Nobel laureate’s advice for treasurer to fix housing
Finance Minister Jim Chalmers said the federal government was focusing on ways to improve housing affordability outside of tax reform, as calls for investors to rethink tax cuts grow.
Housing is the defining generational challenge in Australian society, Dr Chalmers said in an interview with Nobel Prize-winning economist Joseph Stiglitz.
Shedding light on the problems of left-leaning economic policy, Professor Stiglitz offered some typically iconoclastic solutions to Australia’s housing woes.
These included greater government involvement in housing provision, as in Vienna, where residents lived in up to 60 percent subsidized social housing, as well as better taxation of capital gains on land and property.
“It’s part of the agenda to think a little more about the tax structure, how you can use tax reform to make housing more affordable and generate revenue,” Prof Stiglitz said in an interview published in The Monthly magazine on Friday.
Dr. Chalmers has seen his share of calls to raise property taxes lately, as he noted in his response.
“Obviously this is a point where there has been some debate in Australia,” he said.
A Greens-led parliamentary inquiry is investigating whether Australia’s 50 per cent discount on capital gains has increased housing inequality by encouraging investors to push homeowners out of the property market.
The advice from economists at think tanks including the e61 Institute and the Grattan Institute, as well as the NSW Treasury, is that the rebate should be reworked.
Dr Chalmers told Professor Stiglitz: “People who have thought through these issues, like you, are asking us to take a look at some of these tax settings.”
“We’re focused on other ways to build more stock in our housing, to build more homes across the country.
“But we know there will always be pressure to do more when it comes to the tax system and how it applies to housing. We respectfully listen to people who bring their views to us.”
The Australian Council of Social Service called on the government on Friday to cut capital gains tax relief to 25 per cent and phase out negative practices within five years.
The council’s deputy leader, Jacqueline Phillips, said the savings should then be used to build more social housing.
He cited a Productivity Commission report which found the number of households on the public housing waiting list rose from 169,000 to 190,000 in 2024.
“This report today shows that housing stress and homelessness are getting worse, while absurdly generous tax cuts are driving up house prices and increasing inequality in our society,” Ms Phillips said.
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