Why the $5.4 trillion wealth transfer is a generational tragedy

There is a lot of water to go under the bridge before 2050 and the lineal growth rate assumptions built into that timeframe don't always hold, especially when hindsight & recency bias are in play. The one aspect I would be concerned about is the potential social cost to those who stand in the inheritance queue. Inheriting wealth may give a degree of financial security but it can also deprive beneficiaries of a purpose in life and serve to increase the mental instability that plagues the western world today (side note: don't seem to witness such instability in the emerging nations). If the would-be beneficiaries have not been involved in a succession process, I don't see a lot of difference between the transfer of wealth and winning the lottery.

Not all wealth is created equally in Australia

Claw back measures for wealth created by rezoning of land, building of government infrastructure is long overdue.
Tax payers fund the amenities and infrastructure, while the land owner gains from the spoils from the price appreciation.

Talking to a teenage waitress - she said to me "I am saving up for a deposit on a car" while brandishing a bandaged arm. She explained she got a tattoo completed that morning. When asked how much the tattoo was, it was a couple of thousand !

Waiting for an inheritance?

Could have left the $10 million tip:
The 'Bunk of Dad&Mum'
https://www.firstlinks.com.au/financial-pathways-buy-home-require-planning

Temu has temporary tattoos "$5.63 for 34 Sheets".

James
Firstly, there's a lot of noise in the article that doesn't necessarily support your premise. I don't agree that the wealth transfer is the travesty you suggest but agree with most of your suggestions to correct the current inequality in housing. As a baby boomer who benefitted from free university education, the gift that kept on giving, these added superannuation benefits I am receiving now at the expense of young people is inexcusable. Unfortunately the idiots in the coalition would never change tax policy re negative gearing or CGT discounts on housing. I am not in favour of a death tax and its benefit is doubtful.

There already is a death tax on superannuation and pension funds of 15% minimum (on the entire balance; not just earnings) when left to non-dependents.

actually the death tax of 15% + Medicare to non-dependents only applies to the Taxed portion of super account at death (taxed portion is concessional contribs + accumulated earnings). The Un-taxed portion (from non-concessional contribs) is not subject to death tax. There are a lot of ways to convert Taxed to Un-taxed - eg withdraw from pension a/c and re-contribute next day (up to 75yo). Plus there are other types of contribs that are not subject to the 75yo rule - small bus, downsizer, etc. You can withdraw + recontribute just the min withdrawal each year, or you can do it with lump sums. Plus you can withdraw entire balance as a lump sum on your deathbed, or via EPOA, etc. Good super strategies usually include systematically converting Taxed to Un-taxed to minimise or eliminate the super death tax.
cheers, ao

Think of where we would be without Australia's comprehensive Superannuation system.Sure it has been a great accumulator of private wealth but this only shows how inefficient public wealth management has been.
Simply, over decades and it the foreseeable future it can stabilize this country’s prosperity, in the midst of outside calamity.
This must be paramount to ideas of social engineering.
Isn’t it intuitive to encourage the preservation of this wealth transfer to future generations without onerous tax fiddle.
Is it a fine idea to now raid the cookie jar and waste the proceeds …… Really !

Remember if you can't PAY CASH YOU CAN'T AFFORD IT

and if you wait a week the buy impulse likely passed and YOU NO LONGER WANT IT.

"Every system is perfectly designed to produce the results it gets". It this a tragedy? Not sure. My personal belief is that this is entirely a monetary phenomenon, caused by having intrinsically worthless money whose short term value is designed to inflate away over time, eventually to nothing. The populace, quite sensibly, have the imperative to not only protect themselves from the consequences, but by using gearing strategies, to actually profit from it, where they can. If you are on the breadline, you have no capacity to do this, but if you can save, then you can lift yourself out of the trap somewhat by purchasing appreciating assets. The more, the merrier.

"a monetary phenomenon": resulting in small interest rates with disinflation originating in more efficient primary resource extraction, transport, and cheaper Chinese manufacturing.

"if you can save": Where after tax, after inflation return is positive and savings at retirement likely to exceed about 30 times retirement income then "purchasing appreciating assets" is optional, a home in addition to savings being sufficient.

Dudley, thank you for your reply. I do not claim to follow entirely your two comments. I can see that in certain areas disinflation due to productivity succeeds to offset inflation elsewhere, no more so that in technology. I can also note that Australian net inflation, compared to many other basket case countries can be said to be relatively benign. I believe that the readers of this newsletter are generally wealthy, financially literate, and have been able negotiate their way through the complexities of life from education to retirement successfully. Not so the bulk of Australians who would never read this newsletter and are now finding the cost of living pressures acute. Many people in this situation will never have substantial retirement savings at all, nor a home they can call their own. I was fortunate in my youth to be able to purchase a home at at time when inflation was quite high, and I was amazed at how quickly I could pay off the debt. This lesson was not lost on my contemporaries and it became quite popular with many (not me) to accumulate a chain of investment properties, to be always in debt and geared. It was the great Australian way to get rich and retire early. This was one of the big reasons for the introduction of CGT. No one then was concerned by questions of sufficiency. You will also no doubt, appreciate that the ultra rich in Australia do not put their money in bank deposits to earn interest.

"wealthy, financially literate, and have been able negotiate their way" ... "Not so the bulk of Australians who would never read this newsletter and are now finding the cost of living pressures acute":

Increasing consumer price inflation post 2020 was followed, with a lag, by increasing Interest rates resulting in smaller after tax, after inflation interest rates resulting in capital goods like homes increasing in price.

Now that inflation is decreasing the lagging interest rates result in larger after tax, after inflation interest rates and capital goods decreasing in price.

"fortunate in my youth to be able to purchase a home at at time when inflation was quite high":

and mortgage interest rates controlled until April 1986 resulting in negative mortgage real rates; 'free money'.

"No one then was concerned by questions of sufficiency.":

and could not predict, due to their uncertainty of time to death and to the uncertain times, what was sufficient.
Therefore keep acquiring when possible.

"the ultra rich in Australia do not put their money in bank deposits to earn interest":

Berkshire Hathaway currently keeps much cash in government guaranteed 'deposits'.

For the ultra wealthy, wealth is hundreds to thousands of times personal expenditure (not same as income). Far more than sufficient.
For median wealthy, personal expenditure is typically close to personal income.

I question a lot of the figures in this story. Here is the first one: "in 2027, the first of the baby boomers will reach their statistical age of death (81 years for men and 85 years for women)." This statement is wrong. As it refers to people retiring, we may assume they will be around 65 years of age. Life expectancy of 65 year old males is 85.3 yrs and for females 87.9. You can't simply using the life expectancy at birth, as many will have died before retirement and therefore cannot be included in the projections. If using cohorts for projections you must use the average life expectancy of that cohort (and clearly define the cohort!) from the time the relevant events are calculated.
Also, inflation doesn't seem to be included (or not mentioned) for the $$ figures comparison. If French inheritances have doubled since 1960, then they have spectacularly declined in real $$. There is a lot more to be suspicious about....

The oldest boomers were born in 1946 and will indeed be turning 81 in 2027

Not if you are using these statistics for forecasting. Those who died 15 years ago are irrelevant for future inheritances. Only those from 1946 who are still alive at the time of the calculation are relevant for future inheritances, and their statistical age of death will be around 87 (male+female). In fact it will be somewhat later, as males die younger and in many cases inheritances go to the remaining spouse, which will probably not lead to any 'financial change'.
Another comment: to measure the impact of the transfer of wealth it is incorrect to use the total amount available and compare that to say 20 years ago. Same trick as with GDP. Only the per capita amount is relevant, especially if the concept of 'equity' is introduced.

Edward,

1) I think you are incorrect on the baby boomer bit - the oldest baby boomers will turn 81 in 2027.

2) You are wrong on inheritances - I wrote that French inheritances have doubled as a % of national output.

If you think there is anything out to be 'suspicious' about, name it rather than just throwing it out there.

James

James
re 1, see my reply above. Re 2 (and 3) : I apologise, sorry for that. I am not bagging you, but rather the sources that came up with these figures. It is rather complicated. e,g. taking the French example the figures still look dubious. Why comparing with national output in 1960? In that year GDP (almost the same as National Output for these purposes) would have been relatively high, being both the tail end of the post war reconstruction and the high end of the Algerian war. Inheritances would have been historically low, as that generation had much of its wealth depleted by WW2, would not have been able to recoup, as they were around 60/65 in 1945 and the great increase in income and wealth in Europe started around the early to mid '60's and only gathered pace in the 70's.
The 50's were very frugal! That was even more the case in Germany, where reconstruction was a massive boost to GDP, much of that generation had lost everything in WW2 and their great wealth creation also only gathered pace in the 60"s. Not surprisingly, in Germany the inheritances have trebled as % of GDP since 1960. Perfectly normal on these facts. Massive calamity based infrastructure does not increase individual wealth much.
To add more complexity: in Europe the calculation of GDP has changed a lot over time, especially with the standardisation of statistical research and reporting in the EC since say the late 90's.
Having said that: I appreciate the fact that you publish research and address this discussion in Firstlinks.

3. Low Death taxes: Australia doesn't have inheritance (and estate) taxes.
The Solution "and reintroduce a death tax"
The majority of Baby Boomers have the bulk of their savings/money in superannuation.
I'm sure there is an existing 15% Super Death Tax on the taxable component within your account, that applies to non-dependant beneficiaries, meaning children and grandchildren.
This "death tax" has been filling Govt coffers for some time now and will continue to do so into the future.

The tax on super death benefits is 15% plus the Medicare levy, but only apples to the taxable component which is that portion of your fund derived from concessional (SG plus salary sacrifice) contributions.
If you have $10 million in your super, most of that came from non-concessional contributions (after-tax money such as personal savings or the sale of investments) because concessional contributions alone won’t get you there. That portion is not taxable as a death benefit. Your fund can tell you your proportions.
If you have $10 million in your super, most of that is held in an accumulation account because you can only start a pension account with $2 million from July 2025.
An accumulation account has no requirement to take any withdrawals, ever. So it can grow until death which is a cash-out event, with very little death tax and only 15% tax on investments while accumulating.
That’s why super is the estate planning vehicle of choice.
The issue is that there is now strict caps on non-concessional contributions. Before 2007 there were no limits and that’s why we still have some very large individual super balances - a few with more than $100 million.

John, not 100% correct. The taxable component includes earnings in accumulation accounts. If you have $10m circa $8m must be in accumulation as you say and at a modest 5% this is $400k of additional taxable component per annum.

Secondly Medicare is only applicable if you pay direct from the fund to a super dependent who is not a tax dependent. Eg adult children. If you pay the same children via your estate then no Medicare is payable.

I don’t know why ppl are so concerned about the mega balances. There are so few of these ppl and they’ll all mostly be dead in 10-15 years and the money will have to come out, with death benefits tax, if they don’t move it all out soon anyway.

Thank you for contributing the interesting and informative articles. I enjoy reading them.

I don't agree with the directions proposed however.

The shortage of housing for residents is linked to the special function of a residence. This requires market interventions:
* Eliminate investment by SMSFs. Would reduce demand,/prices.
* restore building productivity (PC recently reported hours to build house have doubled over several decades). Would reduce prices.
* National standardised town planning process and systems, focus on speed of decision making.
* if necessary restrict number of residences that may be owned by any entity ... would reduce demand/prices.

Let's not go totally crazy here please? Economics 101 tells us about the supply / demand curve and how that works. As soon as you influence that by restricting or eliminating options you bastardise the market forces. The obvious issue here is that SMSF ownership issue would reduce the availability of housing stock for rental purposes - you have deferred the problem to another sector of the economy. The same would apply if you restrict the number of residences capable of being owned. That sort of madness is a feature of "command & control" economies - read marxist or communist countries. Not the most favoured approach in Australia!

Death taxes still exist but under the name of CGT - when my parents died and left their house which was sold later on, CGT was paid on the gain ( after the two year rule). My UK domiciled sibling paid a much larger tax bill on it because they were not entitled to the 50% discount. Shares left to grandchildren came with an ongoing CGT liability that will be eventually paid at some time in the future.
Good article James.

Separate argument, but I can't resist, given the title of this article..... the real tragedy in wealth transfer occurred during 2020. While small businesses were shut down, our economy smashed, queues for Centrelink stretched around the block, and monetary policy paved the way for inflation and the "cost of living crisis" we have today, the world's richest increased their wealth by around 20 - 25%. Oxfam reports that we minted a new billionaire every 30 hours during that time. There's your tragedy right there, and helps to explain the swing away from the major parties who coordinated and orchestrated this wealth transfer, regardless of which side of politics they were supposed to be on.

Getting back to the article though - why do we have a housing shortage when the birth rate has plummeted over the last 60 years? We should have a housing surplus! I would suggest this has less to do with any tax concessions on housing, and more to do with immigration. (Decreasing household size likely to be a small contributor. As the author points out, household size may well be shrinking as couples can't afford to have kids!) This housing crisis (shortage plus unaffordability) is arguably being felt more now than at any other time, just after we've experienced record immigration over the last couple of years.

Removing tax concessions on property ("subsidies pumping up demand") is almost a moot point if we are importing people faster than our ability to house them.

I find it interesting that no major party is willing to commit to a population target for 2030, 2040 or 2050. Without knowing what the demand for housing and services will be how can governments plan for the future?

Over the past 20 years, Australia's population has grown by 35 per cent.
That is significantly higher than the OECD average of 13 per cent, and faster than any young, developed nations like Canada (27 per cent) and New Zealand (30 per cent).

In the rush to accommodate the growing population State governments are willing to convert leafy suburbs with detached family houses into blocks of apartments with no private open space.

Higher density living or urban sprawl, pick your poison.

How long before Drouin and Ballarat become suburbs of Melbourne?

Build new cities? Draws economic activity from existing cities.

Empty offices in the CBD's are an issue, so much so there is emphasis on stopping the WFH lot working from home and bringing them back to the office to support the businesses in town.


What is right for some is wrong for others.

Fair argument that immigration numbers have been too high


Strong argument against stopping immigration. We need it. Birth rates are too low.

Immigration is used to boost GDP but it has also reduced GDP per capita.

I wonder about the reality of projected wealth transfer figures.
My lived experience is, that significant amounts of wealth get spent on late stage aged care facilities (and rightly so) and a small amount is left to be distributed to families.

With so many variables, it's hard to quantify imho.

Boomers don't have much Superannuation but many have property in inner ring suburbs of Capital Cities having purchased so long ago.

Baby Boomers, a good percentage have housing and Superannuation. Both have been bank of mum and dad for children/grand children. Not all but a good portion.

Latest figures I've read are in the order of 60% of 1st home buyers have received financial assistance from bank of mum and dad. This is inheritance brought forward.

Number of children receiving inheritance impacts figures and potential spending habits.

Low to medium amount spread between a number of children, may not be a lot of money.

Aged care needs, spending Super to pay off a mortgage, help kids out, spend on fun and activities in early retirement years while still relatively healthy to do things

I question whether housing increases in value are the dominant reason for intergenerational wealth differences. I would posit that a big majority of Baby Boomers when they were in their 20s and 30s had a saving / investing mentality rather than a "spend it when I want" mentality (that Gen X and later generations seem to have). That is, you make your own luck.

The BBs didn't have credit cards thrown at them, ubiquitous international holidays, sleeves of tattoos being de rigeur, 24/7 entertainment options, 2 or 3 cars per household, obligatory daycare costs for mothers that think that outsourcing their childraising is a better option that DIY, etc etc.

Happy for a countervailing view that the BBs were in fact not better savers than the current generation, but I hope there is evidence to support it.

PS. I am Gen X by the way.

"I would posit that a big majority of Baby Boomers when they were in their 20s and 30s had a saving / investing mentality rather than a "spend it when I want" mentality (that Gen X and later generations seem to have). That is, you make your own luck."
Happy to endorse your "independent" view about the saving culture that was second nature to many of us baby boomers particularly if brought up in less than extravagant circumstances (one of 6 children of migrants). Growing up I remember two overseas holidays in 27 years, a modest 3-bedroom home for a family of 8, hardly ever went out for lunch or dinner, taught to always pay cash ("if you can't pay cash you can't afford it"), bought all of our cars second hand, etc, etc.

While I generally agree with the sentiment wrt saving, I think there needs to be some honesty about how gov policy wrt tax and immigration pretty much dictates whether the median person can afford housing.

I bought a house in 2021 (and am now mortgage-free) with about 10 years’ worth of savings and from then to 2025 it has increased in ‘value’ to about 18 years’ of savings.
Damn lucky I got in when I did, would be nice if the gov would keep speculative money out of the essentials of life. It’s meant to be housing, not bitcoin.
Imagine if I could pay my home loan interest using pre-tax income, like investors can. Total rort.

Many discretionary goods (like travelling) have massively decreased in price (measured by median workers disposable income), housing has wildly increased. The housing problem could be fixed by the stroke of a ministers pen, but of course it’s not a bug, it’s a feature.

"remove all subsidies pumping up demand"

Would this include removal of CGT emption on PPR and inclusion of PPR in social security assets test.

These seem to be the two major reasons owning your own home is important for financial security.

The alarm over the increase in intergeneration wealth is probably overdone. The increase in transfers from $150B to ~$500B over 20 years is only 6.2% pa compound. Was that real or nominal increase? If nominal, that's chickenshit. If I don't get 4%+ dividends and at least match inflation on investments capital growth, I would be very disappointed. Even if the numbers are real, that's only 2.2% real growth in value.
Get real, and remember the value of compounding.

Also, those figures do not include the effect of population growth, so the per capita transfer will be much smaller. Ch

The issue with regards to housing is more than a just a supply issue although it is significant, the current policies of allowing "wealthy" individuals to out bid potential home owners by allowing negative gearing of multiple properties is counter productive but both political parties are too scared of the backlash to change it. It would make much more sense to remove negative gearing that only benefits the "wealthy" and instead allow !st home buyers to claim tax relief on their mortgage interest as happens in other countries.

The “wealthy” using negative gearing are predominantly teachers, police and the like owning one house besides their PPR. That pool of housing provides rental accommodation for those who cannot (or choose) to rent.
Choosing to rent makes sense for some. Purchasing a home does limit mobility for employment as the transaction costs to sell up and buy a replacement elsewhere are quite significant - especially stamp duty and agent’s fees.
Buying to let makes sense only if there is capital gain as rents these days rarely get to 5% gross - before insurance, rates and other charges. Legislation risk in the area is rising quickly in the current housing shortage.

Yours is a facile argument run by the rt wing press. While some of those professions you list have some exposure to neg gearing of property the vast majority are high income earners inc pollies looking to lower their tax burden at a cost to the lower income tax payers. Many high income tax payers have multiple neg geared houses, a guy on QA last week had 15 and many pollies have several also. Having the new generation unable to get into the housing market can only end badly

One unsaid issue tendsds to be a mix of caution ad also lack or relaxed ambition of inheritors. Beyond any initial splurge comes a sense of caution to preserve the wonderful gift given to them. Moreso as many inheritors are not well versed in financial literacy. And having a ton of assets you don't want to risk them nor feel the need to try too hard creating even more.

Once again trying to solve a social problem with a financial solution - more taxes. Those who prefer a communist government should try living with one and see what it is like with no aspiration.

Dobi,

You didn't read the article properly:

"But raising taxes would just be a band-aid and an admission of failure; a failure to deal with the real issue causing most of the problems, namely housing."

James

But James, you made the statement about death taxes being brought back under the heading "The Solution" I don`t think we have misread your article, maybe it should not have been under that Title.

Ron,

Under the solution section, it says that the fix is housing!

Not sure I can be any more clear.

James

James,
You didn't read the article properly: "The solution to the generational wealth gap and transfers would seem to be easy: increase taxes on superannuation or other forms of wealth and reintroduce a ‘death tax’ ."
The fact that the article also mentions the failure to deal with the "housing issue" doesn't change the fact that the only solution proposed is to increase taxes.
The "housing issue" mentionned here probably refers to the lack of housing, but keep in mind that the retirement of baby boomers will also cause the sale of many suburban homes. Inner city appartments will remain in demand with younger generations and migrants but the suburban homes will likely drop in value, which is another housing issue in itself.
Laurent

More taxes on the wealthy is the only solution that will work.
We rely too much on individual income taxes and not enough on wealth taxes.
Higher taxes is the only way to pay our ever increasing age pension, health, age care, infrastructure and defence costs.
As a country we have no other choice but to return to the higher tax environment of the Menzies era.
Our ageing baby boomer population dictates the lower 1980’s and 1990’s tax policies are no longer fit for purpose. Time to tax the wealthy and inheritance taxes are a good start,
Better to tax older, unproductive baby boomers, rather than our productive younger generations.

well another solution would be less government expenditure.. If you look at the cost of government programs in many ways introduced since 1970 you realise if there are going to be hard decisions on all people not just the easy solution of taxes those who have worked hard and saved....I know you mentioned increased taxes are not the solution but I am confused what housing policy has to with intergenerational wealth transfer ...other than many of the people who inherit have much larger mortgages to pay off because of higher house , child care , education and government taxes ... a second point is policies such as death tax drive alternative strategies ( such as people spending their savings at a much greater rate ) which can have detrimental effects which are totally ignored in these form of discussions.

Peter -
More taxes is the only solution? How about the govt spends the tax take a bit more wisely!
Our health budget supports a pharmaceutical industry that relies on people never getting better. Our defence budget gets blown on second hand nuclear subs, with the US being direct beneficiaries. Landfill full of expired rapid antigen tests and 15 covid vaccines ordered per person. Inefficient govt spending (euphemism of the century) is everywhere you look. Increasing taxes and expecting different results is the definition of insanity!

Has it occurred to you that taxing the older baby boomers is simply demolishing what hopes many of their kids have of ever owning their own house? I can't tell you how many people I know who are basically waiting for inheritance as a house deposit is now well and truly out of reach. I don't know why those who have accumulated wealth (and their families) should be punished over those who frittered it all away.

Oh dear Peter. Falling into the same group think trap.How much more tax would you like me to pay .$45,000 is taken from the start,no pension. Further for the govt ,supposedly a few thousand by no CSHC card, ( or whatever it is called ) income is too high. Then there is the tax paid through dividend imputation ,deny that one,just keep saying it isn't taxed at all . Dividend imputation means you don't pay any tax at all ,you get huge rebates from the ATO.

During the 1980s and 90s I wasn't dictating tax policy.I was paying 60% tax on income over $30K ?,I don't recall the tax bands now.That depended on which project I was on and whether I was working 60 or 84 hours per week. So many more basic things that people will deny.

An entire lifetime of people crying I don't want to pay any tax,all the govt has to do is make somebody else pay more tax,so I can pay less or no tax. Need I go on?.

I don’t necessarily agree that substantial wealth transfer is a bad thing for a country. Your assumptions are that the inheriting generations will all invest in speculative high risk assets and Houses. Inheriting generations will also be entrepreneurs / inventors etc, many of which will risk their own capital and expertise in contributing significantly to an economy, employment and hence a country. Inter-generational wealth is not the problem here - It comes down to policy in creating economic growth

So the writer would like death duties, as if we aren't taxed enough already.
Lack of upply and too much immigration are the key drivers of price rises along with massive snouts of State Goverments which typically account around 50% of build costs because of the multitude of charges at development stage. Fix these. Death duties are not the solution

David,

I think you misunderstood the article. I said that increasing taxes isn't the solution; it's fixing housing.

James

Yes James but "housing" is NOT a Supply problem per se, it is a Supply/Demand "balance" problem which you and every politician conveniently ignore.

Rob,

I didn't say it's just a supply problem: "To solve housing doesn’t require a genius. Significantly increase supply and remove all subsidies pumping up demand."

Of course, it's both a supply and demand issue and getting the market back in balance.

James

Having PPR above ~$2M included in Age Pension asset test would release a lot of land to be redeveloped into higher density. Taxing pension side like accumulation would also be very progressive given first $30k still won't get taxed.

So you think that people becoming wealthy and passing some of it down to their kids is a tragedy that should be solved by the State taking it away with taxes ?
Boy, Karl Marx would be proud of that

CC,

You need to read the article right through. I said no such thing.

James

James,
You certainly meant to say that the solution was to INCREASE HOUSING if you say so.
But you actually only wrote that the solution was to increase taxes.
Catherine

Catherine,

James clearly says that it would be easy to raise taxes but that wouldn't address the real issue, being housing. How on earth is that advocating increased taxes? It clearly isn't.

It seems many commenters read these articles to confirm their own pre-existing beliefs rather than properly reading the words in the article.

"......To solve housing doesn’t require a genius. Significantly increase supply and remove all subsidies pumping up demand......."

Really? When I studied Economics there were two parts to the equation Supply and Demand. Given the Supply side has failed and will continue to fail as Government's soak up available trades on "cost plus" stupidity, how about we reduce Demand? At the stroke of a pen you can cut migration, the birth rate is already falling, get things back into some sort of balance and reset!

Exactly , immigration is far too high yet greedy land developers, the property industry and the overseas student grift keep lobbying for it.

We won’t forget

We already have labour shortages in a number of industries and current fertility rates imply a declining population. A sharp drop in migration would be very disruptive and leave many industries like health and aged care and probably agriculture and construction searching for workers. Migration is easing from its post COVID surge and recent policy changes will see it ease a little further and leave us in a sweet spot. It seems like, that in addition to supply, the house price spike is more about domestic issues like changing dwelling occupancy, poor productivity and the bequest boom.

The immigration paradox. Potentially AI will reduce the number of people needed, which reduces the need for more people.
Another idea is we have lots of people running various state/territory Government departments which are duplicated across the 8 states and territories. As an example, how many workers would be free up if we had 1 national driver's licence and vehicle registration instead of the current 8. Duplicating this idea across numerous state/territory departments would save $b for Government and free up thousands of workers to fill job vacancies with no increase in housing demand.

1- Superannuation is investing in various Assets classes in productive enterprises either directly or indirectly. Super is simply a tax structure. If I buy shares in Soul Patts in my Super Fund, SOL is pretty productive in the Australian economy.
2- Negative gearing in property is not productive. Once built its a single asset with tax deductions. Simply look at our list of politicians from ALL parties and the number of investment properties.
3. There is a Death Tax in Super under a different name.

You might find the opposite to what you see would be real.You owning shares in any company will not make them more productive.
A house on the other hand produces a lot of employment . From local councils and what they do with their rates. Bunnings ( Wesfarmers) that seems to be full every weekend.Utility suppliers,water,and sewerage and electricity that employ a lot of people.Jim's everything,you name it there's probably a Jim's whatever for it. Then that army of trades people etc that maintain it. The carpet fitters,furniture sellers fridge makers etc etc. The list is endless
You are not negatively geared forever so tax collected by the govt on rent.Tax collected when/ if you sell it.Perhaps / probably a cut in the pension through assets testing.

That house that you think sits there doing nothing could well be one of the largest employers in Australia.