By Callum Godde

Is the wealth gap between old and young Australians becoming a gulf?

Former federal Treasury secretary Ken Henry has declared young workers are being “robbed” by the tax system, while ex-Victorian treasurer Tim Pallas calls the intergenerational wealth gap a “national tragedy”.

The “dramatic increase” in wealth inequality between generations is a by-product of Australia’s increasingly dysfunctional housing system, independent economist Saul Eslake says.

“The problem is a very large number of voters do not want that problem to be solved,” the former ANZ chief economist told AAP.

Housing Minister Clare O’Neil caused a stir in late 2024 when she said the Albanese government was not trying to bring down house prices and was instead seeking sustainable growth while boosting supply.

Mr Eslake suggested the stance was a matter of political arithmetic: until sufficient numbers of baby boomers and members of generation X became altruistic or “pissed off” enough about living with their children or being the bank of mum and dad.

“At any point in time there are 11 million voters who own their own home … and less than one million aspiring first-home buyers,” he said.

“Even the dumbest of our politicians can do that math.

“While publicly shedding tears for the difficulties faced by first-home buyers, they nonetheless prompt and implement policies which make it worse not better.”

Australian Bureau of Statistics data, featured in a presentation by Mr Eslake in May, demonstrates the growing divide in the distribution of household wealth between generations.

The distribution of household wealth in the 65 and over demographic lifted 10.8 per cent from 2003/04 to 2019/20, and comparatively fell 1.7 per cent for 15- to 34-year-olds and 5.9 per cent for 35 to 44-year-olds.

Some of that was explained by 65 and overs making up a greater share of households as Australia’s population aged but not all of it, Mr Eslake said.

Real estate makes up almost two-thirds of household assets in Australia.

Home ownership for Australians aged 25 to 34 ticked below 45 per cent in 2021, a level not seen since the 1947 census, while rates for 65 and overs hovered between 75 and 85 per cent from 1961 to 2021.

A more up-to-date picture of the divide was blurred when the bureau cancelled the release of statistics from its 2023/24 income and housing survey, citing data collection issues.

“You can assume with what we know has happened to house prices, that it’s gotten worse,” Mr Eslake said.

Mr Eslake floated solutions such as replacing stamp duty with a broad land tax, lowering tax concessions on super, ending first-home buyer grants, removing tax breaks for investors who buy established homes and reforming planning and zoning rules.

His biggest call would be to reintroduce inheritance taxes, also known as death duties, although he acknowledged it would be politically fraught.

Australia has not had inheritance taxes since the late 1970s but they exist in 25 of 38 Organisation for Economic Co-operation and Development countries, including the UK and US.

Wrapping up the three-day economic roundtable in August, Treasurer Jim Chalmers said attendees took their intergenerational responsibilities “very seriously”.

Mr Eslake understood Prime Minister Anthony Albanese’s reluctance to tackle structural economic reform this term out of fear of breaching public trust.

But he hoped the federal government would spend some of its political capital arguing for a more ambitious policy platform to take to the next election, as then prime minister John Howard did with GST in 1998.

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