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The uphill path for Generation Y

By Emily Morris - 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?

What’s Your opinion?


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The uphill path for Generation Y
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VYBerlinaV8_is_back 10:11 am 23 May 14

HiddenDragon said :

There may be a moral to this story for Canberra – wishes, and hopes and idealised views of the world don’t create real jobs.

Nor does it save the environment.

HiddenDragon 9:04 am 23 May 14

gazket said :

There would be plenty of jobs in Tassie if they expanded their agriculture industry . But gutsy young graduates from Tasmania probably wouldn’t want to get a callus and work on a farm.

Tasmania has always been an under performing state.

Yes, beyond the immediate issues arising from the “on again, off again” nature of the proposed changes to unemployment benefits for younger people, I thought this was the real issue raised by the statistic of 18,000 people chasing 500 advertised vacancies in Tasmania. As I listened, I found myself wondering about all those terrific “clean, green” jobs, and the “smart state” (or whatever it was going to be when the late Jim Bacon was running things), and the jobs from the big new ferry (also back then).

There may be a moral to this story for Canberra – wishes, and hopes and idealised views of the world don’t create real jobs.

gazket 6:08 pm 22 May 14

There would be plenty of jobs in Tassie if they expanded their agriculture industry . But gutsy young graduates from Tasmania probably wouldn’t want to get a callus and work on a farm.

Tasmania has always been an under performing state.

justin heywood 5:48 pm 22 May 14

Az said :

dungfungus said :

As a baby boomer, I have a lot of sound advice to give you…

Stopped reading right there. A member of the most entitled generation in history lecturing young people….

Wow.

Hey, you sound like my teenage son. If it is you Jason, mum has your dinner ready and your clothes are washed but no, you can’t borrow any more money.

.

Maya123 5:36 pm 22 May 14

Az said :

dungfungus said :

As a baby boomer, I have a lot of sound advice to give you…

Stopped reading right there. A member of the most entitled generation in history lecturing young people….

Wow.

The rest of the quote goes “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).”
I don’t often agree it seems with dungfungus, but can you hear yourself. You just proved what he wrote.

Now to quote you…”Wow.”

bundah 5:33 pm 22 May 14

Az said :

dungfungus said :

As a baby boomer, I have a lot of sound advice to give you…

Stopped reading right there. A member of the most entitled generation in history lecturing young people….

Wow.

Spoken like a true GenY….

Az 4:51 pm 22 May 14

dungfungus said :

As a baby boomer, I have a lot of sound advice to give you…

Stopped reading right there. A member of the most entitled generation in history lecturing young people….

Wow.

JessP 4:27 pm 22 May 14

Hmm, yes yes. All the budget changes are bad and should be stopped.

Lets just keep them all and put up the tax rates for everyone (including the GST rate) to pay for the billions it costs every year to keep all this stuff. Oh and to pay all the debt the country already has.

Lets not worry about the number of people on the pension, the dole or DSP because we know no one who ever dud the system. On the people getting family payments. Or child care rebate or whatever. Lets give everyone access but just increase the tax rates.

And close all the tax loopholes.

And just keep putting the rates up a bit more over time, to pay for them in the future when more and more people retire and want the pension or DSP or whatever.

Yeah fine.

VYBerlinaV8_is_back 1:17 pm 22 May 14

arescarti42 said :

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).

I agree with most of this.

One issue with NG concession (which, as I’m sure you know, is neither actual law nor property specific), is whether quarantining of losses to offset future gains would actually achieve the desired result. The real outcome here would be to change when tax claims were made, rather than how much, because quarantining would presumably result in a ‘carrying forward’ of the taxable loss into years when cashflow was sufficient to support the loss.

There are also issues as to how investors would use these rules to their advantage. Consideration would have to be given as to whether someone could elect to claim a previously incurred loss in a given year or hold over to future years. It could be possible to buy a property that made a loss for, say, 5 years, then hold these losses over until a year when substantial other income was received. But then there’s be the issue of real versus nominal value of the deduction. Already it gets messy.

Rather than limiting the concession to new builds, perhaps a better solution would be to increase the rate at which building depreciation could be claimed, but balance this by reducing the time across which the deduction can occur. For example, if you changed from being able to deduct 2.5% of the initial building value each year for 40 years to deducting 5% of the initial building value for 20 years, then new builds would suddenly become WAY more attractive, while existing stock over perhaps 5 years old would have a lot less demand.

Maya123 1:06 pm 22 May 14

arescarti42 said :

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).

These would likely not be popular with investors, because most new builds (at least as far as houses are concerned) are on the fringes of the city, and renters generally look to rent inner city. Investment properties need to be in areas of high demand, and usually the outer suburbs are not conducive to this. Keep negative gearing as is; get rid of it, but don’t only allow it for new builds, as this would further encourage suburban sprawl.
In the past I have rented out a couple of houses. Only the first two or three years were negative geared; most of their rental life the income was taxed.
There’s a thought. Perhaps only allow negative gearing for the first couple of years on a rental property, to assist the investor get started; then after that no negative gearing.

chewy14 12:47 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?

arescarti42 12:42 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).

VYBerlinaV8_is_back 11:58 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.

arescarti42 10:27 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.

Mysteryman 8:43 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.

justin heywood 7:52 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?

milkman 7:07 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…

milkman 7:06 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.

bigfeet 6:41 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.

Walker 1:28 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.

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