Young people need more than just handouts from the federal budget

The federal government is preparing a budget badged as “intergenerational fairness”. The idea it sells is simple: young people are struggling to get ahead because older generations have grabbed all the goodies for themselves.

The idea is as appealing as it is wrong. There are two reasons why the traditional aspirations thatgeneration after generation of Australians has cherished are becoming more difficult to achieve.

The first is that the economy is slowing. Businesses, adapting to the new environment, are no longer creating the opportunities previous generations enjoyed.

The second is that governments have shifted their focus from restarting the economic engine to handing out the dwindling spoils in an attempt to buy votes.

When these handouts go to young Australians, the government calls it intergenerational fairness. It’s anything but.

As national debt mounts, the government is borrowing from young people’s future prospects to give them trinkets that won’t hold their value. Canberra is buying power at the expense of national prosperity.

What’s missing from this conversation is any serious reckoning with the bill being run up in young Australians’ names.

Net government debt is now heading towards $1 trillion, not because of a one-off crisis, but because spending has been structurally ratcheted higher. That doesn’t look like intergenerational fairness; it looks like intergenerational buck-passing.

Future taxpayers — today’s young people — will be left servicing this debt through higher taxes or lower growth.

Yet there is a striking silence from Labor about how this trajectory will be corrected.

If anything, the political incentive runs the other way: promise more handouts today and leave the consequences for tomorrow.

In a recent study of 18-34 year old Australians, the Centre for Independent Studies found that, instead of making young people’s aspirations more accessible, handout policies act as a pacifier — a substitute vision for the future governments believe is more within their power to deliver than the one that young people imagine for themselves.

But these short-term fixes and attempted redirections represent a failure to address underlying issues.

This is not just an Albanese problem, nor one localised to Labor.

The failure by successive governments of all stripes to tackle the hard work of economic reform has rendered young Australians increasingly dependent on these ‘cost of living’ relief measures to make ends meet.

In addition to the financial cost that young people will eventually pay, there is a psychological toll.

By offering subsidies and handouts on particular activities, governments have narrowed the opportunities of young people to build their version of the ‘good life’.

More affordable rental housing is not as good as home ownership. Therapy and antidepressants are a poor substitute for a strong sense of purpose. Free or discounted education doesn’t remove the opportunity cost of credentialism, especially now that post-school qualifications attract a declining wage premium.

What’s more, young people who feel that achieving their goals is no longer something they have control over have a reduced sense of life satisfaction.

Our research found that only four in ten young Australians now believe they have the ability to overcome the barriers to achieving their aspirations.

It’s no wonder young people are starting life unhappier than generations before them.

 Naturally, that generates resentment. Which explains the appeal of another tranche of ‘intergenerational equity’ policies flagged by Albanese for the coming budget.

In a submission to a Senate committee examining the proposal to reduce the capital gains discount, Centre for Independent Studies’ economist Robert Carling pointed out that the policy would have a negligible impact on housing affordability. What it will do is penalise saving and investment.)

Perhaps that’s the point. Young Australians who have lost hope are looking for someone to blame. And the government would rather they blame their parents than politicians.

The CGT changes are a deliberate strike against generations who benefited from a strong economy, which distracts young voters from the fact that the current crop of politicians doesn’t have a plan to restart the economy.

Which is extraordinary, because we still have the recipe. For years, Australian workers prospered as visionary governments undertook bold reforms to take advantage of Australia’s global advantages and foster a healthy business environment.

The Hawke-Keating years in which Australia dismantled its protectionist tariff system and wound back subsidies to loss-making industries were years of significant growth and opportunity.

After a hiccup under Keating’s prime ministership, the Howard-Costello years continued Australia’s golden run.

Australians could afford nice homes — and then some. The middle class became investors and asset holders, building wealth from surplus income. Hard work paid off.

And then something changed. Despite the fact that Australia weathered the Global Financial Crisis remarkably well, using stuffed coffers to provide citizens with cushioning and our Triple-A rating to shore up our financial system as one of the world’s most stable, we followed the world in losing faith in market forces.

In the wake of the GFC, the focus was on the financial instruments that led to the international financial collapse, instead of being on the government policies that encouraged reckless lending.

Instead of learning the right lessons, policymakers doubled down on intervention, entrenching a model where government shields risk, distorts incentives, and substitutes short-term political fixes for long-term growth.

The result is an economy less dynamic, less productive, and less capable of delivering the opportunities earlier generations took for granted.

Until that changes, talk of “intergenerational fairness” will remain hollow — a convenient narrative that obscures the steady erosion of the very conditions young Australians need to thrive.

Parnell Palme McGuinness is a Senior Fellow, and Michael Stutchbury is Executive Director at the Centre for Independent Studies.