Treasurer Jim Chalmers’ fifth budget may ultimately be remembered for three political miscalculations.
Misreading Gen Z’s aspiration
Miscalculation one is believing Gen Z has given up on aspiration.
At the core of the budget appears to be an assumption that younger Australians believe the system is already broken beyond repair and therefore simply want wealth redistribution instead.
I think that’s a huge misreading of how younger Australians actually think.
Yes, Gen Z knows housing affordability has become dramatically worse and they know buying a home is far harder than it was for their parents and grandparents.
But that doesn’t mean they’ve stopped wanting to get ahead. And it definitely doesn’t mean they want a future where the remaining pathways to building wealth become harder too.
What I see every day with our clients and team is that younger Australians still strongly aspire to build wealth and create opportunities for themselves.
If they can’t afford property yet, they still want to build wealth through investing, starting businesses and slowly compounding savings over time.
We have thousands of younger clients investing regularly specifically to save for a future home deposit or other goals. They’re sacrificing spending today because they still believe disciplined long-term investing can improve their future.
That aspiration hasn’t disappeared. If anything, it’s become stronger because younger Australians know they can’t rely on property alone.
Many younger Australians may interpret this budget very differently. To them, the path to building long-term wealth may now feel harder and less rewarding unless they already own assets.
The irony is that while the budget was likely designed to appeal to younger voters frustrated with inequality, it may instead reinforce the feeling that Australia no longer rewards ambition, discipline and long-term thinking.
2. Breaching Gen X and Millennials’ trust
Miscalculation two is believing Gen X and Millennials won’t feel betrayed.
The second political mistake may end up being even larger.
Many Gen X and Millennial voters believed they were voting for a relatively moderate government that would avoid major changes to longstanding investment settings. For many of those voters, this budget will feel like a fundamental breach of that trust.
As much as these generations support issues like climate action, inclusion and social progress, a government that makes people feel they can no longer realistically get ahead financially risks creating a very serious backlash. Eventually, household financial outcomes matter politically.
People still want the opportunity to build a future for themselves and their families. They still want to believe that saving, investing and taking calculated risks will improve their lives over time.
The government appears to believe these policies will improve housing affordability by discouraging speculation and increasing supply. But once the higher tax settings apply, many investors may become far more reluctant to sell at all.
Instead, many investors may simply hold onto assets for longer, creating a classic lock-in effect where investors defer selling assets because the tax cost of crystallising gains becomes materially higher.
Ironically, that could reduce housing market turnover without materially improving affordability.
If fewer investors sell property, the affordable housing supply younger Australians were promised may never materialise. At the same time, landlords facing reduced after-tax returns may attempt to offset those losses through higher rents.
A version of this has already played out in New Zealand. In 2021, the government there removed interest deductibility for residential investment properties in an attempt to “level the playing field” for first-home buyers. Instead, rents kept rising while rental supply tightened. Ultimately, the policy became so politically unpopular that the next government moved to reverse it.
By the next federal election, many Millennials may still find home ownership out of reach while rental affordability deteriorates further. At the same time, alternative pathways to building wealth through shares, ETFs and businesses may feel increasingly closed off.
That’s a politically dangerous combination.
3. Favouring Baby Boomers
Miscalculation three is unintentionally favouring Baby Boomers.
Ironically, the generation that may quietly benefit most from this budget is actually Baby Boomers.
Their primary residences, which in many cases have experienced extraordinary tax-free growth over several decades, remain untouched.
Many older Australians have also already accumulated significant wealth under the previous capital gains rules. Their existing shares, investment properties and business assets will effectively end up grandfathered under far more favourable settings than younger generations will receive going forward. Superannuation also remains largely protected.
So while younger Australians face the prospect of higher taxes on long-term investing outside super, many older Australians remain insulated by assets accumulated under the previous system.
That creates a very powerful perception problem around fairness.
Many younger Australians don’t resent wealth itself. What they resent is feeling like the rules changed after previous generations had already benefited from them.
To many younger Australians, the gate to financial security feels like it’s closing in front of them.
They look at their parents’ generation buying homes cheaply, benefiting from decades of asset growth and accumulating tax-advantaged wealth. Then they’re told their own pathway to financial security will involve higher taxes on investing and fewer opportunities to compound wealth outside super.
The intergenerational divide this budget may ultimately create is therefore not necessarily the one Labor intended.
Instead of younger Australians turning against wealthy older generations, many may simply conclude that the system no longer rewards aspiration at all.
And once a generation concludes the system no longer rewards discipline, aspiration and long-term thinking, the political consequences can arrive much faster than governments expect.
This article was originally published as an opinion piece for The Australian – Budget risks alienating voters with three key wealth miscalculations (17 May 2026).
