ROBYN and John Marlow own two properties in Australia — one in Sydney’s affluent northern beaches, which earns them a steady rental income, and a multi-million dollar, three-bedroom house where they live about 200km south.

The retired couple, who’s rustic home borders a national park and is steps away from Hyams Beach, are worried by calls from the opposition Labour Party to remove tax perks for wealthy retirees.

Just 30 kilometers inland from the Marlows, 22-year-old Luke Sultana works as a part-time receptionist in the regional service town of Nowra. Three pawn shops along the town’s main parade offer a glimpse of its economic hardship.

Sultana says he has hardly any savings, and job opportunities in the town are scant, leaving little prospect of getting on the property ladder- the source of many Australian baby boomers’ wealth.

“The local shopping centre is probably the best chance of a job in Nowra. It is either that or you have to leave,” said Sultana, adding he will vote for Labour at next election because of their support for young and low-income workers.

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 widen.

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.

Turnbull’s Liberal-National coalition government, which has been trailing in polls for more than two years, is targeting next week’s federal budget. Recently it has committed to expensive education and health programmes, usually a domain of state governments and Labour.

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, Labour has promised to make Australia’s wealth and income inequality a centrepiece of its election campaign as it targets younger voters.

Rich dad, poor dad: Australia’s $1.4 trillion economy survived the end of a once-in-a-century mining boom thanks partly to the influx of Chinese visitors who bolstered 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.

As an illustration of higher income inequality, Australia’s Gini Coefficient has been rising and at 0.3, is greater than Canada and most European countries, according to OECD data.

What’s more, the Gini coefficient of Australia’s household net worth is double that, at 0.6, underscoring the big wealth disparity in a country that has prided itself on a “fair go” for all mentality.

Median home values are now at $660,619 in Sydney - almost eight times average gross income. Problems are exacerbated by stagnant wage growth of 2pc compared with 4pc or higher during the mining boom.

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

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

Kasy Chambers, executive director of community service organisation Anglicare Australia, blames the tax system. “We have become a country that cuts from the poorest to give to the richest,” Chambers said.

An Anglicare report showed tax benefits for pension savings, known locally as superannuation, plus capital gains to the richest 20pc cost taxpayers more than $45 billion year. The bottom 20pc of Australians by wealth receive only about $3bn in such benefits.

Labour has pledged to cut capital gains tax discounts and scrap a favourable tax scheme for multiple property owners called negative gearing.

Published in Dawn, The Business and Finance Weekly, May 7th, 2018