The Greens have today announced that action on negative gearing and Capital Gains Tax discount reform will be priorities in minority government, in order to make housing affordable for renters and first home buyers and help shield first home buyers from the fallout of Trump’s global tariff mayhem.
These unfair tax breaks make it easier for a wealthy property investor to buy their fifth or sixth home than a renter to buy their first, and make property a sought-after target for investors during periods of economic uncertainty. With experts predicting a minority government and with Greens on track to retain Senate balance of power, the Greens prioritising reform brings relief for would-be home buyers within reach. The Greens consider this reform achievable, as facing pressure from the Greens, Labor seriously considered reform last year – even undertaking Treasury modelling – before caving at the 11th hour.
Greens Leader Adam Bandt has today revealed independent analysis showing that changes to NG and CGT would allow more than 850,000 people to live in a home they own – allowing many of the 31% of households who rent to move into home ownership. Independent data also shows that renter households would have paid an average of $6,318 less if a rent freeze had been implemented in August 2022, when the Greens first called for it. Nationally, this is an extra $13 billion taken by property investors from the third of the country who rents.
Economists point to the combination of negative gearing and the capital gains tax discount as lighting the fuse on skyrocketing house prices – with analysis from TAI showing that these investor concessions have been a major driving force behind soaring house prices. The average house price used to cost about three times the median income but now it’s more than doubled, to eight times the median income today. Polling undertaken last year found that half of voters back action to cap negative gearing, with 70% backing price caps, including on rent.
The Greens’ policy to end tax breaks for wealthy property investors would:
- Grandfather negative gearing and the 50% CGT discount to one investment property, protecting ‘mum and dad’ investors. People will be able to keep existing negative gearing and CGT discount benefits for one investment property they already own (purchased before the policy commences).
- Scrap the 50% capital gains tax discount for all other assets. The asset base for non-housing assets would be indexed by inflation.
- Any properties purchased after the policy commences, or the second and subsequent investment properties already owned, would not be eligible for these concessions.
- The changes only apply to investment properties.
This is the fourth priority area announced by the Greens. The Greens have previously announced that they will put dental into Medicare, an end to native forest logging, and expansion of free early childhood education and care on the table in minority government.