A month ago, Lucy and I had morning coffee after dropping our children off at school. Since she was about to go back to work and we wouldn’t be meeting for a while, our coffee went on longer than usual; we talked about all the job cuts in the mining industry – at the time, 3 mining giants had already laid off workers – the effects this might have on the economy in the months to come and whether a recession was likely. Being mums, our conversation inevitably meandered to our children and the sort of a future that is in store for them.
“The future is not looking too good,” said Lucy and I couldn’t disagree with her.
Based on what I’ve seen, we’re indeed going downhill. 20 years ago, you could get a decent house in an outer suburb of Melbourne for $80k. Today, that same house in a now-established suburb is hovering around the $1m mark. If it’s a new house, it’s easily $1.5m. In moneyed suburbs closer to the city, $1.5m might get you a new 3 bedroom apartment or a dilapidated house.
It’s the same story where I live in Perth: $1.5 gets you an unrenovated brick-dwelling built in the late 60s or early 70s. If you want a semi-renovated 4 bedder, you’re looking to pay more than $2.5m. You could get something new for that price, but the acreage would be much smaller. You could live many suburbs away in a different direction, where you can get a decent 3 bedder for under $400k, but that area is not likely to have good schools or as long a list of amenities. If it does, it’s not going to remain that price for long.
With the average Aussie full-time wage hovering just above $70k per annum, any old fool can see that home ownership is beyond the means of many. While we don’t have China’s “ant-tribe” – a demographic of highly educated low-paid people – to contend with, what I’m seeing is the emergence of a generation that can’t give it’s children the very comforts and privileges they currently enjoy.
Let’s go back to housing. With house prices climbing steadily in the capital cities, very few of our children will be able to buy in the area they’ve grown up in. Even fewer will be able to buy homes like the ones they’re presently occupying. They might be able to rent, but for some, that too might be out of their reach.
“The thing is there’ll just be fewer opportunities,” added Lucy, and again, I couldn’t disagree with her. Mechanisation and moving production to lower cost centres might be vital for business enterprises to survive, but it doesn’t bode well for future entrants to the labour force.
“But our children aren’t going to be working in factories!” you protest. “What does mechanisation and cost cutting have to do with them?”
You know what? I bet those in the IT industry pre-Y2K said exactly the same thing. Now their jobs have gone to people in India; folks with PHDs willing to work for the wages commanded by bachelor degree holders over here. The thing is, and I’ve said this to F, who disbelieves me, people working in factories in third world countries do not want their children to also be working in factories when they grow up. They have dreams, and their tenacity to achieve those dreams would astound many over here; you don’t have to look far, just the sports pages from during the last Olympics will tell you how determined and fiercely competitive they are. And in the future, what they’ll vie for is not just our jobs but a standard of living comparable with ours. The big question is, “What will our children’s standard of living be like then?” I foresee that in the future, the ant tribe won’t just be limited to China.