Housing Minister Clare O’Neil says Labor’s controversial tax changes won’t solve Australia’s housing problem “overnight”, as the Albanese government bets big on younger Australians in the 2026-27 federal budget.
“This market is cooked,” Ms O’Neil told Sky News on Sunday.
“It’s not serving the Australian people anymore … We want people on normal incomes around our nation to have a fair shot at getting into housing.”
Labor will seek to pair back the capital gains tax discount and limit negative gearing to new builds or grandfathered properties following the May budget, but will need support from either the Coalition or the Greens to get it through the Senate.
Ms O’Neil said the changes were “a really meaningful part” of the government’s attempt to address housing inequality, which also included a multitude of measures aimed at boosting supply.
“Treasury modelling suggests that the impact of these changes will be to turn 75,000 rental households into first home buyers households,” she said.
“One of the ways that it does that is a slight slowing of house price growth.”
Ms O’Neil said treasury predicted house prices would continue to grow but “at a slower rate”.
“We’ve got the balance right,” she said, between doing too little or too much.
“(Treasury modelling shows) the likely effect of these changes is a moderate reduction in the pace of growth of house price,” he said.
“That will lead to somewhere around a $20,000 reduction for the first homebuyer who’s paying it.”
Ms O’Neil said the changes were “not just about a small section of the population”.
“I am just as likely to get stopped in the street by a grandparent or a parent who is desperately concerned about their kids and their ability for their kids to set down roots, grow wealth, and raise a family in this country as I am,” she said.
However, Labor was dealt a blow in the first major polling since the budget, with Roy Morgan putting One Nation ahead of Labor on the primary vote.
Treasurer Jim Chalmers told the ABC later he would be “more surprised” if the result had been the reverse.
“We didn’t do this to get a bounce in the polls,” he said.
“We did it to get a boost in first time ownership, particularly among younger Australians who’ve been locked out.”
Mr Chalmers defended changes to the capital gains tax discount also applying to shares.
“About nine in 10 people under-25 don’t have any shares,” he said.
“For people who do, by getting rid of this distortion which over compensates established housing and under compensated shares or investments in new supply of units and the like, then that will be a much fairer, much more neutral treatment of capital gains in the system.
“Getting into the weeds of this, it is important, but we have to remember, the big issue here is that the intersection of the housing market and the tax system is not working.
“It’s locking too many people out of home ownership, and so our primary motivation here is to better align the tax treatment of people who work and people who earn their income in other legitimate ways.
“Some people will pretend that the current arrangements in the housing market and the tax system are working just fine. We don’t agree. We think the status quo is broken and that’s why we’re fixing it.”
Opposition Leader Angus Taylor, in his budget reply speech, announced the Coalition would scrap many of the Albanese government’s staple housing initiatives, and peg net overseas migration to housing completions.
“Labor has set its immigration targets without regard for the housing that is being constructed in this country, the housing, the services and the infrastructure,” he told Sky News on Sunday.
“This must change, and what we’re proposing here is each year the housing minister would say we’ve built this many houses and so the immigration number, the net overseas migration number, can be X.”
