One of the country’s leading tax experts says the boom in housing wealth has put Australia on a path to a neo-feudal society where your prosperity depends largely on whether your parents own land or property.
The director of the Australian National University’s Tax and Transfer Policy Institute, Bob Breunig, said: “That’s the path we’re on.”
“I don’t think we are back to the time before the French Revolution, but I am concerned about that,” he said during a second day of hearings by a parliamentary committee on the operation of the capital gains tax.
“We often think of the equality problem as an intergenerational problem, an old versus young problem, which in reality is not the case.
Sign up: AU Breaking News Email
“If you are young and your parents have a lot of assets, those assets will eventually come to you. So the real inequality is between people of the same generation, those who have assets and those who don’t.”
Breunig wrote in May 2025 an influential report shows how the tax and transfer system has become more generous to older Australians in recent generations.
Breunig said the purpose of the reforms, aimed at improving the fairness of the tax system, is not to “punish” old people.
“We all want to live in a country where old people are rich; we should encourage people to work hard and save during their lives.”
But he said tax and transfer institutions have not kept up with the times.
“Being old used to mean being poor and so we have a lot of money that we transfer to older people simply because they are old. But a lot of old people are not poor anymore, but we still transfer money to them as if they were poor,” Breunig said.
“So we have to take this idea that old is a sign of poverty further and now we have to say: let’s direct that help to people who really need it.”
The Greens-led committee has focused heavily on the role the generous 50% capital gains tax rebate has played in exacerbating the housing affordability crisis by funneling speculative investment into housing.
Union leader Bill Kelty on Monday called on the government to pursue a much more ambitious reform agenda that would offer hope to increasingly alienated younger generations.
Breunig echoed other expert evidence that reducing tax breaks for investors wouldn’t make a big difference to house prices or homeownership, although it would push the dial in the right direction.
He said the CGT discount was not “extremely high” in an international context, and warned that retaining any changes – so they only apply to new investments – would actually “exacerbate” intergenerational inequality.
“That’s because you are now taking something away from the younger generation that the older generation has access to.”
He said the ‘much bigger problem’ was the ‘blatant under-taxation’ on the family home and pension.
But Bernie Fraser, a former Reserve Bank governor, argued in favor of abolishing the capital gains tax credit, saying he believed the effect on house prices would be greater than the typical estimated 1 to 3% decline.
#Tax #experts #worry #Australia #moving #neofeudal #society #housing #wealth #drives #inequality