Chalmers has never met a tax he didn’t like

Jim Chalmers’ proposed new CGT regime, and mooted changes to negative gearing, would amount to a tax on renters, retirees, savers, and entrepreneurs.

It would raise little revenue, and signal surrender on growing the economy and living within our means.

It certainly would not do anything for housing affordability.

Instead, it distracts from the real causes of the housing crisis: interest rates too low for too long, record immigration, government construction crowding out private sector construction, planning strangulation, alleged union featherbedding, and infrastructure bottlenecks.

Before the 2025 election my think tank, the Australian Institute for Progress, commissioned work from Adept Economics which predicted that removing the capital gains discount and negative gearing from rental housing would increase the average Australian rent by $83 a week, on top of natural increases.

That is because when you tax something more there is generally less of it, and when there is less of it and the same demand, the price rises.

Homeownership levels for people under 35 have fallen by around a quarter over the last 40 years, and the current housing crisis means it takes even longer to save a deposit. That pushes more people into renting, increasing demand for rental properties.

This policy would be a disaster for Australians under 30, a constituency that has faithfully voted Labor and Greens all their voting life.

The government would argue there will be a payoff for home buyers because it will stop investors competing with them for stock. Even if supply were not the overall determinant of house prices, the truth is that it is homeowners who compete with investors, not the other way around.

Part of the reason for high house prices is that the tax system advantages homeowners, and this advantage is capitalised into the purchase price.

Homeowners do not pay capital gains tax at all, and that is where most of the return is in residential real estate.

While investors might get a deduction on interest and other expenses, this is offset against earnings, which are taxed as soon as they turn positive.