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IN BRIEF
- Treasurer Jim Chalmers has once again flagged the issue of “intergenerational fairness” in the budget.
- Speculation is growing that the government could change some housing tax rules.
Treasurer Jim Chalmers expressed the federal government’s worries about the increasing difficulty young Australians face in entering the housing market. However, he did not confirm whether upcoming changes to negative gearing or capital gains tax would be part of the budget set for release on May 12.
During an appearance on Channel Seven’s Sunrise program on Thursday, Chalmers highlighted “intergenerational fairness” as a key focus of the forthcoming budget, noting that both the “housing market” and “tax system” contribute to this issue.
“We are particularly attentive to matters of intergenerational fairness, especially concerning the ability of young individuals to secure a foothold in the housing market,” he remarked.
“There is a growing concern that fewer young people are able to achieve homeownership,” Chalmers added.
“This concern is a significant factor as we finalize the details of the budget,” he concluded.
‘Speculation’ around the budget
Intergenerational fairness refers to the equal distribution of economic, social, and environmental resources across generations — ensuring that current actions do not negatively impact future generations.
Fifty-four per cent of men and 47 per cent of women aged 18 to 29 lived with their parents in Australia, according to the 2024 Household, Income and Labour Dynamics in Australia survey.
The trend has been growing amid housing affordability and cost-of-living pressures.
There has been speculation the Labor government’s potential changes to housing tax in the budget to tackle issues such as intergenerational fairness might include capital gains tax (CGT) and negative gearing.
Chalmers has not confirmed or denied these reports.
“When we are only less than two weeks from the budget, there’s always a lot of speculation, and I think this time around we haven’t finished the budget yet,” he said.
“Some of these sorts of deliberations haven’t been concluded yet.”
What changes are expected?
The Commonwealth Bank of Australia (CBA) has said in its federal budget preview that major changes to CGT “appear locked in”.
CGT is a tax on the profits from selling assets: if someone makes a capital gain when they sell an asset, it will increase the tax they must pay.
There are currently various concessions on CGT, which are expected to be reduced in the new budget.
In response to a question about potential changes to CGT, Chalmers told the CBA podcast that “even if we went down the path that has been speculated about in those areas that you’ve asked me about, people shouldn’t expect there to be this huge amount of new revenue show up over the course of the next few years in the budget”.
Negative gearing is another part of the budget that might change according to the CBA, which might get fully “scrapped”.
Negative gearing has been a controversial topic in federal politics in recent years. It is most often used in the context of investment properties and allows the property owner to offset losses against their taxable income.
Those against negative gearing argue that it has increased housing costs and widened the inequality gap between those who can afford to enter the market and those who cannot.
Others who are in favour of it say restricting negative gearing might lead to fewer investment properties and rental homes.
In his interview with Channel Seven, Chalmers said “we think very carefully about any implications of any changes that we make when it comes to housing or when it comes to tax reform”.
“One of the big issues is the way that over time the amount of young people who are in home ownership, owner occupiers, as a proportion of the overall housing market that’s been trailing away.”
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