On The Nation:
Michelle Boag, Tau Henare and Simon Chapple debate Geoff Simmons, Asher Emanuel and Julie Anne Genter, moderated by Lisa Owen

Lisa Owen: As we’ve just heard, Shamubeel Eaqub's new book says it’s the baby-boomer generation reaping the rewards of the housing market, locking out those that follow. But have the boomers really pulled up the ladder behind them, or are generations X and Y just unwilling to make the sacrifices needed to get their feet on the rungs? We thought we’d put the generations head to head in a debate, so on this side we have the generations X and Y. If they can put their iPhones away from a few minutes. They are Morgan Foundation economist Geoff Simmons, Green MP Julie Anne Genter and former Salient editor Asher Emanuel. And they were once hippies but are now most definitely the man – for the boomers, we have the Otago University economist Simon Chapple, former National Party president and communications consultant Michelle Boag and former National MP Tau Henare. So let’s start with the boomers. Michelle, has your generation snatched up all the golden years and cut the next generation loose?
Michelle Boag: I wish. I don’t think that’s a very fair assumption, and I think some of those assumptions that Shamubeel Eaqub made, and of course he very much represents the generation that you’ve got facing us here today, actually need to be challenged, because most of the boomers I know who have got children are helping them to get into their homes, because if they do have equity in their own homes, they can use that. I mean, one of the banks, Westpac, even put in place a scheme to deliberately encourage parents to do that, to actually use—
But isn’t that the privilege you have, the fact that you own a home, that you’re able to offer equity or help?
Boag: That’s where assumptions need to be challenged, because I don’t own my own home. I am actually a renter now. I’ve made a— My husband and I have made a financial decision that where we live is a lease-hold property and therefore it makes more sense to do other things with our money than invest in lease-hold, which has very limited capital gain. So I’m actually generation rent, and, in fact, there are a lot of people I know who also are renting because they’ve chosen to invest in a retirement property or a beach property; they rent a place in town.
Okay, so, Geoff, the boomers are doing it hard as well, so why are you and those younger than you doing it tough, do you think?
Geoff Simmons: Well, we don’t mind the boomers getting rich as long as they actually paid tax on their biggest investments, which has been housing. They haven’t made— you know, they haven’t contributed for the huge gains that they have made. The younger generation, as Michelle’s pointed out, are getting helped by their parents. That’s fine, but what if you don’t have the parents that can help you? What if you don’t have the parents that can provide you a stepladder to get up to the bottom rung?
What if you don’t, Tau?
Tau Henare: I find that a bit on the nose. You know, during the ‘80s, it was our generation that faced wholesale redundancies. My old man and his family were railway people, and their whole generation before our eyes – before our eyes when we were growing up – lost their jobs. It was our generation that established kura kaupapa, that made an attempt to make things better for our kids. I would love to be able to go to a kura now. I would love to be young. So what that you can’t afford a house or go and buy a home for yourselves. Actually, we had to struggle with 24% interest rates. You know, I mean—
How much interest did you pay on your first house, Tau? Do you know?
Henare: Oh, look, when we got our first mortgage back in the mid-‘80s, we were paying 17%, 19% interest rates, and that was on a mortgage that was from Housing New Zealand.
Julie Anne, interest rates are only 5% to 6% now.
Julie Anne Genter: That’s true, and that’s one of the reasons why house prices are out of control. So house prices were a lot lower. Even when they were paying higher interest rates on it, they needed less for a deposit and needed less to pay it off in the long term. And I agree with what Tau said – you know, there have been some advances made, but the reality is that successive governments have tilted the playing field more and more and eroded opportunities for younger generations, and that started in the ‘80s. But now we’ve gotten to the point where younger generations simply don’t have the same opportunities. You’ve got to get a loan if you want a tertiary education, there aren’t as many job opportunities when you get out of university, you’re saddled with student debt, and then you’ve got to somehow save up for a down payment on a house, and house prices, particularly in Auckland, are completely out of control. That’s a failure of government policy.
Boag: But you don’t have to get a loan if you want to go to university. You did what we did and what, in fact, one of your own panel did – you worked while you went to university. There was no expectation that the state owed you a tertiary education—
Genter: Tertiary education was free.
Henare: Tau hasn’t got a tertiary education.
Simmons: It was free. My parents got paid to go to university.
Henare: Well, we— Hey, which generation—?
Boag: I didn’t get paid to go to university.
Henare: Which generation that you can pick out of the last hundred years was given a loan without paying any interest?
Boag: Exactly.
Henare: None, except you guys.
Asher, how much is your student loan? Because you’ve got a student loan, haven’t you?
Asher Emanuel: My student loan is over $50,000…
And how did you—?
Emanuel: …and I worked part-time throughout my tertiary studies. I wasn’t able to—
Henare: What interest rates do you pay on your student loan?
Emanuel: I have an interest-free student loan.
Henare: Oh, wow, there you go.
Emanuel: That’s not really the question. I mean, we’re asking about the distribution of these resources between generations. Now, most of the people with whom I graduate will leave university with approaching $20,000 worth of debt. That’s going to take them at least— on average seven years to pay off if they’re more, more if they’re female. And you’re here saying that we should be able to start saving for a house deposit as soon as we’re leaving university to start looking after the families that we might want to have. That’s just not an option the way that the housing market is.
Henare: You need to suck it up, because—
Is that a fair point, Simon? You know, Asher says he’s disadvantaged because he had to pay for his education.
Simon Chapple: It’s a fair point but a very narrow one. The current generation of New Zealanders are richer than the previous generation. They’re in better health than the previous generation. When my generation went through university, and I was one of the very lucky ones to do so, it was about 5% or 6% of us. Now it’s pushing up in the high 20s, 30% of people.
Genter: We—
Chapple: Can I finish, please? They’re taller than us because they’ve been in better health. They’re 2cm on average, and we can see that, and they’re better-looking.
Boag: Speak for yourself.
Chapple: We need to create a whole picture, rather than focus on a particular disadvantage. Yes, there are major problems for young people in the housing market. I acknowledge that. However, they’ve got an asset which very many baby boomers didn’t get the opportunity to get, and that’s a university education.
Does it—?
Simmons: You can’t say that this isn’t a generational issue, Simon, because we’ve got some of the lowest rates of elderly poverty in the developed world; we’ve got among the highest rates of child poverty in the developed world. This is a generational issue.
Boag: So you’re saying that we should have higher rates of elderly poverty? I mean, I would have thought that’s a success of a society is how you look after the vulnerable, right?
Simmons: Hang on. If you want a successful society, where do you think you should put your money – in the elderly or the young? Which is the investment?
Boag: Well, the elderly have actually paid taxes for 60 years and entitled to have some sort of return.
Genter: But nobody’s arguing that they shouldn’t have— we shouldn’t look after the elderly, but I just have to say you’ve said that there have been assumptions made. When you look at the numbers, child poverty doubled since the 1980s and homeownership amongst people in their late 30s has declined by 20% just in the last decade. So when you look at—
Boag: I love the way the left talks about child poverty doubling. The trouble is the measures have changed, and what happens is they measure child poverty as a percentage of income. So when income goes up, the threshold goes up.
Simmons: You can argue measures, Michelle, but the fact remains that it has gone up, no matter which measures you look at.
Let’s bring Simon in here.
Henare: Have some children.
Simon, because you actually think that there are inequalities within the generations, don’t you?
Chapple: Two points. First of all, most inequality in our society happens within generations, not between generations. Geoff’s got a fair point, I think, on the issue of child poverty, but that’s not an issue of tertiary education. Most of the kids who grow up poor today in New Zealand will have no opportunity to have tertiary education. If we’re concerned about child poverty, let’s discuss that, not—
But these days you apparently need a degree to be a receptionist. It’s difficult to get jobs.
Henare: Oh, that’s rubbish. I mean, look, how many kids have you guys got collectively?
Simmons: None.
Genter: None.
Emanuel: None.
Henare: Far out.
Boag: There you go.
Genter: Well, we can’t. One, we can’t afford it, and two—
Henare: Rubbish.
Boag: Oh!
Henare: See, I have never met anybody who partners up with their partner and says, lying in their bed on their honey, ‘Can we afford to do this?’ Actually, no—
Simmons: Well, in your generation, they didn’t have to, Tau, but in our generation we have to.
Henare: Rubbish. Go and have some kids and actually figure out how actually hard and difficult it is to bring up children.
But can they afford to have kids?
Henare: Oh, rubbish.
Can they afford to have kids, this generation?
Boag: Come on. Our parents, if you used the child poverty measures that are used today, our parents would have been regarded as poor, but the trouble is they were quite happy to go and build a garage and live in it for three years before they could accumulate enough money to buy a house, and that’s what many of them did.
We’ll talk about that after the break – whether people should be living in garages while they save money. You’re back with The Nation and today’s debate – whether baby boomers are going head to head with Generation X and Y. And before the break, Michelle Boag said her generation, Julie Anne, well, they stayed in garages and shacks and saved money for their first house. So is that your problem? You’re not prepared – X and Y – not prepared to make sacrifices, need to harden up.
Genter: I think our generations are definitely prepared to make sacrifices, but the reality is there aren’t the housing opportunities there that need to be there. And that’s the problem in Auckland. And interestingly, part of this is as a result of the boomers. So in Auckland, for example, where land values are highest in the isthmus, young people want to be close to public transport, able to walk and cycle, access to jobs and opportunities and education, and we can’t actually increase the supply of homes where people want to be, because the boomers have got it all locked up in regulation and the Unitary Plan. They won’t allow us to build multi-unit dwellings.
Henare: But there is a question here, and there’s a whole lot of snobbery around this debate at the moment. So many young people wanna live in Grey Lynn and Ponsonby and close to the city. When actually—
Genter: Why shouldn’t they be given the opportunity to do that?
Henare: When my old man was looking for a house, they actually went out and lived in Otara. How many of the young generation that are looking for a house are willing to move out to South Auckland, out to Papakura, out to Manurewa, where the house—
Simmons: Tau, they’re buying in Pokeno, for crying out loud! They’re buying in Pokeno.
Henare: Good on them.
Simmons: The government wants to pave over the Bombay Hills to provide housing, and that just pushes the cost on to transport.
Asher, do you expect to own a house, Asher?
Emanuel: No, I don’t think that I will. As you heard in the interview before, when 2020 rolls around, which is about the time me, a 23-year-old, might be considering looking at buying a home, it would consume 80% of the income of an average young couple. It’s just untenable. Home ownership is no longer, I think, a reasonable aspiration for my generation. Now, for better or worse, that’s one question. But what are we going to do about it instead is another question. And I think that needs to be a part of the conversation about how these generations are treating one another. We have a generation of landlords, and we have a generation of renters. Now, Michelle says that she’s Generation Rent. She says that because her and her husband were able to make the decision that it was better for them to rent. Now, I’m not going to have the luxury of that decision.
Okay, let’s talk about lifestyle. Team Boomers, the pub used to close at 6 o’clock so that people could have an hour of drinking after they finish up at 5. Who finishes at 5 these days?
Boag: Nobody.
These guys are on their phones and iPads are expected to work much longer hours.
Boag: And we all are. We all are. We all work, you know, all sorts of hours. But the issue here is that expectations have changed so much. The expectations that— for everyone. Right? The expectation my parents had is they would live in a modest little batch before they could afford to buy their own home or build it. The expectations when I was growing up, like Simon, I was the only one in my family to go to university – and I’m talking extended family here – and I didn’t go until I was 22 and I could afford to support myself and work full-time while I went to university.
Good point. Julie Anne, are there more choices now for women?
Genter: Sort of. I mean, there’s still a major gender pay gap, right, and that’s still a problem. It’s not totally equal as it should be. But I just want to come back to this failure of government policy, because the fact is government policy has changed. We have governments who are governing in the interests of those who are voting for them; they’re not thinking about the long-term; they’re not investing for the future of New Zealand. And so what we have is policy, whether it’s at local government level or central government level that are systematically stacking the playing field and making it harder for younger generations.
Hang on a second. Why would someone go to bat – in government – go to bat for X and Y? Don’t you have yourselves to blame because you don’t get out and you don’t vote. I think 87% of people aged over 60 did vote. There was such poor turnout in your generation.
Simmons: Voting is linked to house ownership rates. I mean, there’s a direct correlation between—
Boag: What?!
Simmons: There is. You’re more likely to vote and more likely to be invested in your community if you own a home.
Henare: Lazy. Lazy.
Simmons: We can’t afford a home. I mean, I am 37.
Boag: Well, then you should get out and vote and do something about it!
Henare: That’s right.
Simmons: I just managed to buy an 80m2 “mansion” in Wellington. People can’t afford to get invested in society, so they feel less invested in society.
Boag: I want to know when it was that people decided that buying their own home was some sort of basic human right. Cos I tell you what, my parents’ generation and my generation, we worked really, really hard to do that.
Simmons: This is the get-rich scheme of the baby boomers! The whole get-rich scheme of baby boomers is housing.
Henare: Yeah, whatever. Who wiped your backside when you were young? Your mom and dad.
Simmons: The only way to get rich off housing is to saddle the next generation with debt. It’s a known economic plan.
I just want to bring in Simon here, because you would say that young people today are better off than ever in terms of their rights, their time with their parents, their equality of life, wouldn't you?
Chapple: I would say that. And I would also say that a lot of the discussion about housing neglects the fact that millennials, children of baby boomers, who's going to inherit the wealth? I look at my generation. I mean, both of my parents died recently, and in the case of my father, there were seven kids to divide an estate amongst. When my children, who are millennials, pass away, there'll be two.
Genter: It's not going to be equally distributed.
Chapple: That's the fundamental point. That's the point; is the inequality within generations, some baby boomers have good assets; some live in Greymouth.
Genter: The issue is that in previous decades, there was more equality of opportunity. For the boomers, there was more equality of opportunity, and—
Boag: How can you possibly say that?
Genter: Because this government policy has changed, Michelle.
Boag: How can you say that when tertiary education rates— You cannot say there was less opportunity today when tertiary education is much more prevalent.
Genter: The numbers show there's less social mobility than there used to be.
Henare: The funny thing is that every generation that comes along, the new generation blames the last one. We blamed our parents for whatever was happening. I blamed my parents for being caned at school by some of the teachers that actually, in their later life, said they never got into corporal punishment. It's all the same. I mean—
Simmons: If you guys are so tough; if you had to walk five miles to school every day, then why can't you guys work a bit longer? Because you're living longer — why don't you work longer?
Right. Well, that's a good time— Okay, guys. That is a good time to talk about Super. Asher, you are probably going to live the longest of all of us here. So you're going to end up paying for a lot of people in their superannuation and health. How do you feel about that?
Emanuel: Well, these guys had the good jobs; they came for the houses; and now they're coming for superannuation which is simply going to be unaffordable. It's going to increase from 4% to closing in on 8% of GDP. It's already about a quarter of Crown expenditure, and they expect to be able to retire at 65. Now, 65 was picked at the age of universal Super in 1938. Tau is old, but he's in good condition compared with a lot of people who are at a similar age in that generation. As Geoff has said, if they're as tough as they say they are; if they have this experience of hard work and graft that they is the reason why their generation is so much more enormously wealthy than our generation is going to be, then they should expect to retire a bit later. Asher makes a good point. You're in good nick — keep working.
Henare: I'm in good nick? I had a heart attack at 49; what the hell are you talking about?
Boag: But we are working.
So you don't need super at 65.
Henare: Listen, I'm actually a believer of means testing the superannuation. So I'm actually a wee bit out of my league here.
Apparently with Andrew Little.
Henare: Oh, look. I'd vote for Andrew Little if he brought it in.
Boag: We are working longer. I'm going to work until I'm 80 if I can.
But should you still get Super? On the boomers team, should you get Super at 65 regardless?
Chapple: I'm with Geoff on this. I think we need to raise the age of eligibility. The Danes have a nice system where they think it's life expectancy, and that seems sensible.
What about you, Michelle? 65?
Boag: I would be quite happy not to get my Super at the age of 65 because I intend to be working anyway. And I'm quite happy for people who maybe have done very physical jobs who can't continue to work in those jobs after 65 for them to be supported by the state. But I'm not going to sit back and say, 'Woe is me, the state owes me a living.' I'm not going to stand back and say, 'Woe is me, the state owes me an education,' or 'the state owes me a house,' because the ethics and the values that I was brought up with was you go and work for those things.
Genter: Can I just say we're not blaming you, Michelle, okay? We're just saying that if we want New Zealand to prosper in the long-term, we have to look after those who are most vulnerable and those who are young. We have to invest in those generations. You said people don't have a right to own a home, but every person in New Zealand surely has a right to warm, safe, secure housing. And so we don't have protection for renters here in New Zealand; our entire housing market is stacked; it's in the favour of investors, and so that's why we need to change the policies. If we want New Zealand to do well in the long-term, to be prosperous, to be fair, that everyone has a fair go, we need policies that look after those people.
Boag: Well, that's really nice, but the trouble is that the policies that you come up with would cost tax-payers so much.
Genter: The evidence says that they are working.
Boag: Don't give me the evidence, because you've got no idea about evidence.
All right. We're going to have to leave it there, guys. Thanks to both teams — the boomers and generation X and Y.
Transcript provided by Able. www.able.co.nz

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