High art and triple whammies

One of the themes of the ALP spin on the budget is that the tax cuts don’t make up for the ‘triple whammy’ of higher fuel prices, interest rates and lower wages from the new IR legislation.

There’s another triple whammy (silly expression isn’t it?). In fact, in the spirit of the Grammy Awards, perhaps we should have the Whammy Awards and give one to the Government. If we have the Granny awards we’d give them to the Government as well. Because the other triple whammy is an intergenerational one.

First there was the once in a generation rise in house prices which has made it very difficult for 20 and 30 somethings to get into their first house. Second the labour market has been awful for younger people. In a remarkable pair of diagrams on Bob Gregory’s site (pdf) we see that the full time wages of younger age-groups have stagnated whilst the growth in the economy has slid steadily into the pockets of those over 35.

And then we have this week’s Budget. That part of the budget designed to improve savings was well how do you put it? Exquisite is the only word I can think of. Supporting saving from government is usually difficult because the most direct way for governments to increase saving is to build up surpluses. Another way is to add to compulsory super which doesn’t please those who have to fund it (and anyone else who fancies those contributions might be robbing them of higher wages).

But this government doesn’t fancy this path. Instead it’s about giving the money away. So how could tax cuts most directly increase saving? Well you’d imagine by lightening the tax burden on savings going into the superannuation system thus increasing the amount of money that ends up being locked away. That’s what Nick Minchin suggested. That would also be a bit of a hand to the struggling Gen X and Y’ers.

But that would be too difficult. It would be tax cuts without instant gratification. So instead we cut tax on money coming out of the super system. Well in theory that increases incentives to save. But who knows what the exit tax will be in 20 or 30 years time? So while it’s politically marketed as pro-saving, it’s immediate effect is to assist people consuming, not in increasing their saving. And it hands money to those who already have quite a bit of money (exit tax is currently progressive not being levied on small amounts of super).

Anyway, the Howard Government has at least got art on its side. I’d put this up there with kids overboard, but whereas that was tawdry, this well I can’t think of a more exquisite piece of work by this Government, appearing to do one thing, while doing the other. Its hard not to admire the artistry.

I wonder when some mainstream politician will get serious about how younger generations are getting screwed over.

PS – apologies for the image which is too small to read. I’m hoping Ken can fix it for me. The two lines at the bottom of each graph track the real full time incomes of the youngies – the 19-34 year olds and the two lines at the top of each graph track the real full time earnings of the oldies 35-54.

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17 Responses to High art and triple whammies

  1. Ken Parish says:

    The only way I can make it larger without overlapping the sidebar is to make it a clickable thumbnail, and I hate using thumbnails. It’s fairly legible now, I think.

  2. Ken Parish says:

    Well, actually I could post it full size if you’re happy with it being “over the fold”, because the post page template is wider than the front page. I’ll do it and see what you reckon.

  3. Ken Parish says:

    I was going to comment that maybe the graph explains why Paul Watson is so obsessively hostile towards baby boomers, until I noticed that the 35-44 age group (in which he is pretty much at the median) have done almost as well. It’s the Gen Y and younger group who’ve fallen behind. Moreover, although I accept that this is excessively inequitable, I doubt that those age groups are likely to save much even if the superannuation system is reformed to deliver them greater incentives. Most of us tend instinctively to believe we’re immortal until we hit our mid 30s.

  4. Jennifer says:

    And not only have wages and salaries stagnated, house prices have emphatically not. Yet another explanation why Gens X and Y have much lower rates of home ownership than their parents did at the same ages.

    (disclosure: I just sneak into the 35-44 age group)

  5. meika says:

    Being a couple of years younger than Paul I can only add that more schooling, especially slow degrees which end up finishing in the HECS era, means you’re more like the younger cohorts, in fact using a non-specific age thingo for graduates, and using the HECS Goyder line as a digital threshold would provide a more interesting graph.

    I’m forty, and got $87 dollars in super. Superannuation paying jobs avoid me like the plague.

    An added factor would be that the lower the hours worked the more likely that you get no super at all for any work (i forget what the hours per month are to avoid this for casuals and parttimers).

    People who do not have HECS will find Micallef funny, people who have HECS will find Hughsie funny.

  6. Paul Watson says:

    Interesting figures and analysis, Nicholas.

    Re Ken’s point, that people in my age cohort (I turn 42 next month) may be (surprise!) honorary boomers in the intergenerational equity stakes. The “male”

  7. Paul Watson says:

    Also, look at the “male”

  8. Patrick says:

    Yes, but now do a graph showing just the quantities in each decile, and extrapolate. Inasmuch as this is an incentive to extremely able-bodied and able-minded 60 and 70 year-olds to keep working, even if part-time, then that is a really positive step in and of itself.

    Although they could just make all super contributions tax free if you earn less than, say, 70,000 a year.

  9. Kris says:

    I’ve got a HECS debt and find Micallef far funnier than Dave Hughes, and I didn’t even go to a private school!

  10. It’s even worse if you’re not breeding. Breeders get family tax benefits and the like. The childless get SFA.

    Of course, the only place they represent a big voting bloc is in the inner cities in safe seats, one way or the other. Though Bennelong might be very interesting next time around the way things are going… (though that may have been exaggerated by Andrew Wilkie’s high-profile campaign in Bennelong).

  11. Paul, thanks for your comments, but your likening the depression and WWII to the ‘shit’ that post 60s generations had to put up with strikes me as obscene.

  12. Paul Watson says:


    I apologise re the above, if it’s my swear-word (sorta) that’s got your goat.

    Otherwise, I stand by what I said, with the qualification (in case it’s needed) that what I’m talking about is the relative lifetime experiences of middle-classers born in Australia c. 1920 vs those born c. 1965.

    Also, I am not talking about “post [1961-born] generations”, at large. On present indications, the post-1978-born appear to have it as good as boomers have had since childhood (and continue to have).

    More generally, I’d prefer not to engage in stats-war to make my point about my generation’s disadvantage. Here then, are two recent, more-anecdotal pieces (not written by me!) about Living on the Xer Edge:


  13. Wasn’t upset about the swearing, but rather the lack of attention to the difference between comparative and absolute shit. We’re discriminating against Gen Y’ers. That’s beyond doubt. But they’ve got a whole slew of social security behind them that the 30 odd percent of working people who were unemployed during the depression had to beg for. They’re not being marched off to wars (or if they are there are very few of them and only one so far has come to grief).

    In my view the idea of comparing the suffering of the Gen Y’ers to that of those who experienced anything substantial of the years 1914 to 1945 (I know you were talking of a sub-set of this) is obscene.

    Those people really suffered.

  14. Paul Watson says:


    I still think that you’re overestimating the privations suffered by the parents-of-boomers generation (born c.1920) and underestimating those of GenX (*not* “Y”

  15. Mark Upcher says:


    Are these real or nominal FTE?

    You also have to be careful in interpreting these charts. By converting the chart to an index it makes it look as if all age groups were getting paid the same at the start of the period and then a big gap opened up. Younger workers have always been paid substantially less than older workers.

    It is also interesting that the gap appears to have opened up by just as much during the Labor Accord as during the later period when labour markets became more deregulated. And during the Accord, according to this chart, FTE for younger workers fell (hence my query abour whether the measure is real and nominal).

    The charts also tells me that a 24 year old that was doing relatively badly in 1990 is a relatively prosperous 38 year old in 2004.

  16. Mark,

    The numbers are real – they wouldnt make much sense as nominal numbers – Earnings would have risen by a lot more than 40 odd percent in nominal terms.

    Further they might look to you like everyone was paid the same back at the origin, but what the graph measures is the extent to which what was already a fairly wide gap has got larger.

    So even if you read the graph naively to say that there was no gap in the mid 70s, you’re still getting the right message. Things have been stagnating for those of lower age and the older ones have been doing nicely.

    But yes, in your last para you’re right. If you wait, you get the benefits of this bifurcation. By definition if people live to a similar age, there’s some levelling out of ultimate results. But the youngies have to wait longer (at the same time as funding much more expensive houses – with larger mortgages even taking into account lower interest rates.)

    Then there are other things I failed to mention in my post, all of which do in the younger members of the workforce. I support most of them but they’re intergenerationally tough. Increased self provision for large dissaving episodes like expenditures such as retirement and for education.

  17. Paul,

    I like the idea of working for the dole, but my understanding is that while it was a nice idea to get people working on the Great Ocean Road, most people who were unemployed didn’t manage to get that kind of employment. They queued up for their susso.

    A person 18 in 1938 might well have had to leave school very early to try to help his family eke out a living. As for suicide, it is actually coming down quite sharply – or was when I last looked, but you are right that it is coming down from record highs and is still much higher than a while back. Still I’d rather take even a 40 in a 100,000 chance (mid 90s – it was down to around 25 at the end of the series I’m looking at around 2003 for males 20-24) than a 1000 in 100,000 chance of dying wouldn’t you?

    Of course such a relatively high suicide rate speaks to us of a cultural malaise I guess. But really, I still think the comparison is pretty awful. Young people today get vastly more schooling, and much more help. They can start businesses and do all sorts of things much more easily than they could have in 1938. Of course they seem to be doing comparatively badly, and that’s the fact and the problem we’re confronted with – which makes it a bit silly getting too fancy about comparisons with other times. But I’m afraid your words don’t convince me.

    For me I think of myself, and can imagine it being very hard to do OK and keep my head up high in the 1930s if a few things went the wrong way. It’s a bit of a ridiculous thing trying to ‘think’ ones way into another situation – in which I’d be a different person. But right now, I know lots of employers who are just screaming out for people with basic work discipline, turning up on time, doing the best they can, doing what they say they’ll do, getting on with other people.

    I sent some design work to a uni student the other day who’d expressed an interest in part time design with the businesses we run. I enjoyed talking to him on the phone and it turned out he was also interested in copy writing and I said we could send him some work to do in that regard as the relationship developed. I sent him a small bit of work to do in lieu of an interview asking him to have a go at putting a word document in to the company style and we’d pay him at the advertised rate if we used his stuff.

    I got no reply for about four or five days so I had to follow up and ring him again (I had told him in our phone interview that I was emailing him a task). The guy said he’d look at his email. A day later I got this email.

    Hi Nicholas
    Sorry for not having got back to you sooner. I’ve looked over the material that you sent me and I’ve decided that it’s not the right kind of job for me.

    Now I have no real problem with this guy suiting himself. Why shouldn’t he? And good on him. (Though he could have been more thoughtful

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