen Zers.
Why are the young angry?
A new report by independent think tank Per Capita may help explain why younger generations are turning their backs on the major parties.
The report bluntly critiques a “lost decade during which real wages barely grew” for young Australians.
It says that the purchasing power of workers barely budged from 2012 to 2022, increasing by just 2.6% in total over that decade. On average, nominal wages grew 2.3% per annum (p.a.), but adjusted for inflation, real wages increased just 0.2% p.a. That contrasts with the 20 years prior to that when real wages grew annually by 1.4%.
Per Capita says that if wages in the decade between 2012 and 2022 had maintained the growth rate of the previous two decades, the average full-time worker would be earning an extra $11,900 p.a. today. It suggests that the income lost by an average worker between 2012 and 2022 amounts to $54,000 in current dollar terms. And for a young couple, the combined loss is roughly the equivalent to a 20% deposit on a $500,000 first home.
The Coalition to blame?
Per Capita lays the blame for low wages on the introduction of WorkChoices legislation. It says the changes to industrial laws increased a power imbalance between workers and their employers. And the lack of bargaining power for works led to real wage stagnation in the following decade.
This seems simplistic though and ignores other key drivers of wage growth such as productivity.
Less income equals less homeownership
Per Capita argues that the suppression of wages after 2012, when Millennials and Gen Z Australians were in the first decade or so of their working lives, “not only robbed the average younger person of their first home deposit, but reduced their borrowing power”.
And, “while wages kept pace with home prices it was possible to save a deposit on a first home within three to five years, and this required prospective buyers to save diligently towards that goal. Then, at the outset of the mortgage journey, young homebuyers would be required to devote the maximum amount they could afford from their disposable income towards repayments, as assessed by the lending institution…
“The journey to home ownership and financial security across the life course clearly relied on a certain social compact: that wage growth would consistently outstrip inflation and keep pace with increases in home prices during a person’s working life…
“The collapse in wage growth over the decade from 2012 to 2022 has hit young Australians particularly hard…”
The end result is less homeownership among the younger generations:
“In 1971, Census data showed that 64% of people aged between 30 and 34 owned or were buying their home; by the 2021 Census, this had fallen to just 50%. Similarly, while 50% of those aged 25 to 29 were homeowners in 1971, fifty years later just 36% of people in their late twenties were buying a home”.
The political calculus on housing is changing
Per Capita is right to highlight wage growth as an issue for younger people. Yet it ignores the larger problem of ever-rising house prices. Even if wages had grown faster over the past decade, it’s highly unlikely that they wouldn’t have kept pace with booming housing prices.
That means fixing housing remains the biggest issue.
On that front, the political will to address the problems is weak. That’s because around two-thirds of households own homes.
So while Kos Samaras is right to highlight the growing clout of non-homeowning Millennials and Gen Zers, they aren’t in a position to be kingmakers at this election.
Though as Bob Dylan said, “The times they are a changin.”
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In my article this week, I look at the latest shareholder letter from one of the smartest people in finance, Blackrock CEO Larry Fink. The letter outlines Fink's new quest to become the biggest player in private assets and to upend the traditional 60/40 portfolio.
James Gruber
Also in this week's edition...
Clime's John Abernethy is back, this time with a report card on Australia's economy as we head to the polls. He explores how economic growth of 7% per annum over the past seven years has largely come from fiscal and monetary largesse, and that growth is now slowing. He believes budget forecasts suggesting better times ahead are built on assumptions that lack credibility and neither major party have solutions to kickstart our economy. John offers some potential ways forward.
It’s common for people as they age to seek more help in running their SMSF if their capacity declines. An alternate director may be a great solution for someone just planning for short-term help in the meantime, as Meg Heffron explains.
Recently, James Gruber sat down to interview Wilson Asset Management's Matthew Haupt. In the interview, Haupt reveals his latest views on the local stock market, how he's bullish on REITs though not on the big 4 banks, and why his firm is launching a new income-oriented listed investment company.
Life expectancy isn't just a number - it's a concept that changes with survival rates over time. Don Ezra breaks down how age, survival, and societal factors shape our understanding of life expectancy, especially post-Covid.
While many assets are currently on shaky ground, gold is continuing to reach new highs. VanEck's Arian Neiron says gold miners have lagged the price rises in physical gold, but that may be about to change.
Lastly, in this week's whitepaper, Munro details how climate-related investment remains one of the most significant investment themes of the 21st century.
Curated by James Gruber and Leisa Bell
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