The End of the Australian Dream (NY Times op ed)

[planetary]

In my recent trip to Sydney, I was able to (all too briefly) meet with @JohnS.  We talked about several things, including the recent surge of population around that city, with an accompanying surge of real estate prices.  Just saw this Op Ed piece in the NY Times -- and John wasn't kidding!  It also touches on the business climate, which @Ken Gargett and @El Presidente have discussed several times, as well as the recent surge of anti-intellectualism, where Australia is far from alone, sadly.

Anyway, I found this interesting reading.  Link to original piece.

The End of the Australian Dream?
Lisa Pryor MAY 1, 2017

SYDNEY, Australia — Let me tell you a fairy tale called Australia. Despite what you
may have heard about snakes and spiders and sharks, the remarkable thing about
Australia is not its danger but its safety. At its best, this is a peaceful nation, with
health care and education for almost everyone, that has enjoyed over the past two
decades the longest period of economic expansion of any developed country in
modern history. Our cities are regularly judged to be among the most livable in the
world.

But we are in danger of stuffing it up, which is an Australian way of saying we
may be ruining it all.

In the past 20 years, Australia has become a nation where getting ahead is a
national obsession, partly because we have come to expect a world where the natural
course of events is to become a little bit richer each year. The winnings of our
repeated economic booms have been squandered on inflationary policies that fuel
the rat race.

What we are discovering is that when you have a nation full of people trying to
get to the top, eventually most of the population is forced to run just to keep up. Our
enviable quality of life is at risk.

Consider what has happened with the housing market, Australia being a country
where real estate is not just a place to live but a ticket to prosperity and a statement
of taste and values.

Generous tax breaks for homeowners and real estate investors have fueled the
market to the point where the median price of a house in Sydney, our largest
metropolis, is $1.1 million Australian dollars, or about $824,000. An entire genre of
newspaper writing is dedicated to telling Australians what they could buy for the
same money in other parts of the world — a small chateau in the South of France,
even an apartment in Manhattan, for the price of an ugly brick house 40 minutes’
drive from the center of the city. We watch shows like “Million Dollar Listing Los
Angeles” and laugh.

So even though Australians do not have to put aside many hundreds of
thousands of dollars for college degrees, or tens of thousands of dollars for health
insurance, we are still in huge debt through our mortgages. Australia has some of the
highest household debt in the world, especially if you compare our debt to our
incomes and G.D.P. We are poised for disaster if there is a serious economic
downturn.

Even for those lucky enough to own their own home, there is a fool’s­gold feel to
this property boom. After all, if you own a three­bedroom house five miles from the
city and it increases in value by 50 percent, that means you still have only enough
money to buy a three­bedroom house five miles from the city. This is not so much
rising wealth as glorified inflation.

And for those who are not owners? The property boom is dividing the nation
along lines of age and class. For young people, property prices represent dashed
hopes and a looming intergenerational battle.

Consider a recent furor when an older demographer suggested in jest that young
people would be better able to save for a house were they not wasting their money
buying avocado toast at hipster cafes.

It is a familiar line of attack here, young people being told to stop wasting their
money at cafes. No matter that you would need to forgo 31,429 flat whites to pay a 10
percent deposit on the typical home in Sydney.

Millennials, sick of being told that they don’t know how good they have it, may
well point out that Australia is home to some of the most spoiled baby boomers in
the world. Many retirees divide their time between cruise holidays overseas and
subsidized medical appointments here, all the time complaining that it is the young
people who don’t realize how good they have it.

Aside from tax policies that encourage speculation, other policies show
successive governments have been fueling a rat race when they should have been
building a society. Over the past two decades, federal government funding of private
schools has expanded, including to those with very high fees and swimming pool
complexes, beautiful gardens and performing arts centers, further dividing the
country. Many middle­class parents have become anxious about sending children to
the local public high school out of fear that they will lag behind their peers at schools
that are expensive or academically selective.

We need to rediscover our egalitarian roots. It is true that Australian culture can
be anti­intellectual. We can deride achievement and cut down those who succeed, in
a phenomenon we call tall poppy syndrome. But the egalitarian values of our society
should not be discounted. In fact, it is on the matter of egalitarianism that Australia
has made some of its most important intellectual contributions to the world.
Australia was one of the first countries to institute a living minimum wage, in a
famous court case back in 1907 regarding the employees of the Sunshine Harvester
Works. The court decided that an unskilled worker should be paid enough to meet
the needs of “a human being living in a civilized community,” which included
keeping his family in “frugal comfort.”

The cultural effects of this decision, the idea that every worker should have a
decent standard of living, have been at least as great as the legal ramifications.
Australia enjoys a relatively high minimum wage today of 17.70 Australian
dollars, or about [US]$13.25, per hour. We have so far avoided the hollowing out of the
middle class suffered by other countries like the United States. Australia has one of
the world’s highest percentages of middle­class people, with about 56 percent of the
population falling into this category, according to a 2016 Credit Suisse Global
Wealth Report.

Egalitarianism has been a major contributing factor to the quality of life we
enjoy in our society, including for those who are better off. We have low crime rates.
Few of us fear that medical bills will lead to bankruptcy as we have universal health
care. Our university fees are rising, but we can pay the money back to the
government over time, and only once we are earning a decent wage.
We need to remember what makes Australia a fairy tale and protect it.

Lisa Pryor, a medical doctor, is the author, most recently, of “A Small Book About
Drugs.”

A version of this op­ed appears in print on May 2, 2017, on Page A1 of the National edition with the
headline: Is the dream in Australia crumbling?.
© 2017 The New York Times Company

[thecrowder]

When I lived in Sydney, I can remember thinking to myself that I would never live in another city that is more expensive--then I moved to San Francisco.  While San Francisco's housing prices are higher than Sydney, everything else is more expensive there. I can totally empathize with people who are struggling to get ahead there with the rising costs. 

I also find this quote to be just as relevant in SF: 

"After all, if you own a three­bedroom house five miles from the city and it increases in value by 50 percent, that means you still have only enough money to buy a three­bedroom house five miles from the city. This is not so much rising wealth as glorified inflation."

[polarbear]

The Australian dream has been dead for years. Not because of rising property prices but because the priorities of Millennials (of which I am one) have changed.

The "Australian Dream" used to be, get married, buy a house, have a couple of kids" but most people in their mid-late 20's have no desire to settle down or have children (at least not on purpose).
More women in their mid 20's are saying they have no plans to have children ever, and while you can argue they will change their mind when they hit their 30's (an argument I find incredibly condescending) it doesn't change the fact that more and more people are preferring to travel in their mid 20's than settle down and raise a family.
This begs the question, if you plan to travel and have no desire to settle down in the next 5 years, why bother buying a house?

[PatrickEwing]

Please insert Vancouver in lieu of Sydney. Then grab a glass and drink my tears. 

[Fuzz AI]

Yes, please stop trying to buy a house and keep renting. I'll keep buying investment properties!

[dicko]

The property price rise from around 2000-2002 to 2013-14 in Perth and other parts of Australia (continuing in Sydney still) was crazy. Basically there is a huge divide between people who were on the property train before then (or in the earlier part of the boom) and people who bought in the latter part or who are trying to get on the ladder now. 

I'll give you an example of the generational divide. Around my age my father bought 2 properties in an outer Perth suburb within 24 months of each other. Each was $38,000. He tells me he was on around $40,000 annual salary at the time. So basically, for him, a house was 100% of his annual salary. For me, lets say 400% or 500% of annual income (both specialised industries with above average incomes but nothing great) for something of similar condition and outer suburban. One generation apart. (I admit I buy too many cigars though haha).

So many Aussie baby boomers or Gen x'ers fell ass backwards into money. "oh I'm a property investor" ....  give me a break.you took a risk and were lucky. do that now. you won the genetic lottery is all.

Anyway point is it is much harder for younger Australians, baby boomers suck blah blah  

[RDBM]

I'm surprised there are any young people in Australia to buy the houses. Most of them seem to be here working in bars ??

[LordAnubis]

Its great, the young kids get blamed for everything thats wrong with their attitude, their way of life etc. But who raised them, created the laws that controlled them, created the environment they are surrounded by?

For a young person today, it is multiple times harder than the previous generation. Dicko shows some very valid points. There was also another thing i hear recently abot a similar disparity between wages and secondary education. A university degree in Australia costs 20grand these days. It used to be a fraction of that cost about 20 years ago. But wages weren't all too different.

The same can be said for anywhere though, costs are increasing, but wages are remaining the same for workers. Unless you're a CEO, their wages are skyrocketing. Its jsut the continuation of the shift of wealth from the poorest, to the richest. I think i read something like the 8 richest people in the world own more than the poorest half of the world or something. But lets blame the kids who are good for nothing bad attitude lazy young people who aren't anything like we were when we were younger.

[El Presidente]

I am not sure how anyone can blame the younger generation for the issues we have in Oz.  Most of them are a result of 20 years of government largesse (both sides)  which created thriving middle class welfare.  Our brains trust in Canberra (both sides) managed to squander a historic surplus and create not only a mountain of generational debt but worse, entrench a "hand out" mentality.  To be elected you have to protect things you know the country can't afford to carry, otherwise you will lose the "middle class" vote.

We are justifiably proud of our medical safety nets and they should never be touched.  Such essential services are a far cry from baby bonuses, education revolution (laptops for all....one...which last 18 months), Ceiling insulation. For the love of God we handed out 800 cash to nearly all adults in the nation back in 08/9 in order to stimulate an economy which was still flying.  Today....stone motherless broke. 

Property prices on the eastern seaboard are a result of a lack of consistent planned supply + insane tax incentives that turbo charge prices (and capital growth) + historic low interest rates. Good luck should interest rates begin to rise. 

Wages are going nowhere. small and medium businesses are tapped out on their pay scales as a result of the wages over reach from the mining boom years which spread through much of the white collar and trades network outside of the mining industries. 

Bank CEO's and Government quango CEO's and department apparatchiks make good headlines with undefendable salaries/packages but that is far removed from the 2.1 million small and medium sized businesses employing 5 out of 10 Australian workers. 

Tragically what we are seeing before our eyes in the workforce is the casualisation of labour by S&MS businesses. Casuals and contracts are used to avoid the frightening levels of red tape and liability they face when taking on full time employees.  

How does a  pair of 33 year olds in tech working 32 hours a week each as casuals get a home loan.....even if they found an affordable house? 

Meanwhile 50% of new businesses don't make it to their 5th year of trading. I will venture that 50% of the remaining 50% are working 6.5 days a week barely making wages. 

I love being in business and touch wood I have been relatively successful. If I had to start a business (any) again.....it wouldn't be based in Oz. 

So what's the plan in the great country of OZ that I love dearly?  Nada. It is all too hard.  Play the property lottery, milk everything you can from Govt, celebrate the next Queens Birthday public holiday where the 19 year old bar staff are earning $44 an hour. 

madness 

 

 

 

 

[JohnS]

When you have a lot of people in a small space, the price of accommodation rises. Sydney went from a population of 3 million to 4 million between 1971 and 2001, it took only another 15 years to hit 5 million.

Part of the problem is that Australia is an arid country and most people live on the seashore, or close to it. In fact, Australia has about 40% of its population in just two cities, Sydney and Melbourne, a unique circumstance for a nation.

With population growth we have had to deal with transport issues. Sydney has 48 main carriageways and improving traffic flow has required extensive investment in civil roadway projects, both motorways and tunneling.

I was reading today how Steve Jacobs, a free-to-air Australian  television personality, recently sold everything in Eastern Suburbs Sydney (i.e. very expensive) and moved his young family to Vanuatu for a better quality of life. I can't say I blame him!

 

[Fuzz AI]

32 minutes ago, El Presidente said:

 For the love of God we handed out 800 cash to nearly all adults in the nation back in 08/9 in order to stimulate an economy which was still flying.  Today....stone motherless broke. 

 

You should be happy. I bought cigars from you with that hand out!

[JohnS]

5 minutes ago, Fuzz said:

You should be happy. I bought cigars from you with that hand out!

Yeah...and in those times you could buy at least two full boxes of cigars with $AU800! (Prior to successive tax increases.)

[Fuzz AI]

25 minutes ago, JohnS said:

Yeah...and in those times you could buy at least two full boxes of cigars with $AU800! (Prior to successive tax increases.)

Pretty sure I used it on a cab of Des Dieux.

[TheBaron]

It seems to me the divide between the haves and have-nots will only widen in Oz from here on. The younger generation just can't get ahead without help from their parents/grandparents, and much of the blame as El Pres said lies with successive indifferent governments. It's all smoke and mirrors with those pricks. "Here's $7k for a first home owners grant. Oh, please pay us $40k in stamp duty."

I'm 35 and only bought our first house two years ago. We had to move 60km out of the city (Melbourne) and have a substantial mortgage on an $800k home. I'm a journalist and my wife's a lawyer – we're hardly the ones doing it tough in this society. I really feel for the next generation (and that of my kids). It's why I went out on my own to build a business (which I sold to allow us our current home) and why I'm about to launch another with the aim of helping my kids in the future.

There's so, so much to love about this great nation, but housing is not one of them.

And don't get me started on how much overseas investment in our market (and the ease with which it is allowed) affects the supply of housing for the next generation and inflates prices for the rest of us...

[hedgeybaby]

I have never been to Australia so please forgive me for commenting, but the way I see it, this isnt a problem unique to down under. Government has become far too big and intrusive throughout the western world. Add this with interest rates that have been far too low, a global commodity supercycle (ending soon/ended,) all adds upto a highly distorted market place. Debt has got out of hand and will never be repaid. Also, the fact that western culture has collectivly lost our balls, it feels like the last days of the Roman Empire. Or atleast the mania phase of humanity.

Best light up whilst we can.

[rhcolbert]

Pr

10 minutes ago, hedgeybaby said:

I have never been to Australia so please forgive me for commenting, but the way I see it, this isnt a problem unique to down under. Government has become far too big and intrusive throughout the western world. Add this with interest rates that have been far too low, a global commodity supercycle (ending soon/ended,) all adds upto a highly distorted market place. Debt has got out of hand and will never be repaid. Also, the fact that western culture has collectivly lost our balls, it feels like the last days of the Roman Empire. Or atleast the mania phase of humanity.

Best light up whilst we can.

Took my words.  Spot on imo. 

[PigFish]

I don't know much about Oz except the quality of people that I have known from her. I really dearly care for many of the folks that I have known from Oz via this forum and before.

I know central planning does not work! When you overtax, then 'give back,' pick and choose industries to support and punish, you create economic events that the 'brilliant' planners cannot possibly espy.

Free markets are prone to bubble. That is just how it works. Bailouts and hand outs, just mean that people are paying for the services (and the mistakes of others) to others, that they themselves may not have the luxury of... or were smart enough to avoid. Now instead of the market making the bubbles, the government does!

Money goes somewhere! Even redistributed money.

As someone who has made a living in the real estate, lending and building industries, I have been advantaged by the fact that real estate lending is a favorable tax break. What has this done except create another bubble in a market of taxpayers looking for tax breaks? As I get a mortgage deduction, my neighbor (paying perhaps more in rent) than I do in debt service pays my tax load for me. As the 'government' has supported my desire to buy a house has it not punished his 'need' to rent one? What has master planning and redistribution done here? It has supported those that have the wherewithal to buy at the actual expense of the those that don't...

Now that is masterplanning for you!

For the life of me, I cannot understand how this very simple process is not understood by the socialist. Well, I do understand it. As these 'partial' fixes are known by most all of them to 'cause' further growth of government and further control of the economy and population. Socialism is not about helping anyone, except the socialist on top!

Self interest, and the millennial did not bring this to Australia! I assume you believe you have a voice in government... so therefore the older generations are at fault for this, not the youngest ones! Why blame them? You 'ran' the country before they were born, did you not?

Central planning only 'works' until the central planners melt down the whole economy as they attempt to pick the winners and losers in every aspect of society that you 'used' to call a free choice.

Self-interest, the free market may not be perfect, but it is by far the best solution. Humanity made great strides when it moved away from tyranny, kings and oligarchs. People uneducated about history simply undo all that hard work by bringing it back with the face of socialism... THEY THINK THAT THEY CAN CONTROL IT... How about we ask those in Venezuela?

Australinas... Now that the central planners run most if not all your lives, do you feel that you have a voice in government? I will bet, right or left, you will all answer no! Socialism creates chaos, that only 'more government' and 'more control' will fix. I proffer, that was always the plan and Karl Marx will back me up!

-the Pig

[JC67]

What a brilliant article and all very interesting and valid responses.

Property prices aside, In a society where beautiful young girls at 16 feel the need to get boob jobs, Botox injections and fake eye lashes and boys are wearing make up, i worry about who will be making decisions for us and where the next generation of leaders will come from as we get older

The media and big business have a lot to answer for but at the end of the day it is us that put mobile phones and ipads in the hands of 8 - 10 year olds, us that allows our young girls to be influenced by the images that they are bombarded with. Us that decide to get a $80K loan to buy that Audi and so on.

Our parents work hard it is only natural that we want our children to have a good life but WE have lost the meaning of what  a good life is.

 

I would assume that for the young girls in Syria, Iraq, Africa, Vietnam and so on the last thing on their mind is botox, boob jobs and fake eye lashes.

 

[Dimmers]

18 hours ago, El Presidente said:

20 years of government largesse (both sides)  which created thriving middle class welfare.  Our brains trust in Canberra (both sides) managed to squander a historic surplus and create not only a mountain of generational debt but worse, entrench a "hand out" mentality.

^^ THIS. Massive own goals from John Howard onwards.

[joeruby]

7 hours ago, JC67 said:

 

Our parents work hard it is only natural that we want our children to have a good life but WE have lost the meaning of what  a good life is.

 

WE have lost the meaning of what  a good life is.

Brilliantly said.

We constantly fall for the BS of how we should live our lives, the 'must have items' and 'can't live without crap' that is supposed to enhance and enrich our lives even more..

I don't fall for it anymore..

[polarbear]

Biggest issue I saw when I moved into my own place was most of my friends were shocked that my living conditions were not as nice as the ones I had when I was at home.
I moved out of home when I was 25 (late I know, but I was busy saving to buy a house) and I went from leather furniture and a 60inch LCD screen to milk crates/bean bags and a 51cm tube TV for the better part of 12 months until I'd saved enough to upgrade things a bit.

Compromise is a word that seems to have lost its meaning these days. People want to be able to continue their current life style while at the same time support the higher cost of living that comes with paying a mortgage instead of rent.

My cigar buying habits still haven't recovered from the budget constriction that happened when I found I needed to hand over 3/5 of my monthly wage in order to service my mortgage, and I'm ok with that, but a lot of people my age wouldn't be

[Shaunster]

Same all over the world, over the last 20 years property prices have exploded, all the (what was once) affordable housing is tied up in the hands of investors and the rent payments they demand are higher than a mortgage would be.

[Steens]

Funny thing is was watching a TV series a while back about the life of a Roman soldier they had found a letter written to his wife complaining about the cost of living price of houses/land and the world his kids would grow up in 

[Jeremy Festa]

Slow news week. 

[JohnS]

1 hour ago, Jeremy Festa said:

Slow news week. 

I have a feeling the British Royal Family will take care of that problem soon.