One of the country’s leading tax experts says the explosion in housing wealth has put Australia on the path towards a neo-feudal society where your prosperity depends in large part 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 trajectory we’re on”.

“I don’t think we are back to pre-French Revolution times, but I am worried about that,” he said during a second day of hearings by a parliamentary committee into the operation of the capital gains tax.

“We often frame the equality problem as an intergenerational one, an old versus young problem, which it’s not really.

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“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 in the same generation, those who have assets and those who don’t.”

Breunig in May 2025 authored an influential report showing how the tax and transfer system has become more generous to older Australians over recent generations.

Breunig said the goal of reform aimed at improving the equity of the tax system was not to “punish” old people.

“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.”

But he said tax and transfer settings had not moved with the times.

“It used to be that being old meant that you were 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 aren’t poor any more, but we are still transferring money to them as if they were poor,” Breunig said.

“So this idea of old being a tag for poverty, we need to move beyond and now we need to say let’s target that assistance to people who really need it.”

The Greens-led committee has focused heavily on the role the generous 50% capital gains tax discount has exacerbated the housing affordability crisis by funnelling speculative investment into residential property.

Union great Bill Kelty on Monday called on the government to pursue a much more ambitious reform agenda that would offer hope for increasingly alienated younger generations.

Breunig echoed other expert evidence that reducing tax breaks for investors would not make a huge difference to house prices or home ownership, although it would nudge the dial in the right direction.

He said the CGT discount was not “egregiously high” in an international context, and warned that grandfathering any changes – so they only apply to new investments – would actually “exacerbate” intergenerational inequity.

“That’s because now you are taking away from the younger generation something the older generation have access to.”

He said the “much bigger issue” was the “egregious undertaxation” on the family home and in superannuation.

But Bernie Fraser, a former governor of the Reserve Bank, argued in favour of abolishing the capital gains tax discount, saying he believed the effect on house prices would be more than the typical estimated 1 to 3% fall.