Neglecting youth issues is Canberra's biggest blind spot

As the budget looms, calls for shared sacrifice will place the greatest financial burden on those least able to bear it. By ignoring youth issues, the government is ensuring a bleak outlook for future generations.

When will Canberra stop neglecting the needs of Australia’s future?

The Commission of Audit featured a range of nasty surprises for Australia’s youth, but that is just the latest in a long list of failures. Next Tuesday provides another opportunity for short-sightedness, with the federal budget set to deliver a range of cuts that will expose an already vulnerable group.

Youth issues are regularly ignored by politicians at the state and federal level. Young Australians are among the least represented groups in the country. Decisions are made on their behalf -- on the future of Australia -- without their input or consultation. Often those decisions are made by politicians who won’t be around to witness the damage of their short-sightedness.

How else do we explain climate change policy? How does a problem with minimal disagreement among the scientific community become a heated political issue? It only happens when politicians are either ignorant or prioritising short-term gains over Australia’s future, as Tristan Edis explains (Direct Action is still a dud part 1 and part 2, April 28 & May 1).

Not that it really matters, given key business leaders and political heavyweights plan on being fertiliser when climate change becomes an immediate crisis. Sucks to be young, I suppose.

How about infrastructure? Australia has suffered from a public infrastructure shortfall for decades, as successive governments at all levels have wasted a once-in-a-lifetime opportunity to fund infrastructure, boost productivity and set Australia up for the future.

Instead, tax cuts and superannuation concessions for the wealthy were the best we could come up with.

The entire stock of public infrastructure, operating collectively, promotes productivity and growth and forms the building blocks of Australia’s economy. A failure to invest sufficiently erodes those benefits, weighing on growth, living standards and productivity.

Perhaps the state and federal governments have done us a favour. On the rare occasions that ambitious programs have been announced, the results have been disappointing. The national broadband network, for example, proceeded without a cost-benefit analysis, with little regard for whether the macroeconomic and social benefits exceeded the cost of implementation.

A recent report by the Productivity Commission cited “numerous examples of poor value-for-money” projects due to inadequate project selection and warned that without reform, “more spending will simply increase the cost to users, taxpayers, [and] the community” (The great infrastructure drain must be plugged, March 17).

Incompetence and waste at the state and federal level has reduced our immediate and future productivity, leading to lower living standards than could have occurred under less short-sighted leadership.

But the most pressing immediate concern for young Australians isn’t climate change or infrastructure or productivity, it’s the unacceptably high rates of youth unemployment. Unfortunately, if the government follows recommendations by the Commission of Audit, then it will fail Australia’s youth on this issue as well.

The unemployment rate for 15-to-24 year olds has increased significantly since 2008, rising to around 12.5 per cent in March. But that severely understates the challenge facing today’s youth (Why rising youth unemployment demands our urgent attention, April 29; A steep bill for Australia’s lost youth, April 18).

Graph for Neglecting youth issues is Canberra's biggest blind spot

The number of young Australians suffering long-term unemployment has tripled since the onset of the global financial crisis. These are people who have been unemployed for at least a year. This accounts for around 18 per cent of total youth unemployment.

The Commission of Audit recommends shipping these people somewhere else. It believes that if you can’t find a job in 12 months, then obviously you aren’t trying hard enough. I’m not sure where those jobs might be and I suspect the commission has no idea either. 

Productivity Commissioner Alison McClelland provided a more sensible view. “Forcing people to move is not likely to be all that helpful for them getting a job; the best action there is to improve their employability, their education and training,” she said.

The Commission also recommends significant cuts to the Newstart Allowance. As the graph below shows, those on the allowance would be left much worse off under these recommendations. The Commission advocates increasing the withdrawal rate for the allowance to 75 per cent, so for every $100 a person earns he or she would be left just $25 better off.

Graph for Neglecting youth issues is Canberra's biggest blind spot

The commission recommended that the minimum wage should decline in real terms for a decade, though Employment Minister Eric Abetz has announced that the Coalition has no plans to pursue this recommendation during its first term. The commission also wants students to begin paying back their loans at the minimum wage (currently $32,354) rather than the current level of $51,309.

Some of these policies will be ignored by the Coalition in next Tuesday’s budget, but others will become part of the shared sacrifice that will place the greatest burden on those least able to bear it.

Governments have neglected youth issues for decades, prioritising short-term gains over the long-term wellbeing of the Australian economy. Climate change policy and infrastructure investment provide two such examples where a desire to be re-elected has triumphed over sound economic reasoning. 

If Australia continues to neglect its youth, then there will be long-term consequences. High levels of youth unemployment will create a generation of workers who will be less skilled and experienced than the generation that preceded it. Short-sighted climate policy and insufficient infrastructure investment will lower productivity growth and living standards.

Investing in Australia’s youth is not a burden for the budget but an opportunity to create a better society. Education and health is important but measures that reduce poverty are also essential. The Coalition can do much better than follow the Commission of Audit’s recommendations, and it should do so if it's interested in Australia’s future.

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