Intergenerational Inequality

Intergenerational Inequality

I am very concerned about the future costs and debts our current form of economic management is loading onto young New Zealanders. Our property and wealth taxes benefit the older generations. The young people now paying exorbitant prices to buy or rent houses are the ones being saddled with very large debts into their futures. This is on top of tertiary fees which have been increasing seven times faster than inflation. Moreover, by 2060, our current National Superannuation settings will bankrupt our country according to a recent Treasury report. As early as 2030, there will only be 2 workers for every pensioner. So young people will be facing higher taxes and cuts to health and benefits themselves to fund this. Furthermore, as an economy, we are once more pursuing a pre-GFC path of personal debt funded growth (New Zealand household debt is now 163% of annual household disposable income) rather than productive investment fueled economic growth. NZ is near the bottom of OECD productivity league tables and our GDP growth per person is only 0.2%. And then there is the degraded environment we are bequeathing to young people (global warming, ocean acidification, nitrate and phosphate contamination of our waterways etc). The potential for young people to bear the burden of all these costs and debts looks bleak given that the real incomes of two-thirds of households in 25 advanced economies (NZ included) were flat or fell between 2005 and 2014; and that young people today can expect their starting real incomes to be lower than their parents were (see McKinsey’s July 2016 report - ‘Poorer than their Parents’). In addition, wealth in NZ is becoming increasingly unevenly distributed, with 10% of Kiwis now owning 60% of NZ’s wealth. A massive impediment to addressing this issue is the fact that so many young people seem to both be unaware of the negative legacy they face and also fail to vote - almost half of 18-24 year olds did not vote in the 2014 election. One way to address this ignorance and/or apathy could be for TOP to find a messenger (such as a respected, well known young sports person) who young New Zealanders will take notice of who will make them aware that they really need to start thinking about these issues and exercising their right to vote. Otherwise, their futures will be decided by the self interests of the older generations in NZ.

Showing 6 reactions

  • Matt Walkington
    commented 2016-12-13 19:51:42 +1300
    I certainly agree with the concerns expressed here.

    You may wish to consider this policy idea

    as a method for encouraging political participation. It would certainly have that effect if promoted in a vigorous and effective manner. It would give young people (typically without much spare cash) a way to express themselves politically and encourage them to support, join and set up activist groups to work on issues relevant to young people.
  • Matt Walkington
    tagged this with essential 2016-12-13 19:51:41 +1300
  • Ben Mayson
    tagged this with essential 2016-12-03 18:04:35 +1300
  • duncan cairncross
    commented 2016-12-03 11:24:07 +1300
    This is important – with provisions

    If the current spending is on long lived assets – like damns and water plants then it is entirely appropriate that it is payed for by the future generations who will be benefiting from it

    Things like charging for education are a bad transfer of resources away from the young – and are total madness

    As far as the Super is concerned with the changing (aging) population yes there will be more “pensioners”
    BUT there will also be LESS children to be supported and educated
    The two just about balance each other out so stop panicking about that!

    House Prices
    There are two problems – Auckland – where houses are expensive
    And the rest of the country where houses are expensive BUT the problem is it costs MORE to build a house than the house is worth
    The problem there is that it costs a LOT more to build in NZ – and NO that is not because of the regulations/councils
  • duncan cairncross
    tagged this with important 2016-12-03 11:24:07 +1300
  • Jane Pinder
    published this page in Suggestions 2016-12-03 08:14:29 +1300