Originally published on LinkedIn. Joe Langley is Secretary of Prosper Australia and Chairman of the Australian High Speed Rail Association.
Ken Henry’s blunt assessment of the state of Australia’s lopsided tax system should be a wakeup call to Gen X, Gen Z, and Millennials. According to Henry, young Australians are victims of reckless indifference or, perhaps, wilful acts of bastardy by successive governments, older voters and powerful vested interests responsible for the sorry state of Australia’s regressive tax system (SMH 21 Feb 2025). Young people are paying higher taxes and denied a “reasonable prospect of homeownership” by a tax system that unfairly supports Boomers like me. And I agree with him.
Has this imbalance become so entrenched that instead of passing on a higher standard of living as we have enjoyed, Boomers are passing on a poisoned chalice to their children and grandchildren? Australia’s system of taxing individual efforts while foregoing a reasonable return on investment from public infrastructure needs root and branch reform. Here are two ways to fix this mess.
Become informed – and vote
Like the proverbial frog in a pot, voters tend to soak contently as the temperature around them slowly increases. Until it’s too late. Younger voters are finding it increasingly difficult to secure an affordable place to rent, buy their first home or start a family. This makes them susceptible to short-term financial complacency.
Whereas yesteryears’ Boomers tended to take a year off to backpack across Europe or the States, today’s singles are more inclined to splurge on instant gratification. Like ski trips to Canada or Japan. Or expensive gym membership to build up those abs – and the form-fitting sportwear to go with it. Maybe this year’s smart phones with more computing power than Neil Armstrong’s lunar lander.
Who can blame them when increases in rents and house values far outstrip wages? It’s an uphill battle that only gets steeper.
I bought my first fixer-upper for $69,000 in 1987, roughly three times my salary at the time. Today, the median dwelling value in Sydney has reached eight times the median household income. Assuming a 20% deposit and a 25-year mortgage at average interest rates, approximately 51% of median household income is now required to service the mortgage. Banks want that figure to be 30%.
The only way to address this damning imbalance is through tough structural tax reform. Our current tax system treats housing as a capital asset to be accumulated by wealthy families and politicians. Housing reforms are needed to return shelter and property to its rightful place as the most basic function of civilised society. Capital gains tax discounts, stamp duty, negative gearing and public housing policies stack the deck against essential workers and middle income earners.
Affordable housing can’t be delivered by short-term planning policies or by blindly increasing residential densities. The pathway to sustainable housing reform requires long-term transitional arrangements and political courage, as laid out by Prosper Australia’s Tax Shift and Per Capita’s recent Community Tax Summit 2025.
My advice to Gen X, Gen Z and Millennials is to use these resources to get informed and then vote like your future depends on it in the upcoming federal election. This is your generation’s Viet Nam war.
Become an Advocate of High Speed Rail
The Australian Government’s High Speed Rail Authority is about to release key outcomes of a business case for the first stage of an Australia high speed rail (HSR) network. The Newcastle to Sydney phase will run from Broadmeadow in Newcastle to Gosford, then on to Central, Parramatta and Western Sydney Airport. A key function of the High Speed Rail Authority is “to work with jurisdictions to manage and develop strategies to deal with funding and implementation risks” associated with high speed rail (High Speed Authority Bill 2022).
If approved, high speed rail will be the largest public investment program in Australian history. The 2013 HSR study estimated the full network cost at $114 billion. Its easily twice that amount today. It is therefore incumbent on the Federal government to pursue all available sources of funding for the Newcastle to Sydney High Speed Rail line and for future stages of the network.
The high cost of high speed rail has been its Achilles’ heel for 40 years. But in a similar way to the housing crisis, Australia’s tax policies have a history of privatising the benefits created by public infrastructure investments while socialising their costs. Federal and state policies require public agencies to provide a reasonable return on the public infrastructure investments when possible. High speed rail should not be an exception.
Value capture is an equitable and efficient funding mechanism to support the development of high speed rail. Value capture leverages the land value created by public infrastructure and redirects a portion of that uplift as a source of funding for the project. It ensures that those who benefit the most from high speed rail contribute to its cost. By strategically capturing a portion of this uplift, governments can secure additional funding without over-relying on general taxation.
A high speed rail network in Australia will be a game-changer for our cities and regions. It will help decongest crowded urban centres, open-up opportunities for affordable housing in regional areas, and help transition Australia to a lower carbon future. Internationally, major rail projects are typically funded by a combination of land value uplift captured by government agencies and strategic partnerships with the private stakeholders.
Research by the National Academy of Sciences found that “additional value may be created, and additional public policy objectives may be achieved, through strategic planning and partnerships with other public agencies or not-for-profits such as workforce or affordable housing providers. Costs and benefits associated with development of affordable or workforce housing, parks, parking, or municipal infrastructure may be allocated between the parties in the context of development agreements negotiated toward maximising mutually beneficial value creation” (Guide to Value Capture Financing for Public Transport Projects, 2016).
Transit-induced land value uplift is the product of public investment and is a legitimate and logical source of public infrastructure investment. Land value uplift that is not captured through some form of value capture mechanism, such as rezoning charge, developer contribution or windfall gains tax, produces windfall gains to unintended beneficiaries, primarily private landowners, developers and land speculators. This compounds the current housing affordability crisis by encouraging rezoning of un-serviced land, such as is occurring along the Hume Highway at Wilton south of Sydney.
A high speed rail network without equitable value capture measures in place would likely result in the largest transfer of wealth from taxpayers to private individuals and companies in Australia’s history. See our Value Capture Policy here Value Capture Policy Statement – Exec Summary.
Conclusions
The Australian High Speed Rail Association (www.auhsr.org) is founded on the principle that Australians living in urban centres and regional areas should have better access to high quality jobs, affordable housing, advanced education and specialist medical services.
Australia is a wealthy county blessed with abundant land and natural resources. Structural reforms to the current tax system and infrastructure investment programs are needed to equitably distribute our commonly-held resources and ensure our future prosperity. Tax reform and a national high speed rail network provide the means and methods to achieve that goal.
