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Satisfaction with life among Australians is lower now than during the depths of the pandemic as financial pressures and housing costs squeeze people in their 20s, 30s and 40s, with Anthony Albanese admitting the cost of living is contributing to the splintering of the nation’s politics.
Research released on Tuesday by consultancy KPMG shows life satisfaction – a measure that tracks whether a person is content with their circumstances – is now substantially lower than it was in the mid-2010s across all age groups, while it has nose-dived among people facing the biggest financial hit.
Large proportions of people would struggle to find $2000 in an emergency, a key measure of financial stress, while household wealth levels have stalled since the start of the decade.
KPMG urban economist Terry Rawnsley said unlike during the pandemic, when many Australians had their income levels boosted by government schemes such as JobKeeper and ultra-low interest rates, people today were under sustained financial pressure.
“These factors have left many average Australians in a precarious financial position for the better part of five years and is undoubtedly affecting how they feel about their lives,” he said.
Measures of life satisfaction traditionally find that people in their 30s and 40s express lower satisfaction ratings than other age groups. People in their retirement years usually record the highest level of satisfaction.
KPMG found satisfaction was lowest among 25- to 34-year-olds at 6.8 out of 10. This group also recorded the biggest drop of any age group, having been at 7.5 before the pandemic in 2019.
Rawnsley said the fall among people in their 20s and 30s was tied to the property market.
“The decline in life satisfaction among 25- to 34-year-olds reflects the reality of Australia’s housing market. This is a group facing high rents or large mortgages at the same time as real incomes have gone backwards,” he said.
The research also showed satisfaction among younger Gen Xers has also slipped sharply since COVID.
“The ‘sandwich’ generation are starting to feel significant financial pressures caring for both ageing parents and trying to support their children whose ability to generate their own wealth has flatlined,” Rawnsley said.
During the pandemic, satisfaction dripped sharply among young Australians, those under the age of 24. But this has partially recovered, while there has also been a lift among people about to retire.
In both cases, however, satisfaction is still lower than it was in 2014.
The strain on household finances appears to be the key issue affecting satisfaction levels. More than 21 per cent of people reported they would struggle to raise $2000 in a week for an emergency, while a quarter said they had experienced a cashflow problem in the past year.
The financial pressure is most evident in real wage growth, which turned negative in mid-2021. Inflation-adjusted wages fell for two years before they picked up between late 2023 and the end of last year. But they have gone backwards through the past six months.
Data from the Australian Bureau of Statistics shows that since mid-2021, wages have grown by 17.5 per cent while inflation has climbed by 23.3 per cent.
Over the same period, measures of consumer confidence have also crashed. Consumer sentiment, which had been consistently strong through the 2010s, slipped sharply at the start of the pandemic and has remained below its long-term average ever since.
Pressed on the strong support for One Nation and far-left political groups, the prime minister on Monday said financial pressures were clearly a driving factor.
“Of course it is. To paraphrase ... it’s the economy stupid, it’s always the economy that sets the parameters for debate,” he told reporters.
Albanese said last month’s budget, and its proposed changes to property taxes such as negative gearing, recognised the way younger Australians were being priced out of owning their own home.
“We have made decisions to improve the lives of Australians, and that is why, we want to change the opportunity which is there for first home buyers,” he said.
“Australians are frustrated, and one of the interesting things about the debate about our budget over recent days or weeks, I haven’t seen anyone go out there and argue in an opinion piece, in an editorial that Australia’s current housing systems are working for Australians. I haven’t seen anyone argue that.”
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