Labor’s budget promises fairness – does it deliver?
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What is the main topic of the budget discussed in this episode?
Australia's longstanding housing shortage is making homes unaffordable. This challenge hits young workers and families hard and we're addressing it from every responsible angle.
It was a budget framed around fairness for workers and for young people locked out of the housing market. The Treasurer Jim Chalmers' fifth budget restricts negative gearing, though not for anyone who was already doing it, while also promising to increase housing supply and delivering a $250 tax cut for workers.
Speaker, this is the most important and ambitious budget in decades. Important because the world is throwing a lot at us and this budget is about helping Australia deal with those challenges.
Chalmers wants this budget to be seen as ambitious, but is it? I'm Ruby Jones and you're listening to 7am. Today, Press Gallery journalist Karen Middleton on what the Treasurer is promising and whether it delivers. It's Wednesday, May 13. So Karen, hello and welcome back to the show. Thanks, Ruby.
How does the budget address the housing crisis for young workers?
It's 8.30 at night on Budget Night, which is late. So let's get into it. I thought we could begin with the part of the budget that everyone has been talking about in the days and weeks leading up to tonight, housing. We know that now that negative gearing will be restricted to new homes as of tonight and capital gains tax concessions are also going to be wound back. So tell me how all of this works.
That's right.
What changes are proposed for negative gearing and capital gains tax?
So as of budget night tonight, anyone buying a property will only be able to negatively gear it if it's a newly built property, not an established one. Anyone who's already got an established property will be able to continue to negatively gear it. In terms of capital gains tax, the 50% capital gains tax discount that exists now is going to be replaced by a return to what was the old system, an inflation-based cost assessment system. They'll also have a minimum 30% tax applied. Now, people buying new properties will be able to choose which version of the system they access to minimise their tax. again, to try and boost the sale of new properties, but those with established properties are going to lose that 50% discount now.
This will help rebalance a system which is more generous to assets than it is to labour, and help rebalance a system where house prices have decoupled from incomes. Since 1999, house prices have risen over 400%, more than twice as fast as average incomes. Our tax changes will help about 75,000 Australians achieve the dream of home ownership.
OK, so these changes to negative gearing, as you say, they come into effect now. So if you're buying a house as of tonight, no negative gearing unless it's a brand new property. What that means, though, is that anyone who has already been negative gearing for the past few decades or years, they can just continue to do that for however long their loan goes for. So the intergenerational inequity that exists right now that the government says that it is trying to address, how much does that really change?
Well, that's the question the government's going to have to answer. And I reckon they'll get that question quite a lot in the next few days because there'll be people who argue that it's still inequitable if the people already in the market who've had the advantage and been able to access the housing market and buy investment properties can continue to negatively gear them. whereas the people who had aspired to do that one day will only be able to do that on new properties. Now, they will still be able to do that on new properties, but there will be this debate, I think, about whether it goes far enough to addressing the intergenerational inequity issue. The government argues that there was no perfect way to do this and that they had to have a transition arrangement because they couldn't
sort of holus bolus change the tax system for everyone already in the market. But it's going to raise those kinds of questions and maybe criticisms.
Okay. And this is, of course, something that Anthony Albanese said that he wouldn't do. He went to the last election saying that there would be no changes to negative gearing.
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Chapters
7 chapters
1
What is the main topic of the budget discussed in this episode?
0:00–1:13
2
How does the budget address the housing crisis for young workers?
1:13–1:38
3
What changes are proposed for negative gearing and capital gains tax?
1:38–4:23
4
How does the budget plan to support first home buyers?
4:23–6:52
5
What tax relief measures are introduced for working Australians?
6:52–9:18
6
What are the implications of the budget on intergenerational equity?
9:18–13:30
7
How does the government justify breaking its promise on negative gearing?
13:30–17:05
Speakers
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