June 5th 2004

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Articles from this issue:

EDITORIAL: Time running out for Marriage Act

CANBERRA OBSERVED: Is Howard Government running out of time?

CRIME: Drug trade behind police corruption

DRUGS: Needle exchange programs: the facts

OPINION: Shuffling deck chairs on the gay 'Titanic'

QUARANTINE: Pork producers appeal to the Federal Court

AGRICULTURE: Dairy farmers fight for survival

SOCIETY: Gen X foots bills for baby boomers

PAKISTAN: Behind Pakistan's economic revival

TAIWAN: President Chen's olive branch to Beijing

STRAWS IN THE WIND : More than a sandwich and a milkshake / Golden Goose / Surfing the Sunday soufflés

CO-OPERATIVES : Lessons from Mondragon

EDUCATION: Dumbing down our schools

COVER STORY: Mitsubishi - counting the cost of closure

Britain and the Arabs (letter)

Australia's sovereignty (letter)

Standards in education (letter)

BOOKS: CARL SCHMITT, By Paul Gottfried

BOOKS: THE MAN WHO DIED TWICE: The Life and Times of Morrison of Peking

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Gen X foots bills for baby boomers

by John Ballantyne

News Weekly, June 5, 2004
Former Oz editor and 1960s identity, Richard Neville, got a loud chorus of raspberries from Australia's youth recently when he berated them for failing to speak out more on global issues.

When a student demonstration erupted in Sydney a few weeks ago, Neville said: "These respectable ruffians in branded chinos were holed up in the Vice-Chancellor's office to protest against the rising cost of education. No posters of dead Iraqi babies. The students have a point about the fees, but why can't they get upset about other people's problems?" ("Come on, kids, dare to resist", Sydney Morning Herald, May 3, 2004).

Neville's accusation of self-indulgence was the last straw for many Australian students, one of whom shot back:

"Richard Neville, Vietnam protests may have been the defining moment for your generation but our generation has been forced to focus a little closer to home by the policies of your generation.

"Did you start your career with a debt of a year's wages? Silly me! You had free education. Perhaps those uni students whose absence you're bewailing were too busy at their second part-time jobs to protest ..." (John Littler of Balmain, in Sydney Morning Herald, May 4, 2004).

It is little wonder why today's youth are disillusioned with their lot and generally disconnected from the political system. Unlike their parents, they haven't had everything handed to them on a platter.

They face increasing Higher Education Contribution Scheme, or HECS, charges, not to mention dearer medical insurance.

Although today's young generation receive less than their parents in the way of welfare entitlements, they nevertheless face the prospect of shouldering a substantial tax burden to support the baby boomers in their retirement. On top of this, however, the young are somehow expected to fund their own retirement.

Two academics - Dr Alan Tapper of Perth's Edith Cowan University and Dr David Thomson of New Zealand's Massey University - have confirmed that, across much of the Western world, the 60-year-old welfare state is in crisis. The welfare state has come to be not so much a straight-out redistribution from the haves to the have-nots, as was originally intended. Rather it has been, in Tapper's words, "one generation imposing costs on its successor".

After World War II, says Tapper, modern democracies chose to invest heavily in the young through family benefits and subsidised education. This greatly increased birth rates for the generation born between 1920 and 1940.

But Tapper says that, around 1970 the welfare state did "a little-noticed about-face". He said:

"The Youth State became the Elder State. Supports for children were quietly but steadily withdrawn, so that today they are about 1/10th what they were per child in 1950. Expenditure on the elderly became, and remained, the dominant theme. And, after 1970, 'the elderly' just happened to be the inter-war generation." [Dr Alan Tapper, The Intergenerational Report is not about Intergenerational Equity, but about Fiscal Sustainability, a submission to the Standing Committee on Ageing, House of Representatives, Parliament House, Canberra, ACT, Australia, July 22, 2002].

Dr David Thomson's study, Selfish Generations? How Welfare States Grow Old (Cambridge: The White Horse Press, 1996), has produced evidence from Britain, Europe and the USA, that the welfare state is increasingly unable to satisfy the conflicting demands for "intergenerational justice".

Australia's young generation is burdened, not only by heavy taxation and reduced welfare entitlements, but also soaring property prices and poor job prospects.

According to the recently published study, Men and Women Apart: Partnering in Australia, by Dr Bob Birrell, Virginia Rapson and Clare Hourigan from the Monash University Centre for Population and Urban Research, some 30 per cent of Australian men aged 25-44 lack full-time jobs, and more than 17 per cent of men in this age group receive less than $15,600 a year.

And, according to the Birrell Report, this growing underclass of low-income males is the major cause of Australia's plummeting marriage and fertility rates, which will further diminish the number of future Australian taxpayers.

The plight of Generation X caused the ANZ's chief economist Saul Eslake recently to exclaim that he could not understand why the young were not rising up (Australian Financial Review, April 5, 2004, page 30).

However, as Dr Thomson warns, it is not fair to blame the older generation for stealing all the plums and leaving the young with a negative bequest of higher taxes and reduces social services.

This situation has not been the result of deliberate design. The welfare state has been assembled in a piecemeal and poorly co-ordinated manner over many decades. While society was busily focusing on redressing inequalities between the haves and the have-nots, it failed to consider what the ultimate distributionary impact of the various policies would be from one generation to the next.

The historian Macaulay once said that a politician thinks of the next election, whereas a statesman thinks of the next generation.

To fix the crisis of the welfare state before it deteriorates much further will require statesmanship of the highest order.

  • John Ballantyne

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