"OK Boomer!" Let me rise on behalf of my own baby boomer generation, not in disapproval of our X, Y and Z children but in their support. The "OK Boomer!" meme, popularised in the United States on social media and amplified across the Tasman by a young New Zealand MP to ridicule an entitled cohort, has sliced through generations to expose a widening disconnect between age brackets.
In Australia, the "OK Boomer" meme might just as easily be applied to growing tax-advantaged wealth disparities. My own Gen Y daughter has been going on about this for years, to which my response has been to accuse her, in jest, of "generational envy". After all, didn’t we Baby Boomers have our own generation gap in the 1960s, more pronounced than the one now, as we fought our battles with our "silent generation" parents? Didn’t we shift the country on its axis – and for the better – in the Vietnam era? And, by the way, didn’t Baby Boomers such as Bill Gates and Steve Jobs create the software and hardware for the communications revolution to which Millennials are addicted?
All of this is true, but as the most privileged generation – with the caveat that many, many Baby Boomers born between 1946-1964 have fallen through the cracks – we have to admit that Millennials and their successor generation (known as Gen Z) have a point.
A lucky generation in a lucky country in danger of scorching its dumb luck has had bestowed on itself the sort of once-in-a-hundred-year windfall that is unlikely to be repeated in all our lifetimes, Millennials included.
The housing boom is the Baby Boomer Klondike. I’m talking about a period of supercharged wealth accumulation that has produced the sort of intergenerational-riches bulge that has distorted the benefits of a record-setting economic expansion to the advantage of one generation and the disadvantage of others. You would be hard put to argue that, if not intergenerational theft, this was not an intergenerational provocation driven by the most favourable giveaway tax regime for an entitled generation in the Western world.
In other words: Generation X, born between 1965-1980; Y, 1981-1996; the so-called Millennials; and Z, 1997 onwards, have a rather large point in their criticisms of a protected Baby Boomer species.
This Boomer cohort is spearheaded by a ubiquitous self-funded retiree block in cahoots with pestilential money managers whose "benchmarks" have much less to do with the greater good than they do with the commissions they receive. This noisy cabal helped demolish Labor’s dysfunctional and overloaded election ambitions in which a so-called "retiree tax" became an easy target.
Among various consequences of the Labor debacle is that overdue reforms of the tax system – such as reining in negative gearing, capping tax-free franking credit returns, and overhauling capital gains tax and family trust concessions – will be off the table for the time being.
This will continue until the government is left with no choice. Budgetary pressures will dictate a re-balancing of an unfair tax system in which younger taxpayers continue to underwrite a wealth transfer to an older generation. The question is not if but when this transfer becomes unsustainable and politically untenable. In the meantime, "OK Boomer" resentment – by whatever description – will continue to grow.
The Grattan Institute’s Danielle Wood, co-author of a timely survey "Generation Gap: ensuring a fair go for younger Australians", says that for the first time in living memory we are setting up a generation to be worse off than the one before.
Numbers tell their own story. Australian Bureau of Statistics surveys of Household Income and Wealth 1994-2016 show that head of household wealth in the 55-74 bracket had more than doubled to around $1.3 million compared with Gen Ys and Zs, whose worth had flat-lined.
Homeownership among under-35-year-olds has plummeted. This is especially so among the young and poor. In 1981, 60 per cent of people in the lowest wealth quintile aged 25-34 owned a house; now, the figure is just 20 per cent. All this is taking place against the background of low wages growth, increasing casualisation of the workforce, job insecurity, the precariousness of the gig economy, and the near-certainty of lower incomes for Millennials than their predecessors.
On top of that is the frog-boil, as Wood puts it: an ageing demographic whose demands on a working-age population will escalate from now. This is not sustainable under the present tax system in which net transfers – government benefits minus taxes – have dramatically increased for older households but not for younger ones.
OK, Boomer; it's time to yield some ground.