One doesn’t need a spreadsheet to see the generational divide: our current tax and welfare systems consistently prioritise the wealthy and elderly at the expense of the young and the working poor.
The discrepancy in how we apply means testing is staggering. Support for those under 55 is governed by stringent criteria and narrow windows of eligibility. Conversely, reaching a certain age unlocks a suite of financial perks—many of which are either not means-tested at all or benefit from generous loopholes. For instance, according to National Seniors Australia, certain assets like the family home are often excluded from calculations, allowing couples in multi-million dollar residences with significant savings (over $1m) and large income (over $110k) to still claim a part Age Pension.
The contrast is starkest when comparing household support. A wealthy retiree might access heavily subsidised aged care regardless of their millions in assets, yet a young family of five—earning significantly less per person and struggling without a home or savings—can find themselves disqualified from basic Family Tax Benefits or even simple community supports like children’s sport vouchers.
While the younger generation is taxed heavily to fund the system, the wealthiest cohorts enjoy extensive tax concessions on superannuation and investments. We have built a system where those with the least are asked to contribute the most, while those with the most are shielded by policy.
I was shocked when learned some numbers: an elderly couple living in a a $10m+ dollar waterfront mansion, can have $1,070,000 in a bank, can have annual income of $110k per year ($55k per person) and still claim a part Age Pension. They would also pay no tax if their income of $110k is coming from super but even if all of the income is coming from employment or investments they would pay max of $18k in tax - Thanks to Seniors and Pensioners Tax Offset (SAPTO) to reduce their tax.
On the other side, a couple with 3 small kids, making around $144k (<$30k per person), no savings, no house, paying $40k pa for rent, $15k for daycare (for two kids after subsidy), does not qualify for family benefits and would not get any tax benefits. They would pay around $30k in tax regardless of how they earned the money.
Somehow out tax system assumes that a wealthy elderly person who pays no rent or mortgage, has large income, no big expenses deserves not only to pay less or no tax but also to get welfare, while a family with 3 kids just above poverty has to pay full tax and doesn’t qualify for any welfare.
I think the only reason young do not riot is the fact they do not know these facts
One thing I’ve noticed amongst many friends and colleagues- you no couples work and save like demons to try have a shot at buying a house - which is really quite hard.
Suddenly you’re in your late 30s/early 40s and ready to have a kid - and then biology works against you and it’s extremely hard to have a kid.
So you consider IVF - which has no guarantees and is also ludicrously expensive.
So even if you manage to get in a position to have housing security that makes having children more appealing, you’re hit with more disincentives due to the staggering cost of fertility treatment.
Thanks for the link mate, I'm keen to read more into whatever good literature exists on the issue.
I think Rory Sutherland summed up the double income household issue quite well when he said it went from being a boon for an individual household to an "obligation".
Since having my son I have spent a lot of time around young parents, which has provided some interesting first hand insights.
A lot of people wish they could have more kids or stay at home in their early years, but the scope simply doesn't exist to the same degree in 2026.
Your post is an analytical masterpiece. And a masterpiece of compression. Well, done.
Typo. "Today it takes 48.7% of the median household (income) to afford the median home, despite the fact that the last quarter of a century has seen the further rise of the dual income full time working household".
But it needs a bit of passion that perhaps an 83 year old can provide. In my time the bank provided the deposit and a Building Society the loan at a time of galloping wage inflation and the teachers union looked after me. Two earners, three jobs, no holidays. Three kids. No child-care subsidy.
The system confers pricing power on the better off and provides them with advantageous tax benefits on capital gains. This is a rort that investor landlords have taken full advantage of and it their demand that drives prices upwards. Low interest rates due to modern monetary policy and the insistence on deficit spending by governments to try and hold everything together improves the situation for those who can borrow. Getting a loan requires collateral. Saving for a deposit is no longer possible. This situation accentuates the skew in income distribution and wealth. It perpetuates and aggravates the severity of the error.
New house prices are inflated regardless of construction costs. The independent building contractor has disappeared along with the local bank manager and his place is taken by corporates with a stable of brands and the ability to inflate prices in line with the advancing opportunity cost attached to the price of the existing housing stock.
Without a background in the industry, you can’t 'owner build' anymore. Developers insist on minimum floor areas so you can't build small initially and add as the family grows as was possible with previous generations. The neighbours would complain. The planning system looks after the neighbours. So, people can't get back to basics, get grandpa involved and solve the shelter problem for themselves. The Ikea generation needs stuff handed to them on a plate.
The regulatory framework looks after the 'professionals', the licences master builder, the tradesman and a raft of consultants.
We have a burgeoning book of Rolls Royce 'national standards' imposed to look after suppliers and energy conservation zealots who can't see the advantage in putting on woollen socks and jumpers rather than investing in central heating of the sort required in high latitudes.
The productivity commission has indicated that the construction industry has failed to increase productivity.
Town planning imposes a frontier for development resulting in intensification. The house occupies the totality of the space available. No place for kids to play, the street is a no go area and now occupies 50% of the available space. Kids can't find their cohort locally, depending on parental transport. Reliance on credit cards is a deep hole. Result is familial stress and accelerating divorce rates.
A family needs two cars. Preferably large gas guzzling four wheel drives.
The cost of energy is through the roof due to the carbon police.
The cohort affected is an ever tinier minority that are flat out coping and politically inactive.
Turning this around will not be easy because the rot is so widespread, the constraints so ingrained, there are vested interests involved at both the consumer and producer levels, and developers who dictate the sort of unliveable forms of development that mindless, feckless, conscience deficient, box ticking town planners are happy to endorse.
The current generation, unlike the generations before having never been in the military, wouldn't know how to handle a gun and lack leadership. Politicians on all sides are gutless wonders, with too few notable exceptions who tend to be ejected if they take a stand.
The election of Mamdani in New York should inspire others who can see that this boat needs to be rocked.
What you need is a firebrand type of leader who will call a spade a spade. And marching in the streets so people can see you are serious.
Falling, low or below replacement fertility are facts of life across the world now, except sub-Saharan Africa, where rates are stagnant and falling.
Our population is kept up by more births vs deaths (for now), modest permanent migration with high temporary migration eg. international students etc. impact short medium term population growth then depart, and Australian citizens/PRs' increased longevity driving long term population growth.
However, while we have 1+ million silent gens and 5.5 million boomer 'bomb', the top end of the latter hit 80 years of this year, soon the start of the 'big die off', then demographic and sociocultural rebalance or 'the great replacement' by 2050.
One doesn’t need a spreadsheet to see the generational divide: our current tax and welfare systems consistently prioritise the wealthy and elderly at the expense of the young and the working poor.
The discrepancy in how we apply means testing is staggering. Support for those under 55 is governed by stringent criteria and narrow windows of eligibility. Conversely, reaching a certain age unlocks a suite of financial perks—many of which are either not means-tested at all or benefit from generous loopholes. For instance, according to National Seniors Australia, certain assets like the family home are often excluded from calculations, allowing couples in multi-million dollar residences with significant savings (over $1m) and large income (over $110k) to still claim a part Age Pension.
The contrast is starkest when comparing household support. A wealthy retiree might access heavily subsidised aged care regardless of their millions in assets, yet a young family of five—earning significantly less per person and struggling without a home or savings—can find themselves disqualified from basic Family Tax Benefits or even simple community supports like children’s sport vouchers.
While the younger generation is taxed heavily to fund the system, the wealthiest cohorts enjoy extensive tax concessions on superannuation and investments. We have built a system where those with the least are asked to contribute the most, while those with the most are shielded by policy.
Well said mate, it is an incredibly lopsided system.
There is no issue with older people who need help receiving it, but as you rightfully suggest there are those who don't really need it.
I was shocked when learned some numbers: an elderly couple living in a a $10m+ dollar waterfront mansion, can have $1,070,000 in a bank, can have annual income of $110k per year ($55k per person) and still claim a part Age Pension. They would also pay no tax if their income of $110k is coming from super but even if all of the income is coming from employment or investments they would pay max of $18k in tax - Thanks to Seniors and Pensioners Tax Offset (SAPTO) to reduce their tax.
On the other side, a couple with 3 small kids, making around $144k (<$30k per person), no savings, no house, paying $40k pa for rent, $15k for daycare (for two kids after subsidy), does not qualify for family benefits and would not get any tax benefits. They would pay around $30k in tax regardless of how they earned the money.
Somehow out tax system assumes that a wealthy elderly person who pays no rent or mortgage, has large income, no big expenses deserves not only to pay less or no tax but also to get welfare, while a family with 3 kids just above poverty has to pay full tax and doesn’t qualify for any welfare.
I think the only reason young do not riot is the fact they do not know these facts
A very interesting article.
One thing I’ve noticed amongst many friends and colleagues- you no couples work and save like demons to try have a shot at buying a house - which is really quite hard.
Suddenly you’re in your late 30s/early 40s and ready to have a kid - and then biology works against you and it’s extremely hard to have a kid.
So you consider IVF - which has no guarantees and is also ludicrously expensive.
So even if you manage to get in a position to have housing security that makes having children more appealing, you’re hit with more disincentives due to the staggering cost of fertility treatment.
Great article as always, Tarric; however, the broader economic literature suggests that your conclusion misses the primary driver of falling birth rates, which is the huge increase in female workforce participation. When women enter the workforce, the opportunity cost of having children (foregone income and career progression) increases dramatically, which directly drives down fertility. Some research here: https://www.birthgapfacts.org/ and some more here https://www.nber.org/papers/w34268 and https://www.monash.edu/__data/assets/pdf_file/0010/925588/the_relationship_between_female_labour_force_participation_and_fertility_in_g7_countries_evidence_from_panel_cointegration_and_granger_causality.pdf
Thanks for the link mate, I'm keen to read more into whatever good literature exists on the issue.
I think Rory Sutherland summed up the double income household issue quite well when he said it went from being a boon for an individual household to an "obligation".
Since having my son I have spent a lot of time around young parents, which has provided some interesting first hand insights.
A lot of people wish they could have more kids or stay at home in their early years, but the scope simply doesn't exist to the same degree in 2026.
Your post is an analytical masterpiece. And a masterpiece of compression. Well, done.
Typo. "Today it takes 48.7% of the median household (income) to afford the median home, despite the fact that the last quarter of a century has seen the further rise of the dual income full time working household".
But it needs a bit of passion that perhaps an 83 year old can provide. In my time the bank provided the deposit and a Building Society the loan at a time of galloping wage inflation and the teachers union looked after me. Two earners, three jobs, no holidays. Three kids. No child-care subsidy.
The system confers pricing power on the better off and provides them with advantageous tax benefits on capital gains. This is a rort that investor landlords have taken full advantage of and it their demand that drives prices upwards. Low interest rates due to modern monetary policy and the insistence on deficit spending by governments to try and hold everything together improves the situation for those who can borrow. Getting a loan requires collateral. Saving for a deposit is no longer possible. This situation accentuates the skew in income distribution and wealth. It perpetuates and aggravates the severity of the error.
New house prices are inflated regardless of construction costs. The independent building contractor has disappeared along with the local bank manager and his place is taken by corporates with a stable of brands and the ability to inflate prices in line with the advancing opportunity cost attached to the price of the existing housing stock.
Without a background in the industry, you can’t 'owner build' anymore. Developers insist on minimum floor areas so you can't build small initially and add as the family grows as was possible with previous generations. The neighbours would complain. The planning system looks after the neighbours. So, people can't get back to basics, get grandpa involved and solve the shelter problem for themselves. The Ikea generation needs stuff handed to them on a plate.
The regulatory framework looks after the 'professionals', the licences master builder, the tradesman and a raft of consultants.
We have a burgeoning book of Rolls Royce 'national standards' imposed to look after suppliers and energy conservation zealots who can't see the advantage in putting on woollen socks and jumpers rather than investing in central heating of the sort required in high latitudes.
The productivity commission has indicated that the construction industry has failed to increase productivity.
Town planning imposes a frontier for development resulting in intensification. The house occupies the totality of the space available. No place for kids to play, the street is a no go area and now occupies 50% of the available space. Kids can't find their cohort locally, depending on parental transport. Reliance on credit cards is a deep hole. Result is familial stress and accelerating divorce rates.
A family needs two cars. Preferably large gas guzzling four wheel drives.
The cost of energy is through the roof due to the carbon police.
The cohort affected is an ever tinier minority that are flat out coping and politically inactive.
Turning this around will not be easy because the rot is so widespread, the constraints so ingrained, there are vested interests involved at both the consumer and producer levels, and developers who dictate the sort of unliveable forms of development that mindless, feckless, conscience deficient, box ticking town planners are happy to endorse.
The current generation, unlike the generations before having never been in the military, wouldn't know how to handle a gun and lack leadership. Politicians on all sides are gutless wonders, with too few notable exceptions who tend to be ejected if they take a stand.
The election of Mamdani in New York should inspire others who can see that this boat needs to be rocked.
What you need is a firebrand type of leader who will call a spade a spade. And marching in the streets so people can see you are serious.
It’s time for a sweeping re-set.
Falling, low or below replacement fertility are facts of life across the world now, except sub-Saharan Africa, where rates are stagnant and falling.
Our population is kept up by more births vs deaths (for now), modest permanent migration with high temporary migration eg. international students etc. impact short medium term population growth then depart, and Australian citizens/PRs' increased longevity driving long term population growth.
However, while we have 1+ million silent gens and 5.5 million boomer 'bomb', the top end of the latter hit 80 years of this year, soon the start of the 'big die off', then demographic and sociocultural rebalance or 'the great replacement' by 2050.
Costello introduced the "one for the country" baby bonus in 2002 and Swan scrapped it in 2013
Australia's birth rate went above 1.8 about a year after that policy was introduced and dropped below 1.8 about a year the scrapping was announced.
Maybe it's that simple?
Thank you Tarric. Did you see Michael Greens substack before Christmas? (US focused but very applicable)
https://www.yesigiveafig.com/p/part-1-my-life-is-a-lie?r=hhvbc&utm_campaign=post&utm_medium=web