Tax Expert Warns Australia's Housing Wealth Could Create Neo-Feudal Society
One of Australia's leading tax experts has issued a stark warning that the country's explosion in housing wealth is putting it on a path towards a neo-feudal society. According to Bob Breunig, director of the Australian National University's Tax and Transfer Policy Institute, prosperity is increasingly determined by whether your parents own land or property, rather than individual merit or effort.
The Real Inequality: Assets Within Generations
Breunig emphasised that the true inequality problem in Australia is not between young and old people, as is commonly framed, but between those who have assets and those who do not within the same generation. "If you are young and your parents have a lot of assets, those assets will eventually come to you," he stated during parliamentary committee hearings into capital gains tax operations. "So the real inequality is between people in the same generation, those who have assets and those who don't."
While Breunig clarified that Australia is not yet back to pre-French Revolution times, he expressed serious concern about this trajectory. His comments came during a second day of hearings by a parliamentary committee examining the capital gains tax system, which has been criticised for exacerbating housing affordability issues.
Tax System Failing to Adapt to Changing Wealth Patterns
Breunig, who authored an influential report in May 2025 showing how Australia's tax and transfer system has become more generous to older Australians over recent generations, argued that current policies have not kept pace with changing economic realities. "It used to be that being old meant that you were poor," he explained. "But a lot of old people aren't poor any more, yet we are still transferring money to them as if they were poor."
The tax expert stressed that reform should not be about punishing older Australians. "We all want to live in a country where old people are rich; we should incentivise people to work hard and save during their lifetime," he said. However, he argued that assistance should be better targeted toward those who genuinely need it, rather than using age as a proxy for poverty.
Capital Gains Tax Under Scrutiny
The Greens-led parliamentary committee has focused heavily on how the generous 50% capital gains tax discount has worsened Australia's housing affordability crisis by encouraging speculative investment in residential property. Breunig acknowledged that reducing tax breaks for investors would not dramatically lower house prices or significantly increase home ownership, though it would move things in the right direction.
He noted that the capital gains tax discount is not exceptionally high by international standards and warned that grandfathering any changes to apply only to new investments could actually worsen intergenerational inequality. "That's because now you are taking away from the younger generation something the older generation have access to," he cautioned.
Broader Tax Reform Needed
Breunig identified what he called the "much bigger issue" as the "egregious undertaxation" of family homes and superannuation. His concerns were echoed by other experts, including former Reserve Bank governor Bernie Fraser, who argued for abolishing the capital gains tax discount entirely, believing it would reduce house prices by more than the typically estimated 1 to 3%.
The warnings come amid growing calls for comprehensive tax reform in Australia. Union leader Bill Kelty recently urged the government to pursue more ambitious reforms to address the alienation felt by younger generations who face increasingly difficult paths to property ownership and financial security.
