The 'American dream' is about getting a shot at making it from rags to riches. The 'Australian dream,' on the other hand, has always been both more humble and more universal: the expectation that everyone who wants to should be able to get a job and own their own home.
This link between job creation and home ownership has created one of the great societies on earth. But today this link has been broken.
Our crazy approach on housing and tax disadvantages young Australians in two ways: by locking them out of the surging housing market and denying them jobs to pay for a home of their own.
The truth for young people currently entering the workforce is they might never buy a home. Today in Sydney, you need to earn over 12 times your annual income to buy an average house. Historically you only needed three times your salary.
With house prices comfortably outpacing wages the fact is, if you're a young worker, it doesn't matter how hard you work or how many smashed avocados you forgo -- you're going backwards, fast.
This is neither sustainable nor fair.
Young people struggling to buy a house should be furious that we have a tax system that favours the highly paid who already own their own home to buy up multiple properties and choke job creating investment, all while reducing their own tax bills and straining the budget.
Thanks to these policies, less than one in two young Australians own their own home, with that number falling fast. Our government does less to help a family buy its first home than it does for an investor who wants a fifth, sixth, or seventh.
This is national policy madness, because home ownership is not just a great way to build economic security -- it underpins every desirable social outcome. Studies have shown high levels of home ownership create safer communities, increase participation in elections and local clubs, and help children do better at school and in life.
The same goes for having a job, of course. And the issues are very much linked.
You might wonder why many young Australians can't get an apprenticeship or find themselves needing to go back to uni straight after graduation just to enter the workforce for the first time. A very large part of the problem lies with the fact that we're choking off job creation through poor tax incentives that favour investing in housing above all else.
Currently, six out of every 10 dollars lent by our banks goes to the housing market -- a figure roughly double of other comparable economies. That leaves just four dollars for job creators -- those trying to create new or expand growing businesses.
We are choking off money that could be flowing toward job creating industries through a system of generous tax concessions that has made housing returns an irresistible lure to investors.
You can't blame investors or even the banks. Putting money into anything other than housing in Australia makes very little sense (for now). So if you want to explain our sclerotic jobs market, consider how there just isn't enough money directed into things that employ people.
Young people struggling to buy a house should be furious that we have a tax system that favours the highly paid who already own their own home to buy up multiple properties and choke job creating investment, all while reducing their own tax bills and straining the budget.
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Fixing the problem is hard, but not impossible. It's pretty much economic consensus that the twin gorillas most responsible for our house price explosion -- negative gearing and capital gains tax deductions -- need to go or should be wound back considerably. This is an obvious place to start.
But, given young people are starting from so far behind now, its time to consider whether we should aim to level the field a little.
One way to do so would be giving every 25-year-old, on a means-tested basis, $50,000 in public money on his or her birthday to invest as they please -- be it in property, equities or a business. Progressive estate and land taxes on older, wealthier generations could be used to pay for this, as would the growth dividend.
Access to capital would help ensure we retain equity within and between generations when it comes to home ownership. It would also free up money for job creation by funding a generation of youngsters that are only too willing to back their ideas and create employment for themselves and others.
The dream of entering Australia's property market for young people has become a nightmare. It's time we woke up.
This is a shortened version of a recently published essay. Read the full version here.
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