While Labor treasurer Jim Chalmers agreed that the challenges in Australia’s housing market begin with housing supply, “they don’t end there”.
“Any responsible government like ours needs to take seriously the very genuine intergenerational concerns that people have, and make the housing market fairer and make the tax system fairer as well,” said Chalmers.
The push to reform negative gearing and capital gains tax is grounded in a straightforward argument: Australia’s current settings tilt the housing market sharply in favour of investors at the expense of owner-occupiers, particularly younger Australians.
Investor loans now account for 40% of all new housing finance commitments, while first-home buyer loans have fallen to just 22% – a ratio that reform advocates say reflects decades of skewed tax incentives.
The Grattan Institute argues that the CGT discount and negative gearing arrangements distort investment decisions, increase price volatility in property markets, and put upward pressure on house prices.