Australia at a Crossroads: What 50% Government Dependency Means for Business Owners

Ten years ago, I had the privilege of hearing Jeff Kennett speak to a group of business leaders at Melbourne’s Eureka Tower. His message was clear and simple:

“46% of the adult population of Australia relied on the government for their main source of income. Once this tips over 50%, the great nation of Australia is on a slippery slope.”

Fast forward to today, and that tipping point has arrived.

According to recent reports, more than 50% of Australian adults now rely on the government as their primary source of income, whether through welfare payments, public-sector salaries, or taxpayer-funded subsidies. This marks a profound shift in our economic and cultural landscape.

Government spending has now surged to 39% of GDP, the highest level since World War II. The National Disability Insurance Scheme (NDIS) alone costs $52 billion annually, and when combined with disability pensions and carer payments, disability-related spending now exceeds the budgets for defence, aged care, Medicare, and even the age pension.

This level of spending is not just unsustainable, it’s dangerous. It fuels persistent deficits, rising debt, and increasing calls for higher taxes. It also undermines the dignity of work and the value of independence.

NDIS & the Aging Population

The NDIS was introduced with noble intentions, to provide choice and control for Australians with disabilities. But the reality is stark: half of all NDIS providers operated at a loss in 2023–24, and many didn’t realise it until the damage was done. Rising labour costs, compliance burdens, and lack of financial oversight have pushed the sector into crisis mode.

Providers are now being urged to adopt data-driven financial controls, early warning systems, and integrated compliance frameworks to survive. Without reform, the system risks collapsing under its own weight.

The aging population of Australia adds another layer of complexity. Today, 64% of retirees rely on a full or part government age pension, despite decades of compulsory superannuation. With fewer working-age Australians to support a growing elderly population, the sustainability of the pension system is under serious threat.

In 1901, there were 15 working-age people for every person aged 65+. Today, that ratio has dropped to less than 4, and is projected to fall to just 2.5 in the next 30 years. Every working couple will effectively ‘adopt’ a pensioner financially, raising serious questions about future tax burdens and intergenerational equity.

The Political Landscape

At the federal level, the Labor Left faction, also known as the Socialist Left, holds significant influence within the Australian Labor Party. This faction advocates for economic interventionism, progressive tax reform, and expanded social programs, aligning with democratic socialist principles.

While these policies may be socially progressive, they often come with financial consequences for business owners and property investors:

• Taxing superannuation balances over $3 million
• Removing CGT-free status of the family home
• Introducing or expanding death taxes
• Increasing state taxes and levies

These are not hypothetical scenarios, they are part of the ongoing policy debate.

Let me start with a little story, I was at our Gold Coast office and had the privilege of having dinner with a good friend and client who was born in Venezuela, and his Australian partner.

During our conversation, we spoke about the subtle but significant shifts happening in Australia’s economic and political environment, changes that are beginning to reshape the landscape for business owners and investors.

Here in Australia, we’re seeing:

• Taxing superannuation balances over $3 million, a move that disincentivises long-term saving and undermines confidence in the superannuation system.
• Proposals to remove the CGT-free status of the family home, threatening the financial foundation of many Australian households.
• Renewed discussions around death taxes, once politically off-limits, now quietly re-entering the national conversation.
• Rising state taxes and levies, including land tax increases and stamp duty reforms that add pressure to property owners.
• More than half of the adult population now reliant on government income, a clear signal that the balance between private enterprise and public support is shifting.

These changes are not isolated. They reflect a broader trend toward increased government intervention, higher taxation, and a growing reliance on the state. The concern lies not in any single policy, but in the cumulative direction they represent, a gradual shift that could have lasting consequences for business owners, investors, and future generations.

What Does This Mean for You?

If you’re a business or property owner in Australia, the implications are real:

• Expect higher taxes and more regulation
• Prepare for reduced government support in retirement
• Consider diversifying income sources and building financial resilience
• Stay informed and engaged in policy debates
  
  

How Rees Group Can Help

At Rees Group, we work closely with small and medium-sized businesses to help them navigate uncertainty, protect their assets, and plan for long-term success. Whether it’s tax planning, structuring your investments, or building a strategy to grow and preserve wealth, we’re here to provide clarity and confidence in a changing environment.

If you’re concerned about how these shifts could affect your business or personal finances, let’s have a conversation. The earlier you plan, the more options you have.

– Justin