Wealth divide dominates Aussie poll strategies

Mr Malcolm Turnbull must win seats like Gilmore - which includes Nowra (above) - at the 2019 election if he is to retain control in Canberra.
Mr Malcolm Turnbull must win seats like Gilmore - which includes Nowra (above) - at the 2019 election if he is to retain control in Canberra.PHOTO: REUTERS

Govt committed to expensive education, health programmes amid populist wave

SYDNEY/HYAMS BEACH • Australia has enjoyed an extraordinary 26 years of growth without a recession, but is now facing a populist wave that has hit the United States and Britain as income and wealth inequality widens.

The growing divide between wealthy baby boomers and struggling younger voters poses a big problem for Prime Minister Malcolm Turnbull, who must win marginal seats like Gilmore - which includes Hyams Beach and Nowra - at the 2019 election if he is to retain control in Canberra.

Mr Turnbull's Liberal-National coalition government, which has been trailing in polls for more than two years, is targeting next week's federal budget to seize back the policy initiative.

In recent days, it has committed to expensive education and health programmes, usually a domain of state governments and Labor.

Treasurer Scott Morrison defended the government's populist approach, saying a commitment to return to a budget surplus by 2020 is intact and better-than-expected revenues have allowed higher spending on key projects.

At the same time, Labor has promised to make Australia's wealth and income inequality a centrepiece of its election campaign as it targets younger voters.

Australia's A$1.8 trillion (S$1.8 trillion) economy survived the end of a once-in-a-century mining boom thanks partly to the influx of Chinese visitors who bolstered the tourism and education sectors.

A surge in house prices that rekindled housing construction and boosted the net worth of home owners and property investors also played a key role. Over the past 12 years, middle-and high-wealth households enjoyed a real increase in average net worth of 31-58 per cent, government data shows. But low-wealth households saw no real rise in that period.

Median home values are now at A$875,816 in Sydney - almost eight times average gross income - making owning a house an elusive dream for many young workers.

Their problems are exacerbated by stagnant wage growth of 2 per cent compared with 4 per cent or higher during the heydays of the mining boom. While house prices are one sore point for young voters, the lack of job opportunities is another. Youth unemployment in Nowra, at 30 per cent, is almost six times the national average.

Worryingly, the rate of underemployment for those aged 15 to 24 has stayed near record highs of 17-19 per cent in recent years, compared with 10-12 per cent before the 2008 global financial crisis.

A study based on government data by research firm McCrindle shows the top 20 per cent of households in Australia own 62 per cent of private wealth. That amounts to a whopping 80 times the average of those in the bottom 20 per cent.

Political analysts say Mr Turnbull risks losing Gilmore, a seat that helped him win the last election by the slimmest of margins, if he does not deliver on his party's mantra of "jobs and growth for Australians".

Offering Mr Turnbull a route to re-election, however, is the large percentage of retirees that call Gilmore home.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 05, 2018, with the headline 'Wealth divide dominates Aussie poll strategies'. Print Edition | Subscribe