The Australian Housing Minister has gone viral on the internet this week over an interview she gave a couple of weeks ago, just one day after I wrote my post on why the Australian government is addicted to real estate inflation. (Synchronicity much?)
The interview was conducted on Australian youth radio broadcaster Triple J. Here’s the short section that has gone viral – https://www.instagram.com/triplejhack/reel/DC8Pd1LRIqs/.
This is the key part of the exchange:
Interviewer: “Why don’t you want to be seeing house prices drop?….If you’re a young person, looking at what’s ahead of you, you definitely want to see house prices come down.”
Minister: “Well, that may be the view of young people. It’s not the view of our government. We want to see sustainable price growth.”
Interviewer: “But minister, if house prices don’t come down, doesn’t that mean that this system is stacked against young people…”
Minister: “Sure. And Dave we may have a difference of view about this…”
The incredible part about this exchange is that the minister just flat out agreed with the interviewer’s framing of the issue that the system is stacked against young people. Of course, that framing is exactly correct: high house prices are screwing over the rising generation.
Maybe this was just a political gaffe. But there’s actually a very good reason why the minster might not think she has to care. The politics of the issue are surprisingly clear because it turns out the Australian population divides almost exactly into thirds on the subject.
About 1/3 Australians own their home outright. About 1/3rd have a mortgage on a home. The remaining 1/3 are renters. House price inflation is in the interests of owners and mortgage holders, but not renters. Therefore, house price inflation is in the interests of 2/3rds of the voting public.
The people hurt by house price inflation are the renters. Since renters are mostly made up of young people, the minister basically went onto youth radio and told that demographic to its face that the government couldn’t care less about its interests. Nice job, minister!
Given Australia has a federal election coming up early next year, the immediate effect of this could be to see young voters shift even more away from Labor and towards the Greens. Since Labor’s position is already looking tenuous, we could very well see the Greens holding the balance of power in a minority government.
Longer term, however, this is pretty much the number one ticking time bomb of Australian politics. Both government and a majority of voters support a policy position that is disenfranchising the entire upcoming generation. Anybody who thinks that’s a viable strategy for the future has not studied history very well.
I can’t really blame the government on this. It’s the entire elderly generation that is the source of the issue, the majority couldn’t care less about the future of the country. They are complete individual economic units with no feeling of nation or community.
There is a street in the town near where I live which is almost completely full of holiday homes owned by wealthy elderly couples. There are only two rentals and two owner occupiers actually living there while families go homeless.
One of my grandfathers lives in a house all by himself, while his partner lives in a huge house all by herself about ten minutes away (both their original partners have passed away). They refuse to move in together.
I got into trouble in a conversation with a boomer recently when I implied that it might be good for the elderly to think about the inheritance they were leaving for their children. This lady roundly informed me that she was under no obligation to her children and would spend her money how she saw fit. Bear in mind, I had only implied the issue and that was enough to trigger an angry response. Meanwhile, look at how much money is being tossed down the drain on aged care and medical bills. Not only are the boomers profiting off real estate inflation, they’re not even going to hand that profit on to the next generation.
It’s an interesting phenomenon because as far as I can tell their parents generation was the opposite. World wars, great depression etc, usually had a lot of children and raised them in poverty.
Maybe it’s just that they have unreasonable expectations because they are literally the wealthiest generation that has ever lived or will live, but there is such a lack of care for the future that the wealth will most likely disappear quickly.
Maybe it’s also because many of them are in some way what we call cashed up bogans. They are lower middle class or working class raised people that have basically won a sort of lottery, and waste it in similar ways to what you see people do when they really win the lottery; act like it’s a never ending party.
It’s worth remembering that in the aftermath of WW2 there really was a requirement for a mindset change away from frugality and towards consumption. Among other things, that was needed in order to solve the unemployment problem. So, you had an entire generation encouraged to live for today and not think too much about the future, which was subtly reinforced by the fact that nuclear armageddon was always just around the corner. So, I guess the boomers want to party to the end, and they’ll leave the rest of us to deal with the hangover.
And then they have the gall to complain about the young having gone on a breeding strike.
The official position from the premier of my state is that the rising generation will be able to buy apartments in new high-rise buildings. Sounds like the perfect environment to start a family 😛
@Simon
If this:
https://theemergentcity.substack.com/p/brisbanes-housing-paradox-what-happens
is to be believed, then it doesn’t sound like Australia’s youth will be able to afford those apartments any time soon. Mind you, this sort of problem is in no way limited to Australia. Europe has the same issue, though as always, some countries (and cities) are worse than others.
Irena – if I could use a bit of vulgar Australian slang, it’s all just pushing shit uphill. As James Goldsmith pointed out three decades ago, once we let hundreds of millions of third world workers into the global economy with the neoliberal reforms, we guaranteed that western wages would have to drop to equalise with the third world. There’s two ways we can get there: 1) recession; 2) inflation. For political reasons, we are going to choose inflation since it lets politicians pretend they are doing something. The result will be the same.
The question is whether the rising generation will realise they have been sold down the river and what they do about it.
Simon: “The question is whether the rising generation will realise they have been sold down the river and what they do about it.”
I suspect it goes something like this: if you squeeze the young, and there are many young people around, then they organize a revolution. But if you squeeze the young and there aren’t very many young (as a share of the population), then they respond by becoming useless, and then when you need them, they just shrug. (Either that, or they pack up and leave, assuming that’s an option.)
Now we’d need someone like Peter Turchin to take a look at the data and tell us if this is broadly correct. 😛
What we do know is that societies sometimes turn out to be surprisingly brittle: a little bit of a push, and they collapse. For a (very) recent example, see Syria. For a famous historical example, see the Aztecs.
I suspect we got a little glimpse of one way it might go with the shooting of that CEO in the US this week. The reaction to it was very revealing. Then, of course, there’s the Canadian truckers, the French and British riots and all kinds of other little signals from the last few years, all of which were responded to by the elites with some combination of complete cluelessness or abject indifference. It really does feel like we are governed by zombies at the moment.
What usually ends up happening (and is already happening and is also the norm in the third world) is that most households become massively multi generational, with grandparents parents and kids all in the ancestral family big house. It’s simply far too efficient not to do it. Our culture over the past 70 years or so has been really against it due to economic reasons, but the same economic reasons will force it back upon anyone who wants to face the future with any semblance of support.
Now this is actually subversive to the government and the system, because it takes a lot of things out of the monetary economy and puts them back in the household economy. So in many ways it’s the best solution but one which is not encouraged. But I’m already seeing it starting to happen everywhere in Aus.
There might be a funny twist there because the current arrangements already can’t pay for themselves and one idea I’ve heard floated is that aged care money be given directly to family members. If they do the same thing with NDIS, you’d have a lot of money going to families just to take care of each other. That would help with household budgets while also probably reducing fraud. Clearly, the Labor Party wants to move to the China model with everybody atomised in high rise apartments but, as Irena pointed out, it’s probably too late to do that because we already can’t afford to build high rises. If the Liberals were smart (which they’re not) they could disintermediate some of the bureaucracy and make some populist reforms in one go.
Hi Simon,
Both Sandra’s and my boomer parents left us with nothing. They blew it all, that’s the sort of world our society is gifting to the future. Nuff said.
I’ve mentioned this to you before, but I watched this bubble kick off in 1997 with a sense of horror. It’s hard to know how things will end, but history suggests that every single economic bubble has ended sooner or later, and usually badly.
My best guess is that there is a tipping point where the house price policy arrangements make absolutely no sense relative to incomes, but then, we elect governments with a propensity to borrow with little to no ability to pay off the escalating debts (maybe they can with hyper inflation), and pretend that it’s all cool. The government reflects the people, and the people reflect the government. I dunno, not how I’d arrange matters, but then asking people to live within their means is very uncool.
Did you spot the recent news that the tourism industry produces 10% of the worlds carbon emissions? I don’t know what to make of such claims, but, usually such news runs ahead of on-the-ground shifts in societal arrangements. We can’t afford that industry anyway.
I’m waiting to see the superannuation funds raided to support housing prices. Anything will be thrown under the bus to support these housing policy arrangements – you wait and see. That’s my prediction.
The ALP went to the federal election with plans to scrap the capital gains discount and I believe they were going to quarantine negative gearing (like what used to happen long ago), and they lost that election to the Morrison government. Sends a strong message.
Cheers
Chris
Chris – the trouble is that people simply can’t afford to buy houses or apartments. It doesn’t matter how much supply they bring online if the price is too high. The only thing I can see working is if the government also takes care of demand by loaning people the money. It could go the same ways as HECS in that the government would later cancel the debt. But that’s pretty much indistinguishable from socialism. So, the only solution to the problems caused by the “free market” neoliberal agenda is socialism. If he’s in heaven, Karl Marx must be looking down and having a nice old chuckle.
Re: multigenerational houses
Given a choice, people generally prefer not to do it. This applies also in cultures in which such arrangements are “traditional” (e.g. in the Balkans, which is where I’m from). As soon as it’s an option, couples set up a separate household for themselves. What is true is that, if family relations are decent enough (and frequently enough, they are not), people prefer to live *close* to their parents, which has most of the pluses and a lot fewer of the minuses of living in the same household. Of course, people can and do wind up living under the same roof as their parents (or worse: in-laws), but given easily accessible contraception, expect plenty of people to say “actually, I’d rather just refrain from reproducing and live wherever (e.g. with roommates) than live and raise my children in my parents’/in-laws’ house.”
I wish I could find it now (alas!), but there was an interesting Substack post on how in Pakistan, it is quite common for women to sabotage their sons’ marriages. Basically, the woman never has a close relationship with her husband (it’s distant at best and abusive at worst). So, she forms a close bond with her son instead, who is also her old age pension. When he marries, he brings his wife home (his old home, where the mother also lives), and his wife is the mother’s competitor for his attention. So, the mother does what she can to prevent her son from becoming too close with his wife. And so the cycle continues. Sounds rather Oedipal to me, and yes, it does, in fact, sound plausible. There’s a reason why the “mother-in-law” is such an – is “archetypically” the correct word here, Simon? – hated character, and by no means only in Pakistan.
In Australian suburbs with their big backyards, the traditional configuration for a multi-generational household was to have a “granny flat”, which is a small house at the back of the property with its own kitchen and bathroom. That gives some level of privacy and separation.
As to mother-in-laws, yes, that really does seem to be a universal. This brings up one of my favourite rules from Australian aboriginal culture. In most tribes, it was forbidden for son-in-laws and mother-in-laws to be in the same place as each other. If they did have to be in the same area, then they were not allowed to talk to each other or even to look at each other. This is a rule that every culture should adopt 😀
Hi Simon,
Sustainable growth (and the minister was referring to house prices) is a concept that makes no sense whatsoever. As a concept it’s just not possible, and never was. It’s completely nuts when you consider what the person was actually saying.
One unusual aspect of this situation is that I have heard many parents express the opinion that they’d like their children to stay with them as err, adults. Certainly that wasn’t my experience. However this sort of desire feeds into your archetypal analysis and is reflective of that overarching archetypal figure you wrote a very interesting book about. Dunno, what’s your thoughts on that? Sometimes the secret and hidden desires of a society can guide real world outcomes.
Cheers
Chris
Chris – technically speaking, if wages grow by more than real estate prices, it could be “sustainable”. But that ship sailed decades ago. It’s like telling somebody who’s just drunk two bottles of whisky that it’s fine to drink a third one as long as they slow down a bit.
Hi Simon,
Agreed and I’d never quite thought of the arrangements as an indulgence, but yeah and interesting way to look at the policies. It’s worth noting that as house prices grow faster than wages, or any other form of income for that matter, that’s technically known as increasing growth in poverty. Is that the sustainable growth the minister was talking about?
Things which seem firmly in place, can change rapidly and without warning. You may have missed this: Federal election 2025 will be the first vote where Gen Z and Millennials outnumber Baby Boomers at the ballot box.
As a Gen Xer, I feel I must state for the record that nobody listens to that cohort! 🙂
That recent demographic shift may have been repeated in other parts of the world.
Cheers
Chris
Chris – yeah, interesting times ahead. I still think that the most likely route for Australia is a variety of government-funded policies that try to shift wealth to the younger generations. But without being able to fix the main problem of asset bubbles, it’s all likely to be of little use.
Simon: “In Australian suburbs with their big backyards, the traditional configuration for a multi-generational household was to have a “granny flat”, which is a small house at the back of the property with its own kitchen and bathroom. That gives some level of privacy and separation.”
Ha! Where I’m from, the “traditional” configuration of a multi-generational household is three generations in two rooms (living room + bedroom), or three rooms if you’re lucky. It’s a pretty terrible way to live. If there is any tension, there’s every chance it’ll explode, since “go to another room to cool off” is simply not an option. Instead, everyone is going on everyone’s nerves all the damn time. And even when the family looks reasonable enough, some arrangements look – fishy. For instance: a 12-year-old boy and his 9-year-old sister sleeping together on a pull-out couch because there are five people (three generations) living in a one-bedroom (yes, I am thinking of a particular family I once knew).
Anyway: if you don’t have enough space, Do Not Breed. Just Don’t Do It. It’s a horrible way to live, and it’s not fair to the children.
I would have thought such conditions were not conducive to breeding anyway. How does a young couple find the space to pursue such activities? Don’t answer that question! 😛
Yeah Irena that is a huge difference to our set up here in Aus. Our houses are huge from an international perspective, second only to the USA. I remember an Italian farm worker thought our farm Cottage where my parents live was a large house, while for us it was in need of at least two extensions, and my parents then also built a granny flat out the back that my grandfather now lives in.
My in laws live in a 5 bedroom house all by themselves that also has a shack out the back that could be turned into a flat. It’s so empty it’s spooky. Like the USA, our enormous resource wealth has resulted in incredible waste. We have a lot of room for family members to move in if needed. Much of Europe obviously doesn’t have the same wiggle room.
I’m probably an outlier too because all of this is just taken for granted in farming families. If the younger generation doesn’t respect and help the elder and vice versa, the intergenerational family farm has no chance of surviving.
@Skip
To be fair, I don’t know what it’s like in the countryside. The countryside is rapidly depopulating, so overcrowding as such is not necessarily an issue. I’m talking about the cities. So, you get three generations living in 2-3 rooms. And it’s not like you can go outside to get some peace and quiet and privacy (as you might in sparsely populated areas). You’re in a densely populated urban area, after all.