More young Australians are living with their parents - Transcript, ABC News 24

E&OE TRANSCRIPT

TV INTERVIEW

ABC NEWS 24

WEDNESDAY, 2 AUGUST 2017

SUBJECT/S: Inequality; HILDA survey results; Labor’s plan for a fairer tax system for all Australians

ROS CHILDS: Let's get more reactions to today's HILDA report which shows a growing wealth divide across the generations which has been compounded by rising house prices. I'm joined by Shadow Assistant Treasurer, Andrew Leigh. Overall, what do you think of the picture painted by the HILDA report?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: It's a pretty grim one if you are a member of Generation Y. You’ve seen the under-40 home ownership rate drop from more than a third in the early 2000s to now only a quarter. More and more young Australians are living with their parents. It means that that Australian dream, the notion that if you take a middle-class job, you can afford to buy a home in a decent suburb, is slipping out of the grip of many Australians. Comes on the back of these other statistics showing we have got the highest household debt load in the world and suggesting that increasingly Australia is moving from being a nation of home owners to a nation of renters.

 CHILDS: One of the main findings was that, because of increased part-time work and progressive taxation, income inequality and wealth inequality hasn't really changed since the GFC. That was one of the conclusions of the report. Doesn't that conflict with the campaign against rising inequality that you and Labor have been waging?

LEIGH: We know that, over the last generation, inequality has gone up markedly. That's true whether you look at the Australian Bureau of Statistics numbers, whether you look at the work that the late Sir Tony Atkinson and I did in estimating top income shares, whether you look at top wealth shares – the work that I’ve done with Pamela Katic – or indeed if you look at the Australian Bureau of Statistics’ numbers on earnings inequality. All of those metrics show that Australia has become significantly more unequal over recent decades. Indeed, the HILDA research shows that earnings inequality has grown over the course of the period that it measures just from the early 2000s.

CHILDS: But it showed there has been a marked shift to part-time work and underemployment and that inequality remained relatively steady. That's due to progressive taxation and more low-income people gaining employment.

LEIGH: As I said, earnings inequality is up in both the HILDA study and in the Australian Bureau of Statistics figures. If you look over a longer time span, it's clear that pretty much any measure of inequality that you look at has increased. There is this growing fragility I think in the Australian economy now - Australians seeing median incomes not having budged in quite a while, a worry that young Australians can't break into a housing market where seven-figure house prices have become the norm and that notion that first home buyers are increasingly beaten out at auctions by housing investors. That oughtn't be the Australian way. We have a great egalitarian tradition of a nation that sits in the front seat of taxis, prefers the word "mate" to "Sir" and doesn't stand up when the Prime Minister enters the room. Yet a government that puts tax cuts for millionaires as a high priority and which supports the cutting of penalty rates is going to worsen in inequality in Australia.

CHILDS: How can you get more young people into a home without putting them on a financial knife edge?

LEIGH: One way is to curtail our uniquely generous tax breaks in forms of capital gains tax discount and negative gearing which have together acted to contribute to runaway house prices in Australia. We’ve had periods where in Sydney and Melbourne over recent years, house prices have been going up $140 a day. You can forego as many smashed avocado brekkies as you like, you’re never going to be able to keep up with the runaway prices. We need to tilt the scales back to middle Australia, that's why Bill Shorten announced Labor's plan to crack down on income-splitting. It follows a range of progressive tax proposals - cracking down on tax havens, on multinational profit-shifting and then making sure we use those additional resources to invest in education, in job training programs and apprenticeships. So we have got that pathway to the middle class clear and running smoothly.

CHILDS: One of the features of the HILDA survey was around the growing wealth gap between the old and the young, this generational gap. Older people are doing relatively well. How can you maintain that situation whilst helping younger members of society?

LEIGH: It is interesting. I hold a range of pensioner roundtables and we did one a couple of years back focused heavily on the government's attempt to cut the pension, to index pensions to prices rather than wages. But it was extraordinary to me how quickly the conversation turned to grandparents’ concern about their grandchildren not being able to get a place in university, not being able to buy a home. Older Australians may have done well out of generous tax breaks for housing investors but that doesn't mean they want to live in a society in which a young person can't afford to buy a house based on a modest income. We used to have a Liberal Party led by Robert Menzies who believed deeply in home ownership. But this Liberal Party is more on the side of the investors than the first home buyers, where you have a Prime Minister defending the right of families to buy a house in the name of their one year-old. That isn't the Australian way. We have to get home ownership going again. This HILDA survey is a real wake-up call.

CHILDS: Andrew Leigh, Shadow Assistant Treasurer, thanks for joining us.

LEIGH: Thank you, Ros.

ENDS


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