Australia’s fiscal debt will cost Gen Z’s future

When my HECS debt exceeded $50,000, my jaw dropped, and I wondered how I’d ever pay it off. In contrast, my father enjoyed a free tertiary education when he was my age and entered the workforce unburdened by debt. Is that fair? 

The Baby Boomer generation faced huge challenges, like post-war reconstruction, promoting civil rights and living with the prospect of nuclear war. But it had its boons too. This is the generation that benefited from a buoyant labour market, cheap housing and enjoyed free university thanks to the Whitlam Government. Today, a booming housing market is helping to fund a luxurious retirement for many of that generation.  

On top of this, middle-aged and older Australians have disproportionately benefited from government spending in recent years – spending that has been funded by taking on debt that younger generations will have to pay off. So not only do younger generations not have the benefits that older Australians have enjoyed, but they have the added burden of government debt. 

It’d be like if I was able to avoid paying my HECS debt for my university degree by foisting that debt on my children. I would benefit from the education and its employment opportunities, but my children would bear the cost. Just as that would be unfair, so too are Boomers passing government debt onto younger generations while they get to enjoy the benefits of government spending today. 

This is the problem of intergenerational injustice when it comes to government debt. Fiscal spending is, by nature, short-term and aims to solve economic problems quickly. In moderation, it isn’t bad. However, in excess it disproportionately benefits people who are working at the time. Younger and future generations then bear the brunt of debt repayments accumulated by previous governments, while receiving fewer immediate benefits from the public spending financed by that debt. In contrast, older individuals enjoy the immediate advantages of government expenditure without the long-term responsibility of repaying the accumulating fiscal debt.  

For example, the large government spending during the COVID-19 pandemic has left Australia with a debt in excess of $800 billion. That is around 38% of Australia’s GDP. This means for the next 20-30 years, when today’s young Australians will be entering the workforce, their taxpayer dollars will not go into benefiting the society they live in, but rather repaying these loans. If the government cannot repay those loans, it must either increase taxes or spend less. It means young people potentially could lose healthcare benefits or have less personal money due to increased taxation or cuts in services.  

Philosopher Juliana Uhuru Bidadanure argues that we should be focused on relational equality at a moment in time. Relational equality emphasises the significance of social relationships and interdependence in achieving a more equitable society, highlighting the need to address and transform the structural conditions that perpetuate inequality.

Younger people today should not have to financially suffer today because it is expected that their lives will improve later.

Likewise older people in nursing homes shouldn’t be punished because they had a good life earlier. Everyone, regardless of age, should be entitled to a good life. Debt ultimately undermines this principle of relational equality if the benefits are only short term, as an unfair burden is placed unto future generations.  

Jobseeker is another example contributing to this inequality. Members of Generation Z who weren’t working or on Youth Allowance during the pandemic received no government benefits, much of which were funded by debt. So, over the next two decades, it will fall mainly on Generation Z to repay that debt, even though they received the least benefit from it. In fact, someone born today will likely have to pay off a portion of that debt in their first job even though they were not alive to experience the COVID-19 stimulus. Older generations will not live long enough to see through the long-term consequences of debt, but young people today will.  

It is important to note that not all debt is bad, such as long-term spending as investments today can greatly benefit future generations. Unlike pandemic-related debt, which disproportionately benefited older people, expenditure on infrastructure contributes to the collective good and is eventually enjoyed by younger people when projects are completed, demonstrating a more equitable form of financial responsibility. 

In addressing the pervasive issue of intergenerational injustice fuelled by fiscal government debt, we must advocate for policies that prioritise relational equality now. Balancing the scales requires a nuanced approach, moderating short-term fiscal spending, focusing on the impact of spending in the long-term through investments in projects like infrastructure.  

Governments need to ensure that they are careful with how their spending today will impact future generations. Short-term spending promises before an election are an example of short-term thinking from our political establishment. Naturally, voters who benefit from such spending might be inclined to support such policies. But they should be mindful of not only their self-interest but the interests of future generations, including their children and grandchildren. 

Meanwhile, Generation Z would benefit from advocating for balanced government budgets, for it is in their interests. Young people should always be cautious whenever they hear the words “fiscal”, “stimulus” and “injection” into an economy. Because, in the future, if those government actions risk a debt blowout, they are the ones that will have to pay for that intervention in the future.