Treasurer Jim Chalmers says the federal government is focused on ways to fix housing affordability other than tax reform, as calls grow for a rethink on investor tax breaks.
Housing was the defining intergenerational challenge in Australian society, Dr Chalmers said in an interview with Nobel Prize-winning economist Joseph Stiglitz.
A leading light of left-leaning economic policy wonks, Professor Stiglitz offered some typically iconoclastic remedies to Australia’s housing woes.
They included greater government involvement in providing housing, like in Vienna, where up to 60 per cent of residents live in subsidised social housing, as well as better taxing land and capital gains on property.
“Thinking a little bit more about how you can use tax structure, tax reform, to make housing more affordable, and generate revenue, is one part of the agenda,” Prof Stiglitz said in the interview, published in The Monthly on Friday.
Dr Chalmers has fielded his fair share of calls to increase property taxes in recent times, as he recognised in his response.
“Obviously this is a point of some contention in Australia,” he said.
A Greens-led parliamentary inquiry is investigating whether Australia’s 50 per cent discount on capital gains is turbocharging housing inequality by incentivising investors to crowd owner-occupiers out of the property market.
The advice from economists at think tanks including the e61 Institute and the Grattan Institute as well as NSW Treasury is that the discount should be reformed.
“Quite frequently, people who have thought these issues through, as you have, want us to have a look at some of these tax settings,” Dr Chalmers told Professor Stiglitz.
“We’ve been focused on other ways to build more stock in our housing, build more homes around the country.
“But we know that there’ll always be that pressure to do more when it comes to the tax system and how that applies to housing. We listen respectfully to people when they put those views to us.”
The Australian Council of Social Service on Friday urged the government to halve the capital gains tax discount to 25 per cent and phase out negative gearing over five years.
The savings should then be used to build more social housing, the council’s acting chief executive Jacqueline Phillips said.
She cited a Productivity Commission report that revealed the number of households on the public housing waitlist has climbed from around 169,000 in 2024 to 190,000.
“This report today shows housing stress and homelessness are getting worse while absurdly generous tax breaks drive up home prices and supercharge inequality in our society,” Ms Phillips said.