Ian Verrender

Now, that's a philosophical question that probably won't be answered either by the Reserve Bank or the government and in this budget.

But clearly in the budget, the Treasurer has decided to look at intergenerational issues and try to rectify some of the

anomalies that are there.

Now, over the past 25 years, what we've seen, and look, budgets are about two things, just a bit of background here.

They're about, you know, is it going to be a surplus and therefore restrictive?

Is it going to be a deficit and therefore expansionary?

That's the big picture.

But within that framework, budgets are about redistributing wealth and income, right?

They always have been.

Now, over the past 25 years, there have been consistent decisions made to redirect wealth towards people who have investments and to make the people who work for a living pay for that.

So essentially, it's welfare.

And the people who have investments tend to be older people with money.

So wealthy older people have been getting welfare handouts that have been paid for by younger workers.

Now, that is a situation that has resulted in, you know, you've got a young kid who's just come out of an apprenticeship, maybe earning $80,000, $90,000 a year, paying far more tax than somebody who's not working at all, retired, and paying hardly any tax because they've got all their money in tax-effective investments.

Now, you know, that cannot continue, especially given that apprentice, but probably or just, you know, new tradesperson will never be able to afford a house anyway.

So there's a whole lot of issues that are building, you know, and becoming a political pressure point that the government is trying to address.

Look, the changes to capital gains tax, particularly back in 1999, I think it was, that really turbocharged the way negative gearing worked.

So negative gearing allows people who've got excess cash to be able to buy another property and you can rent it out at a loss and you can basically write that loss off your income elsewhere.

Yeah, that's right.

So, you know, you can write that off.