The Fraying of the Australian Social Contract – Dr Albert Palazzo

The Australian nation faces a convergence of events that risk the security and prosperity of its people. Some of these are well known and receive considerable attention from the government and the media, such as the consequences of China’s emergence as a great power. Others are equally well known but receive minimal attention and resources from the government, such as climate change. Other potential developments are not well known but whose consequences if manifested could bring about the end of Australia as a cohesive and functioning society. Of these, there is a nascent suggestion that the nation’s social contract is fraying and if unchecked it would pose a great danger to Australia’s future as well as to the people who call it home.

This potential fraying of Australia’s cohesiveness is manifested as breaking down of trust between Australian citizens and the government.[i] The trigger for this decline in trust is the perception in how the government fails to meet equitably the different interests of Australians. Current policy is failing to meet the needs of those of the young while older Australians are enjoying a disproportionate share of state-directed benefits. I fear we are witnessing the beginning of a breaking down across the generational divide as an older generation reaps the rewards of policies from which the younger generation does not benefit. For many of the young, Australia’s social contract has ceased to be fair and no longer serves all members of the nation equally.

Polling reveals that large numbers of today’s youth are deeply dissatisfied with the condition of their lives. The 2024 Australian Youth Barometer, a survey conducted by Monash University, revealed that young Australians suffer from persistent feelings of anxiety, isolation and pessimism, and have mental health problems.[ii] More concretely, 86% of young Australians have experienced financial difficulties in the last 12 months while 50% have had to face underemployment and have worked through the worst real decline in wages over the last 15 years. As consumers, the young have had to cut back while those over 65 have been able to increase their expenditure.[iii] Placing at risk Australian’s society’s future, only half of the young people surveyed expressed a desire to have children. A significant generational difference has emerged in the life expectancy with of those born after 1970 having fewer years to live compared to older generations.[iv]

The Scanlon Foundation’s 2023 report into Australia’s social cohesion also found a worrying trend.[v] Its research shows a precipitous decline in their respondent’s faith in social inclusion and economic justice. Only 36% of those surveyed have trust in the federal government, and among members of Generation Z, expectations of economic opportunity have dropped sharply since 2013. For many boomers, stable employment was the norm during their working lives whereas, according to the Australian Bureau of Statistics, job prospects for many of today’s youth include the inequity of the gig economy and a future dominated by casual employment.[vi] While the young are under significant pressure to pay their bills, the Scanlon Foundation’s research shows that most boomers are doing just fine.

The government’s own research supports the findings of these independent reports. In July 2024 the Department of Home Affairs released Strengthening Australian Democracy which found that younger people, and those struggling financially (often a young person) were less likely to trust the government.[vii] A lack of trust in government affects one’s perceptions of social cohesion and creates a weaker sense of belonging to the group. Trust encompasses not just loyalty to the state but faith that the government will take action to secure one’s interests. A trusted institution, according to the Department of Home Affairs report, is one that possesses the values of security, integrity, legitimacy and responsiveness.

A nation’s social contract, like all contracts, imposes obligations on both parties. The people accept the laws and regulations that the government imposes, and in return expects the government to provide for their needs while treating all members of the state equally, fairly and justly. According to John Rawls, the political philosopher and author of A Theory of Justice, the binding force in a social contract is an acceptance of social justice. By this he means the ‘proper distribution of benefits and burdens of social co-operation’.[viii] Government, to uphold its part of the social contract, must not only provide what the populace requires but do so fairly. Those placed in charge must demonstrate equity in their acts.

Generation Z faces pressures that the age cohorts that came before them did not — there is a generational gap that is marked by inequality. While no one has a claim to financial security, the playing field needs to be as level as possible. Yet, according to the Grattan Institute today’s young Australians are the first to face lower living standards than their parents.[ix] This is a result of wage growth not keeping up with rising costs, not because of too many avocado toasties and lattes. Due to their demographic bulge in the electorate, boomers were able to use their numbers to game the system in their favour. For today’s youth, home ownership is a distant prospect, with the median Sydney home now costing $1.4 million.[x] Since the end of free university education in 1986, students have had to bear an increasing share of the cost of their studies, and many now graduate with HELP debts that greatly exceed the average cost of a house in Sydney in the 1970s ($18,700).[xi] More Australians today are renters or have had to take out larger and longer mortgages than in the past.[xii] The Albanese government’s changes to indexation did little to provide relief, as students have seen their debt increase by more than 11% since Labor took office.[xiii] The state’s impost on the young will likely only get worse as boomers age and demand more care and support.

Climate change, and the government’s lack of meaningful action to reduce the nation’s greenhouse gas emissions, effectively means that the older generation has robbed the young of their future. A 2023 YouGov poll found that 75% of young Australians were concerned about climate change and that two-thirds believed it was having a negative impact on their mental health.[xiv] Instead of taking action against fossil fuel producers, the government has criminalised protest and chided school children who skip school to attend climate rallies.[xv] The terms ‘eco-distress’ and ‘eco-anxiety’ sum up the state of mind of the nation’s youth,[xvi] while climate justice and a chance for a fairer future is what they seek.[xvii]

People entrust the state with the responsibility to provide for the welfare of all of its citizens as equitably as possible. This is the foundation of the social contract. Unfortunately, the government is failing to balance the legitimate interests of all. Government relative inattention to the interests and needs of the nation’s youths contributes significantly to a growing sense of unease by the generation now embracing adulthood. The government needs to redress the current unequal balance of opportunity and justice across the Australian polity. Failure to do so will see the social contract not only continue to fray but to fall apart.

Dr Albert Palazzo, Adjunct Professor, University of New South Wales – Canberra

29 October 2024

I acknowledge the Ngarigo People upon whose land I live

[i] See, https://www.abc.net.au/news/2023-02-08/trust-slump-as-division-rules/101939406 and https://www.edelman.com.au/trust-barometer-2022-australia.

[ii] See, The 2024 Australian Youth Barometer: Understanding young people in Australia today – Monash Education.

[iii] See, https://www.news.com.au/finance/economy/australian-economy/graph-reveals-the-age-group-that-spends-the-most/news-story/3460b8556ddaf99933aa2c578e6de599.

[iv] See, https://theconversation.com/our-new-study-shows-life-expectancy-is-stagnating-for-australians-under-50-240790?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20October%2010%202024%20-%203123431869&utm_content=Latest%20from%20The%20Conversation%20for%20October%2010%202024%20-%203123431869+CID_83dbde2488b0d90ee66286b493cd35de&utm_source=campaign_monitor&utm_term=Our%20new%20study%20shows%20life%20expectancy%20is%20stagnating%20for%20Australians%20under%2050.

[v] See, https://scanloninstitute.org.au/publications/mapping-social-cohesion-report/2023-mapping-social-cohesion-report.

[vi] See, Digital platform workers in Australia | Australian Bureau of Statistics.

[vii] See, https://www.homeaffairs.gov.au/about-us-subsite/files/strengthening-australian-democracy.pdf.

[viii] John Rawls, A Theory of Justice.

[ix] See, Generation gap: ensuring a fair go for younger Australians – Report.