Minister won’t rule out tax change as Greens up demands
Australia’s housing minister says young people are seeing the housing market weighing heavily on them as the Greens call for sweeping changes to property tax concessions.
Clare O’Neil continues to directly oppose suggestions that the government is considering reducing capital gains relief and negative property regulations, but says there is more work to be done to solve the housing problem.
Official data released on Tuesday showed housing approvals fell for the second consecutive month in January; This has further set back the government’s national housing deal target of 1.2 million new homes over five years.
Building more homes has been the government’s main focus to reduce affordability, but Ms O’Neil did not close the door when asked whether reducing tax breaks would help.
He said it was absolutely clear that the housing burden was falling unfairly on young Australians.
“Our tax policies haven’t changed and our housing policies haven’t changed either,” Ms O’Neil told reporters in Canberra.
“Our government absolutely sees housing as a fundamental part of the intergenerational challenge facing our country.”
The Treasury is reportedly inclined to reduce the 50 per cent capital gains tax break to 33 per cent on investment properties, which economists, think tanks and MPs argue is overly generous and is driving up house prices excessively.
With the coalition already out of the talks, Labor will need the involvement of the Greens to get any changes through parliament.
Greens economic spokesman Nick McKim, who is leading the Senate inquiry into the impact of the capital gains tax cut on house prices, said the government should use its large majority in parliament to go further.
“Capital gains allowance… should be abolished entirely and not grandfathered in,” he said, referring to comments by former Reserve Bank governor Bernie Fraser.
Senator McKim said there was “a very strong consensus among economists and experts” that the government should not exempt existing properties.
Opposition housing spokesman Andrew Bragg said the government was dealing with changes to the rebate and negative measures to fix the broken budget.
“Higher taxes on housing will not lead to more housing; it makes no sense,” he said.
“If anything, it would cut off supply and increase rents.”
Senator Bragg said the workforce was only making the housing crisis worse, pointing out that housing approval figures were falling.
According to the Australian Bureau of Statistics, housing approvals fell 7.2 per cent in January due to a 25 per cent decline in apartments and townhouses.
The result was below economists’ expectations for a five percent increase, but the data set remains highly unstable.
Economists tend to focus more on the trend rate, which rose modestly last year but has plateaued in recent months.
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