The first day of the Greens’ parliamentary inquiry into the capital gains tax was dominated by a bloke in his late 70s imploring parliamentarians to show “unequivocally that they’re on the side of young people”.

Not just any bloke, of course, but Bill Kelty: union legend, co-architect of the economic reforms of the 1980s and 90s, former Reserve Bank board member, and self-proclaimed rich guy.

Kelty told the committee that he supported scaling back the 50% capital gains tax discount for investors – something Jim Chalmers is apparently considering for the upcoming budget.

If he’d stopped there, it would have been happy days for the treasurer.

But Kelty is from a different generation of Labor bigwigs, one that derides this government’s timid strategy to break economic reform down into “bite-size chunks”.

Australians are hungry for a full buffet of tax reform, he reckons.

_{Sign up: AU Breaking News email}

He insisted any changes to the CGT discount had to be part of a broader reform effort that changes the tax system so it takes the burden off younger shoulders and makes a meaningful difference to their lived experience and aspiration.

“The nub of the problem is the tax system for young people – you have to fix that. Ad hoc changes that end up nowhere are not meaningful,” he said.

Kelty said it was patently unfair to boost government spending and “then ask working people to pay for it all; it only means that their living standards fall”.

“It’s a terrible tax system for young people who are not on the train of dependency from their mothers and fathers.”

Kelty reckoned a younger worker on a reasonably good wage of $80,000 was left with just $16,000 a year to live on after paying taxes, insurance, GST, Hecs repayments, high rents and basic cost of living.

“If I can’t pay the bills next week, do you feel better that the government has reduced the CGT [discount]? Well, it doesn’t make a difference to me.”

He said simply scaling back tax breaks for investors to pay for some extra spending was not good enough.

“What’s it for? To increase expenditure and spend it on Aukus? I’m not keen on that idea.”

He backed reforms like indexing income tax thresholds to inflation and cutting the top marginal tax rate, which he said had created an “industry of [tax] avoidance”.

Comments such as Kelty’s highlight that Chalmers is on the right track with policies that remove the excesses of an inequitable tax and housing system that favours owners of capital over wage earners.

But they cast a harsh light on the government’s lack of ambition when it comes to addressing the growing sense of grievance and alienation among Australians, more and more of whom believe the system is rigged against them.

“I need the parliament of this country unequivocally to stand up and say they are on the side of young people … because young people do not believe that you’re on their side,” Kelty said.

“And where do they go? They go to extremity, they go to parties of hate, they go to the parties of division. And it’s not just a bad thing for the Liberal party … it’s a very bad thing for this country.”

Cutting tax breaks for investors will be something and should be applauded. The trouble for Labor is that even if they manage it, it won’t be anywhere near enough.

Patrick Commins is Guardian Australia’s economics editor