The 2026 Intergenerational Report contains an important warning for Australian business owners.
Household wealth continues to grow, but the gains are increasingly uneven. Younger Australians are finding it harder to buy a home and are accumulating wealth more slowly than previous generations. At the same time, many older Australians hold substantial wealth in property, superannuation and privately owned businesses.
This is more than a question of social equity. It will affect who can buy a business, how SMEs attract and retain people, and whether valuable enterprises survive beyond their founders.
In short, Australia has an intergenerational business succession problem.
According to the report, average real household net worth increased from approximately $500,000 in 1993–94 to more than $1.3 million in 2019–20. However, households born in the 1980s and 1990s have not experienced the same gains at comparable ages as previous generations.
Housing and superannuation have driven much of the increase. Gross housing wealth almost tripled in real terms between 1994 and 2020, while superannuation wealth increased five-fold.
That matters because property ownership has traditionally helped the next generation become business owners. Home equity can supportacquisition finance, personal guarantees and the early cash-flow demands of ownership.
But what happens when the intended successor does not have that equity?
Australia may have capable managers, family members and ambitious employees who are operationally ready to take over a business, butcannot fund a conventional purchase.
For current owners, this means succession planning must start earlier and consider more than an outright sale.
The solution may involve vendor finance, a staged transfer, profit-funded equity, employee ownership or external capital. The structure willvary, but the principle is the same: waiting until retirement to find a fully funded buyer is becoming increasingly risky.
Housing affordability is also a workforce issue
Home ownership among households aged 25 to 34 fell by 17 percentage points between 1981 and 2021. In 2021, only half of householdsaged 30 to 34 and around one-third of those aged 25 to 29 owned their home.
The report estimates that approximately 250,000 more households aged 25 to 34 would own a home if ownership rates had remained attheir 1981 levels.
For SMEs, the effects are practical.
Employees who cannot afford to live near their workplace face longer commutes and greater financial pressure. Regional businesses maystruggle to recruit skilled people where housing supply is limited. Younger employees may also change jobs more frequently as they pursuehigher incomes and greater financial security.
Salary remains important, but it is not the whole answer.
SMEs need a stronger employee proposition built around career progression, flexible work, technical development, profit sharing and,where appropriate, employee ownership.
Giving key people an opportunity to participate in the value they help create can improve retention, build personal wealth and establish afuture succession pathway.
The report also highlights a decline in income mobility.
More than 80 per cent of Australians born in the 1950s earned higher incomes than their parents by their early 30s. For those born from the1960s onwards, the proportion has been closer to two-thirds. Australians born in the 1990s have not experienced the same early-careerincome gains over the preceding generation.
The answer is not simply longer hours. It is higher productivity.
For SMEs, that means documenting knowledge held by the founder, automating repetitive work, improving pricing, developingmanagement capability and using artificial intelligence to support better decisions and workflows.
Treasury describes productivity as the key driver of living standards and identifies private business investment, innovation, skills andtechnology adoption as central to future growth. Higher productivity can lower unit costs, improve output and support reinvestment andexpansion.
These improvements also strengthen enterprise value.
A productive business with reliable systems, capable managers and limited owner dependence is easier to scale, finance and sell.Productivity improvement is therefore not separate from succession planning. It is an essential part of becoming succession-ready.
Superannuation provides the more positive part of the report.
Since the introduction of compulsory superannuation in 1992, total assets have increased from approximately $148 billion to around $4.8trillion. The median balance for Australians aged 65 to 69 increased from $115,000 in 2014 to $204,000 in 2024 and is projected toapproach $450,000 by the end of the medium term.
By the mid-2040s, most retirees will have received compulsory superannuation throughout their working lives. Superannuation drawdownsare projected to approach 6 per cent of gross domestic product by 2065–66.
For business owners, the lesson is clear: the business should not be the only retirement asset.
Too many owners expect a future sale to fund retirement without knowing what the business is worth, whether it can operate without themor whether a buyer will be available.
Building wealth outside the business gives an owner more control. It reduces the pressure to sell at the wrong time and creates greaterflexibility around a staged transition.
The report does not position business succession as a major response to intergenerational inequality. It should.
Australia has an older generation holding substantial business wealth and a younger generation that may have the capability to assumeownership, but not the capital required by traditional acquisition models.
That mismatch creates both risk and opportunity.
Handled poorly, viable businesses will close, sell under pressure or lose value when their founders leave.
Handled well, succession can transfer wealth, protect employment, reward key people and preserve decades of accumulated knowledge andenterprise value.
Business owners should act now:
establish the current value of the business
identify and close the value gap
reduce dependence on the founder
build management and technical capability
assess the readiness of potential successors
consider employee ownership and staged transfers
build retirement wealth outside the business
start well before the intended exit date
Intergenerational change will not happen in theory. It will play out inside thousands of Australian businesses.
The businesses that prepare early will retain more options, attract better people and achieve stronger transitions.
Those that wait maydiscover that a capable successor exists, but the traditional funding pathway does not.
The commercial question is no longer whether the intergenerational shift will affect Australian SMEs.
It is whether business owners will be ready when it does.
Reference: Australian Treasury, 2026 Intergenerational Report, Section 6, “Intergenerational equity,” pp. 119–137.