The road to ownership just got harder
Before I begin; I use the term ‘workers’ in this article. It’s not intended to be disparaging. It’s a reference to a label that the Labor Government gives their core constituency. It’s the voting base Labor frequently refers to and says they support.
The 2026 Federal budget may offer an insight into Labor’s logic:
‘Tax the asset to fund their so-called ‘worker’, so that worker can buy an asset.’
The problem?
They haven’t solved a generational divide; I believe they’ve just designed a wealth-recycling machine where the Government takes a service fee at every turn.
If we look a bit closer, we find a paradox.
- The ‘Subscription’ model of citizenship
If assets are perpetually targeted to fund current consumption or ‘level the playing field,’ then private property effectively ceases to exist.
Instead, ownership becomes a lease from the state. If you ‘own’ a home but the tax regime (land taxes, removal of capital gains tax (CGT) discounts, inheritance taxes) is designed to claw back its value to fund the next generation of workers, you don’t actually own the asset.
You’re renting your status as an ‘owner’ from the government. The ‘worker’ isn’t being elevated to an ‘owner’ either; they’re being elevated first to a state-subsidised beneficiary and then to another status renter.
So, setting up a system that takes from the class of asset owners, simply means taking from a worker’s own future self.
- Institutionalising the ‘Middle-class trap’
If the ‘asset class’ is the villain, then the moment a worker succeeds in saving enough to cross that threshold, they become the new target. And that’s why this budget may not help the young as is claimed to.
Instead, a permanent ‘middle-class’ is created that’s simultaneously too wealthy to receive benefits and too poor to survive the taxes on the assets they just managed to acquire.
This is not a ‘fix’ for the generational divide.
The only entities that survive the ‘land grab’ or are protected are the ultra-high-net-worth families who have the scale to absorb or negotiate these costs, or the mobility to move their capital offshore.
- Consumption: The social control tool
There’s irony in the idea that Australians should ‘give to the workers’ so they can consume. Consumption is ephemeral; it disappears the moment the transaction is over. Assets, however, provide leverage and autonomy.
If a government prioritises ‘flows’ (giving ‘workers’ more cash to spend) over ‘stocks’ (protecting the ability to hold and grow wealth), they are essentially keeping the population on a liquidation treadmill – assuming they sell these assets.
If you give workers more money but don’t increase the supply of assets (like building more houses), the workers just bid against each other. The supposed ‘gift’ flows straight back to the asset class via higher prices.
Meanwhile, the worker enjoys a slightly better lifestyle today but remains dependent on the next ‘transfer’ or ‘tax tweak’ to survive.
And finally, the government becomes the indispensable arbiter of who gets what, gaining more power as the ‘intermediary’ between the two classes.
- The ‘Entropy’ of capital
Capital requires maintenance. Houses need repair, businesses need reinvestment, and portfolios need growth to outpace inflation. If you treat the ‘asset class’ as a giant piggy bank to be smashed and re-distributed to people who can’t afford to buy anything with the little they’ve received they will consume it.
Once again, the invented generational divide isn’t fixed; it’s just nationalised.
The real issue
The real fix Chalmers and others are chasing isn’t about equity; it’s about solvency.
In a world of massive sovereign debt and aging populations, the state cannot afford a private asset class that sits on what it thinks of as ‘dead’ wealth (like family homes or old-money portfolios). They need to force that capital into the ‘flow’ of the economy so they can tax the movement.
The ‘Generational Divide’ that is frequently described is just the moral wrapper on what the government see as a necessary economic squeeze. They aren’t trying to make workers into owners; they are trying to turn owners back into taxpayers to help fill the hole created through waste like NetZero, the NDIS and the black market in tobacco.
Policymakers argue the goal is to shift the tax burden away from labour and more toward passive asset ownership. Critics, however, contend that over time these types of policy changes reduce the incentives for long-term private ownership and capital formation – making asset ownership increasingly difficult for ordinary Australians. Own nothing and be happy.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
