Younger Australians may be seeing lower standards of living than their parents did at the same age, according to a new report released by the Grattan Institute.
The report, titled The wealth of generations, found the wealth of Australians aged 25 to 34 slipped during 2011-12 to a lower point than what it was eight years before.
While younger generations are worse off, other age groups have seen their wealth grow. The average 35 – 44-year old household was found to be $80,000 better off than the same age group in 2003 – 04, 55 – 64-year old households are $173,000 richer, and the average 65 – 74-year old household’s net assets have risen in value by $215,000.
The report highlights the boom in housing prices, which has led to home ownership rates falling over the last two decades for all but the oldest households. 48 per cent of 25 – 34 year olds owned their own home in 2011, down 12 per cent from 1981. House prices were revealed to have increased 4.3 per cent per year from 1995 to 2012.
Government spending was also pointed out in the report, which found that governments spent $9,400 more per household over 65 in 2010 than the six years before.
The report says the spending on pensions and services, which was mostly funded by budget deficits, will see future taxpayers having to repay the debt.
Tighter targeting of the Age Pension is suggested to help restore the balance of wealth between age groups, along with the reduction of superannuation tax concessions and an increase of taxes on assets.
“These reforms would fall most on those who have benefited most from windfalls and government largesse, and have paid lower taxes while deficits accumulated,” Grattan Institute CEO John Daley said.
“We shouldn’t delay, or a younger generation may be even worse off, as they miss out on benefits their parents enjoyed.
“The huge challenge for governments and the nation is to introduce policies that ensure we keep a vital part of the generational bargain: rising living standards for every generation.”
