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The uphill path for Generation Y

By 21 May 2014 59

On Monday night’s Q&A I watched as a fairly gutsy young graduate from Tasmania questioned Mr Hockey on the new rules around unemployment benefits for those under 30.  I was pretty impressed.  Obviously a well-educated fellow, although the Treasurer came back more than once with ‘Under 30s will earn or learn’, this man pressed, citing figures of (something like) 18,000 job seekers to approximately 500 job ads (in Tasmania).  This guy wants to work, but understands the reality that finding a job in the current market is tough.  So, under these new rules he asked how he would survive.  The previous answer was repeated, with explanation that if he couldn’t find a job the Government would assist him in enrolling in a TAFE course or diploma.  By the look on this guy’s face, I imagine he probably had a fairly detailed and lengthy degree behind him.  Does he really need to learn any more at this point in time?  Another young woman said she was currently in a public sector role and likely to lose it.  If she was denied benefits (although Joe did mention a sliding scale of the 6 month wait, losing 1 month for every year worked which was the first I had heard on this), how would she pay her mortgage?  The Treasurer seemed surprised that someone under 30 would have a mortgage. 

My point is less about the budget and more about the impressive face I saw of Generation Y (those born in the 80s and 90s). 

Myself, I’m a Generation X-er.  We’re a whole different kettle of fish.  I have however come across work places that have really battled to take on Generation Y employees with any great success.  It has felt a bit like trying to put a round peg in a square hole.  I have wondered if maybe it’s the hole that needs some level of change and adaption rather than putting the entire onus on the peg.

The ABS puts the ACT’s unemployment rate for 15-24 year-olds at 10.4 per cent.  As benefits shift, along with increasing university fees – I can’t help but wonder if this generation will be made to carry a heavier load than most during this transition period.

I was happy to hear about a Forum run in Canberra today, working with employers on how to better manage their Gen Y workforce.  Was anyone part of it who would care to share their experience?

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59 Responses to The uphill path for Generation Y
#1
bd8410:01 am, 21 May 14

As a proper gen Y (born prior to 1990), all I can say is people need to harden the firetruck up and get out and find a job themselves. I’ve had job since I was 14, gone through Uni, remaining in the low paying retail job after finishing Uni, got a degree related job and worked hard to pay off my HECS and now a mortgage. Hard work does it for you.

Just because you’ve gone and gone some qualifications doesn’t mean you’re entitled to anything or that a job will fall into your lap. Particularly if you’ve gone and done a useless degree like arts or communications which qualify you for very little.

It seems to be an age of “I’m too good for that job so I won’t apply for it” instead of the realistic you start at the bottom job and work my way up by working hard. If there isn’t demand for your work in your area, you travel or move to where there is work. If you’re that desperate for work, take any job you can get. No shame at working at woolies or if a cafe to pay the bills. Walk through the shopping centres etc and there are lots of jobs in windows of shops. There probably isn’t one for every person in this country, but there would be enough to put a dent in the unemployment line.

It’s about time they stopped giving the lazy people a free ride on the dole, the proposed changes sound fairly reasonable, whether they work in practice might need done fine tuning, but it’s better than doing nothing.

If they thing dealing with gen Y is difficult, just wait for dealing with the next generation born after 1990, born to self entitlement, spoon feeding, never hearing “no” and hugs as discipline growing up.

#2
neanderthalsis11:14 am, 21 May 14

By the look on this guy’s face, I imagine he probably had a fairly detailed and lengthy degree behind him. Does he really need to learn any more at this point in time?

I would say yes, he does. Obviously his original field of study was in an area where there is not sufficient demand for labour so he should retrain in a field where there are employment opportunities or move to an area where his skills are in demand. Having a degree does not mean that you are guaranteed employment and doesn’t put you at the top of the shortlist for advertised jobs. Instead of bleating about not being able to find a job people need to put more effort into making themselves more competitive in the jobs market.

There seems to be an all pervasive sense of entitlement that has crept into almost all sectors of the community. Merely having kids, having a qualification, having private health insurance, using childcare, running a manufacturing business or not having a job seems to make people think that it is the role of government to support their lifestyle.

#3
Kellamity11:30 am, 21 May 14

Forget having the government support your lifestyle, I would have been very interested to hear how you are expected to live if you are 28, have a mortgage (or even rent), and turn up at work one day to find that the business is going under and everyone will be out of work in two weeks. It can take months to find another job but the bills keep coming. The dole is barely enough to get by on (and doesn’t need to be any more than that) but it keeps you alive.

#4
dungfungus11:53 am, 21 May 14

As a baby boomer, I have a lot of sound advice to give you but from experience, Generation Y people are not receptive to advice from my generation (or any other demographic either).
There seems to be a common denominator in the comments so far namely “hard work”.
Hang onto your main job and get a second (or third) job doing something that no one else wants to do. Jobs like this attract premium rates of pay. You will prosper and other opportunities will present themselves.
Forget what you see on Q&A – it is all confected left wing nonsense.

#5
chewy1412:00 pm, 21 May 14

neanderthalsis said :

By the look on this guy’s face, I imagine he probably had a fairly detailed and lengthy degree behind him. Does he really need to learn any more at this point in time?

I would say yes, he does. Obviously his original field of study was in an area where there is not sufficient demand for labour so he should retrain in a field where there are employment opportunities or move to an area where his skills are in demand. Having a degree does not mean that you are guaranteed employment and doesn’t put you at the top of the shortlist for advertised jobs. Instead of bleating about not being able to find a job people need to put more effort into making themselves more competitive in the jobs market.

There seems to be an all pervasive sense of entitlement that has crept into almost all sectors of the community. Merely having kids, having a qualification, having private health insurance, using childcare, running a manufacturing business or not having a job seems to make people think that it is the role of government to support their lifestyle.

1000000% this.

If you can’t find a job in your preferred field then you should be looking elsewhere and potentially retraining rather than expecting the government to support you until you find your dream job.

I’m sick of people that complain about job availability, pay or conditions in their preferred field of work. The vast majority of people do jobs that they hate simply because it pays the bills. If you want to do a job that provides you with career satisfaction and inner warm and fuzzies, accept that you may have to sacrifice other things to get it. Or perhaps study in a field where there is continuous and predictable market demand?

#6
justsomeaussie12:02 pm, 21 May 14

I think a lot of the commenters here are being overly critical of the individual but first let me say this. I am very critical of over educated and under knowledged individuals that our society is pumping out. There is a common perception that any education is good education and Hockey supports this view by his “earn or learn” philosophy. Learn what? Post Modern Feminist Thought, Greek History? Education has to be able to benefit society especially at this early stage, save those fluffy topics for your 40s-50s.

We have a big issue in this society where we expect an 18 year old to have an idea on what is a “good education”. Universities have proven that if you have enough money they’ll sell you an education in pretty much anything you want.

So where is the targeted education? If Tasmania has a shortage of agricultural engineers where is the targeting funding that reduces the costs for those degrees. Why is it exactly that the less “useful” degrees are commonly the cheapest? Shouldn’t we want young people at universities to learn things that will pay the biggest dividend back to society? Why do we let people receive HECS and do degrees of which we know there is a high chance that they won’t be able to get a job using that skill.
Let’s figure out what jobs we need now and in the future and then focus our education and HECS funding towards that and then help shape students so they know what they are getting themselves into.

Personally I really don’t need another arts degree graduate who had to go work in the public service because they can’t get a job anywhere else.

#7
bigfeet12:11 pm, 21 May 14

’18000 job seekers to approximately 500 job ads in Tasmania’

So move then. I came to Canberra because that was where this job was. I would prefer to still be sitting in the tropics where I could put my boat in the water and get a couple of hours on the reef after work each day… but there were no jobs available…so I moved.

On the plus side though it is good to see Gen Y actively engaging with politicians and not just shouting them down.

#8
watto2312:27 pm, 21 May 14

Kellamity said :

Forget having the government support your lifestyle, I would have been very interested to hear how you are expected to live if you are 28, have a mortgage (or even rent), and turn up at work one day to find that the business is going under and everyone will be out of work in two weeks. It can take months to find another job but the bills keep coming. The dole is barely enough to get by on (and doesn’t need to be any more than that) but it keeps you alive.

Exactly. there is a belief that the dole is being misused. I know many, many people who have been on the dole were well educated and struggled to find work for months and none of them wanted to stay on the dole, it was a pittance and they couldn’t understand why anyone would want to stay on the dole, but at least it fed them and kept some creditors at bay until they found a job.

This is just going to lead to more crime as people have no money. There are always going to be people who abuse the system, but start with those who have money and abuse the system like wealthy retirees getting a pension, the middle class as well. Why are the government not offering incentive based welfare as well.

That is the issue with the budget. Its the ideology of it. No one argues about making cuts, but why increase spending over the previous budget, then blame labor while also paying for a lot of expensive things in this budget that could wait a few years.

#9
dungfungus12:52 pm, 21 May 14

bigfeet said :

’18000 job seekers to approximately 500 job ads in Tasmania’

So move then. I came to Canberra because that was where this job was. I would prefer to still be sitting in the tropics where I could put my boat in the water and get a couple of hours on the reef after work each day… but there were no jobs available…so I moved.

On the plus side though it is good to see Gen Y actively engaging with politicians and not just shouting them down.

Yeah, all the thousands of jobs The Greens were claiming would happen from their clean/renewable energy economy must have been already snapped up (all two of them).
The Tasmanian whinger on Q&A should complain direct to Christine Milne.

#10
gospeedygo1:13 pm, 21 May 14

bd84 said :

It’s about time they stopped giving the lazy people a free ride on the dole, the proposed changes sound fairly reasonable, whether they work in practice might need done fine tuning, but it’s better than doing nothing.

If they thing dealing with gen Y is difficult, just wait for dealing with the next generation born after 1990, born to self entitlement, spoon feeding, never hearing “no” and hugs as discipline growing up.

Attitudes like this have constantly made my blood boil since the welfare changes were announced, it’s utterly toxic and demonises all of those legitimate people on benefits you don’t hear about because of the stories of the mythical bludger who has stopped bothering to hide the bong when they have company and is living large on his/her dole money has been yelled in deafening roars from all the rooftops in the media for decades which has trickled down through to the attitudes people who know what it’s like to struggle but somehow forget all about it.

They should have a job already. They’re not looking trying enough. They’re lazy. They’re afraid of hard work. They’re entitled and demand handouts for nothing out of the pockets of taxpayers.

It’s exactly the kind of attitude government has reinforced with this budget, through their subsequent pressers/interviews.

There are plenty of reasonable and level headed young people who really want and are more than prepared to work hard and make lives for themselves. Like the rest of the population they also want reliable access to food and stable accommodation.

Newstart/YA isn’t a holiday; it’s a utilitarian safety net to prevent the vulnerable falling even lower and suffer the dire consequences and outcomes caused by easily avoidable poverty which, surprise, surprise has consequences for everyone. Healthy, stable and productive people are very beneficial for society in a lot of ways, not all of them measurable.

Even in good times, job hunting, combined with the aforementioned instability can be a stressful, demoralising and lengthy process. Calling people lazy and entitled helps no one.

Have a bloody heart, read less rupertnews and get rid of that stale bootstraps mentality.

#11
justin heywood2:41 pm, 21 May 14

gospeedygo said :

Attitudes like this have constantly made my blood boil since the welfare changes were announced, it’s utterly toxic and demonises all of those legitimate people on benefits you don’t hear about because of the stories of the mythical bludger who has stopped bothering to hide the bong when they have company and is living large on his/her dole money has been yelled in deafening roars from all the rooftops in the media for decades which has trickled down through to the attitudes people who know what it’s like to struggle but somehow forget all about it.

The ‘dole bludger’ is not some mythical being invented by ‘Rupertnews’. If you don’t know many, many people who are abusing the welfare system, then you either don’t get out much or you have a different view of what a welfare safety net should be.

gospeedygo said :

Have a bloody heart, read less rupertnews and get rid of that stale bootstraps mentality.

Fairfax (SMH) ran a big piece on the weekend about the plight of two Year 12 St Andrew’s College students who, tragically, faced the prospect of abandoning their proposed overseas gap year due to possibly rising fees and reduced benefits.

Now St Andrews is an expensive, inner city private school, but the SMH played the story straight. We actually WERE supposed to feel for these two and to take it as further evidence of Abbott’s heartlessness. This is only one example of almost blanket negative media coverage for the Liberals.

But apparently, it’s only Murdoch that runs any kind of agenda in the Australian media,

#12
VYBerlinaV8_is_back3:38 pm, 21 May 14

justin heywood said :

Fairfax (SMH) ran a big piece on the weekend about the plight of two Year 12 St Andrew’s College students who, tragically, faced the prospect of abandoning their proposed overseas gap year due to possibly rising fees and reduced benefits.

Two wealthy kids can’t take a gap year paid by mummy and daddy to ‘find themselves’? Wow, what is this country coming to…

#13
chewy144:45 pm, 21 May 14

VYBerlinaV8_is_back said :

justin heywood said :

Fairfax (SMH) ran a big piece on the weekend about the plight of two Year 12 St Andrew’s College students who, tragically, faced the prospect of abandoning their proposed overseas gap year due to possibly rising fees and reduced benefits.

Two wealthy kids can’t take a gap year paid by mummy and daddy to ‘find themselves’? Wow, what is this country coming to…

Haha, reminds me of a story a few years ago in the Daily Terrorgraph where a family were lamenting how difficult their lives were going to be due to government means testing of a family bemefit.
Apparently things were so tight that the family were going to be forced to sell their investment property to make ends meet. Funny stuff.

#14
Listers_Cat5:07 pm, 21 May 14

bd84 said :

As a proper gen Y (born prior to 1990), all I can say is people need to harden the firetruck up and get out and find a job themselves. I’ve had job since I was 14, gone through Uni, remaining in the low paying retail job after finishing Uni, got a degree related job and worked hard to pay off my HECS and now a mortgage. Hard work does it for you.

Just because you’ve gone and gone some qualifications doesn’t mean you’re entitled to anything or that a job will fall into your lap. Particularly if you’ve gone and done a useless degree like arts or communications which qualify you for very little.

It seems to be an age of “I’m too good for that job so I won’t apply for it” instead of the realistic you start at the bottom job and work my way up by working hard. If there isn’t demand for your work in your area, you travel or move to where there is work. If you’re that desperate for work, take any job you can get. No shame at working at woolies or if a cafe to pay the bills. Walk through the shopping centres etc and there are lots of jobs in windows of shops. There probably isn’t one for every person in this country, but there would be enough to put a dent in the unemployment line.

It’s about time they stopped giving the lazy people a free ride on the dole, the proposed changes sound fairly reasonable, whether they work in practice might need done fine tuning, but it’s better than doing nothing.

If they thing dealing with gen Y is difficult, just wait for dealing with the next generation born after 1990, born to self entitlement, spoon feeding, never hearing “no” and hugs as discipline growing up.

I’m guessing you grew up in Canberra. It shows.

#15
Tetranitrate5:19 pm, 21 May 14

neanderthalsis said :

By the look on this guy’s face, I imagine he probably had a fairly detailed and lengthy degree behind him. Does he really need to learn any more at this point in time?

I would say yes, he does. Obviously his original field of study was in an area where there is not sufficient demand for labour so he should retrain in a field where there are employment opportunities or move to an area where his skills are in demand. Having a degree does not mean that you are guaranteed employment and doesn’t put you at the top of the shortlist for advertised jobs. Instead of bleating about not being able to find a job people need to put more effort into making themselves more competitive in the jobs market.

There seems to be an all pervasive sense of entitlement that has crept into almost all sectors of the community. Merely having kids, having a qualification, having private health insurance, using childcare, running a manufacturing business or not having a job seems to make people think that it is the role of government to support their lifestyle.

Oh come on.
Lots of companies have cut grad intakes over the past 3-4 years, it’s very possible that someone could have done a degree in something as ‘useless’ as mining engineering and still missed a spot in grad rounds. Doesn’t mean they won’t enter the field in the next round the year after or through getting a job in the field through other means.

Should they get a job, any job to tide them over? absolutely

Should they spend months or even a year doing an unrelated Cert or Diploma that they’ll likely never use at the public’s expense? no, that’s a ridiculous waste of resources

While searching for a job (keeping in mind there are already job search requirements on newstart, ect) their Job Services Australia Provider will be watching them, pushing them to take any job that comes along and they face being breached if they don’t take a job that they’re offered (and the JSA providers reverse market as well) – given that I don’t see why they shouldn’t get newstart while search for a job. Discriminating based on age is obscene, good thing this BS is going to be shot down in the senate.

#16
dtc5:24 pm, 21 May 14

What I dont understand is why people get so upset about ‘dole bludgers’.

If you think people are getting something for nothing, feel free to join them. You too can get something for nothing.

Whats that? You dont want to – surely you can survive happily on the dole like all those people you think do it volunarily. Its such a luxury lifestyle.

You want a house and car and children and being able to eat out and all of that? Well, guess what, thats your lifestyle choice and you can suck up the consequences.

If you see someone getting something and you feel offended, but you can easily achieve the same result yourself – go and do it and stop feeling offended.

(and, FWIW, I’m a gen X and have been employed continously since the day after I finished my uni degree)

The no dole for 6 months is the most odious of the budget changes. Its premised entirely on the belief amongst liberals that a bit of ‘get up and go’ is all that young people need and that, without it, people will luxuriate in a tax payer funded holiday and rip off all those rich people by requiring higher taxes. Its crap, very very few people on the dole want to be on it; and those that do chose it are unlikely to be great workers anyway.

#17
Tetranitrate6:27 pm, 21 May 14

dtc said :

The no dole for 6 months is the most odious of the budget changes. Its premised entirely on the belief amongst liberals that a bit of ‘get up and go’ is all that young people need and that, without it, people will luxuriate in a tax payer funded holiday and rip off all those rich people by requiring higher taxes. Its crap, very very few people on the dole want to be on it; and those that do chose it are unlikely to be great workers anyway.

I would hazard a guess that the number of people on Newstart itself who want to be on it is essentially zero because anybody who truly wants to bludge their life away would have long since weaseled their way onto the disability pension.

#18
chewy147:53 pm, 21 May 14

dtc said :

What I dont understand is why people get so upset about ‘dole bludgers’.

If you think people are getting something for nothing, feel free to join them. You too can get something for nothing.

Whats that? You dont want to – surely you can survive happily on the dole like all those people you think do it volunarily. Its such a luxury lifestyle.

You want a house and car and children and being able to eat out and all of that? Well, guess what, thats your lifestyle choice and you can suck up the consequences.

If you see someone getting something and you feel offended, but you can easily achieve the same result yourself – go and do it and stop feeling offended.

(and, FWIW, I’m a gen X and have been employed continously since the day after I finished my uni degree)

The no dole for 6 months is the most odious of the budget changes. Its premised entirely on the belief amongst liberals that a bit of ‘get up and go’ is all that young people need and that, without it, people will luxuriate in a tax payer funded holiday and rip off all those rich people by requiring higher taxes. Its crap, very very few people on the dole want to be on it; and those that do chose it are unlikely to be great workers anyway.

I don’t agree with the proposed changes to the dole but the idea that someone doesn’t have the right to be offended by people bludging off welfare (of whatever kind, including corporate) is absurd.

No one envies their lifestyle, its simply the fact that we’re paying more tax than we should to fund it and id prefer that the money I earn remains mine as much as possible. If you don’t agree, id be more than happy to take a percentage of your wage. Come on, you won’t miss it and it doesn’t really matter right?

#19
milkman8:31 pm, 21 May 14

Whenever someone receives without working, someone has worked without receiving.

#20
Codders1111:00 am, 22 May 14

Since when has this website been overrun by radical conservatives? A full 100% employment rate is not possible (outside the USSR at least), nor even desirable. No matter how ‘hard’ people work THERE WILL BE PEOPLE UNEMPLOYED!!!!! Newstart is just recognition of the reality that they need food to eat and somewhere modest to live. Australia is a wealthy country and there’s simply no reason why people here should be starving or homeless. Very few dole recipients are unemployed by choice.

Since some of you seem only to care about yourselves I’d like to emphasise that at least a minimal safety net is in everyone’s interests. It improves group cohesiveness and and social mobility (both are economically beneficial in the long run), keeps crime low, and eventually gets spent on goods and services helping to create jobs and wealth for all!

#21
Walker1:28 am, 22 May 14

milkman said :

Whenever someone receives without working, someone has worked without receiving.

Which is why now is a good time to call it straight on things like negative gearing.

#22
bigfeet6:41 am, 22 May 14

gospeedygo said :

Newstart/YA isn’t a holiday; it’s a utilitarian safety net to prevent the vulnerable falling even lower and suffer the dire consequences and outcomes caused by easily avoidable poverty which, surprise, surprise has consequences for everyone.

And in this initiative the government has got it completely back-to-front.

Instead of not receiving Newstart or YA for the first 6 months, it should be the other way around.

People should be entitled to benefits for 6 months only. After that they must get a job. A job…any job. Not the job they want or think they are entitled to…but whatever job is available.

Failing to take an offered job after six months should mean immediate suspension of all benifits.

#23
milkman7:06 am, 22 May 14

Walker said :

milkman said :

Whenever someone receives without working, someone has worked without receiving.

Which is why now is a good time to call it straight on things like negative gearing.

The strategy of negative gearing generates vastly more revenue for the government than the cost of the concession. It also reduces the amount of housing the government has to provide.

#24
milkman7:07 am, 22 May 14

milkman said :

Whenever someone receives without working, someone has worked without receiving.

To each according to his contribution, aye comrade?

Ha! Just stirring the pot…

#25
justin heywood7:52 am, 22 May 14

Codders111 said :

Since when has this website been overrun by radical conservatives? ……Australia is a wealthy country and there’s simply no reason why people here should be starving or homeless.

Damn straight Walker! Sometimes I’ve seen up to three posts in a row where no-one has called for Abbott’s crucifixion!

Seriously though, I doubt that political debate has ever reached such a low ebb as it is now. You cannot try and make a counterpoint without people immediately questioning your morality.

- Believe that maybe the current welfare set-up encourages inter-generational unemployment? You’re a HEARTLESS B*”TARD!

- Believe that Abbott may not be the anti-christ, or at least no worse than Rudd? You’re a pathetic neo-con, a mindless drone of the EVIL MURDOCH and probably YOU ARE ANDREW BOLT!

– Believe that perhaps not having hundreds of asylum seekers drowning at sea might be a good thing? You XENOPHOBIC RACIST! And what about that bloke who died on Manus!

And so on. I’m sure that the other side of politics could make an equal complaint against the conservatives, but really, has Australian politics ever been as polarised as it is now?

#26
Mysteryman8:43 am, 22 May 14

Fairly gutsy? Well-educated? The kid was a twit. He hadn’t actually looked into the details of what he was complaining about. He was trying to push a moot point and the Treasurer shut it down. If he is the face of Gen Y, then God help them.

It was symbolic of nearly all the questions on that episode of Q & A. I’ve never seen a more poorly informed audience, or more ridiculous questions. “I’m 30 and I can’t work forever. What’s the government’s plan to help me retire?”. Um, it’s called superannuation. Rather than blowing all your money on traveling and cars and clothes, start contributing to it. It was pathetic.

#27
arescarti4210:27 am, 22 May 14

milkman said :

The strategy of negative gearing generates vastly more revenue for the government than the cost of the concession. It also reduces the amount of housing the government has to provide.

Oh really?

I challenge you to find one, just one, reputable source that supports your point of view.

To name just a couple on the other side of the argument, we’ve got preeminent Australian economists such as Saul Eslake and former Treasury Secretary Ken Henry pointing out that it costs the government many billions of dollars per year in foregone revenue, and does next to nothing to increase the supply of housing or reduce rents.

#28
VYBerlinaV8_is_back11:58 am, 22 May 14

arescarti42 said :

milkman said :

The strategy of negative gearing generates vastly more revenue for the government than the cost of the concession. It also reduces the amount of housing the government has to provide.

Oh really?

I challenge you to find one, just one, reputable source that supports your point of view.

To name just a couple on the other side of the argument, we’ve got preeminent Australian economists such as Saul Eslake and former Treasury Secretary Ken Henry pointing out that it costs the government many billions of dollars per year in foregone revenue, and does next to nothing to increase the supply of housing or reduce rents.

At the risk of getting into someone else’s argument, what about the sources of revenue the government has thanks to residential property investment? Rates, CGT, GST on new builds, stamp duty, developer fees, etc? Obviously these are all taxes levied for a variety of reasons, but I would have to wonder whether the government could collect so much CGT if people weren’t NG’ing. As I understand it CGT collected significantly exceeds NG concessions.

Of course, many would argue that CGT shouldn’t have a 50% discount, but that could be removed if inflation based indexing was reintroduced.

#29
arescarti4212:42 pm, 22 May 14

VYBerlinaV8_is_back said :

At the risk of getting into someone else’s argument, what about the sources of revenue the government has thanks to residential property investment? Rates, CGT, GST on new builds, stamp duty, developer fees, etc? Obviously these are all taxes levied for a variety of reasons, but I would have to wonder whether the government could collect so much CGT if people weren’t NG’ing. As I understand it CGT collected significantly exceeds NG concessions.

Of course, many would argue that CGT shouldn’t have a 50% discount, but that could be removed if inflation based indexing was reintroduced.

Agreed that residential property investment generates a lot of revenue for Governments, the key question is does the negative concession generate offsetting revenue elsewhere, that otherwise would not have occurred.

While the tax benefits offered by negative gearing are an additional incentive for people to invest, surveys typically indicate that they’re only a secondary consideration, with prospects for capital growth usually the deciding factor.

So you’d expect that changes to CGT revenue would be fairly muted without negative gearing, as the majority of negatively geared investors would still make the investment decision to invest without the concession (and this makes sense, the majority of negatively geared investors don’t have high incomes or marginal tax rates, so don’t derive much tax benefit anyway).

If you were to limit the concession to new builds only (as many commentators are suggesting), you could potentially raise a lot more revenue, because a much larger proportion of investors would be paying GST (currently 95% of newly negatively geared investors buy existing properties, which aren’t subject to GST).

#30
chewy1412:47 pm, 22 May 14

VYBerlinaV8_is_back said :

arescarti42 said :

milkman said :

The strategy of negative gearing generates vastly more revenue for the government than the cost of the concession. It also reduces the amount of housing the government has to provide.

Oh really?

I challenge you to find one, just one, reputable source that supports your point of view.

To name just a couple on the other side of the argument, we’ve got preeminent Australian economists such as Saul Eslake and former Treasury Secretary Ken Henry pointing out that it costs the government many billions of dollars per year in foregone revenue, and does next to nothing to increase the supply of housing or reduce rents.

At the risk of getting into someone else’s argument, what about the sources of revenue the government has thanks to residential property investment? Rates, CGT, GST on new builds, stamp duty, developer fees, etc? Obviously these are all taxes levied for a variety of reasons, but I would have to wonder whether the government could collect so much CGT if people weren’t NG’ing. As I understand it CGT collected significantly exceeds NG concessions.

Of course, many would argue that CGT shouldn’t have a 50% discount, but that could be removed if inflation based indexing was reintroduced.

Seeing as over 90% of NG occurs on existing properties and not newly built ones I don’t think it would come close to the revenue foregone.
Although if someone wanted to do a detailed economic analysis of the effects of NG on the economy, what is the overall cost to the economy of artificially increasing prices through investors speculating on non productive assets instead of putting that capital to better use? What’s the opportunity cost of the policy?

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