Anthony Albanese has forced to defend a furore over broken election promises as he and Treasurer Jim Chalmers scramble to fix the housing crisis by cutting back property investor tax lurks.
The Opposition claimed the Government’s Budget, due to be delivered on Tuesday night, was in “complete disarray” because of the broken pledges.
But the PM insisted voters should have seen it coming, pointing to speeches he and Dr Chalmers gave last year foreshadowing broader housing and tax changes.
Both said last year’s election mandate was the foundation for Labor’s agenda, not the limit.
Since then the difficulty for first-home buyers had become even further entrenched, Mr Albanese said.
“Another year has passed since the election, and not enough has changed,” he told Radio National on Monday.
“So many people have had another year of missing out at auctions, of renting and paying someone else’s mortgage, and too many young people are close to giving up on the opportunity of owning their own home.”
He insisted the Government was all about “making the right decisions for the right reasons for the times that you are in” as it contemplated change that he had ruled out during last year’s election campaign.
Finance Minister Katy Gallagher said last year the Government was focused on boosting house supply.
That’s still the case more is needed, she said,
“People of my generation, we found it hard to save up and buy a house, but people in generations below me are finding it impossible,” she said.
Tomorrow’s Budget is widely expected to contain cuts to capital gains tax discounts and negative gearing, used in combination by people with investment properties to shrink their tax bills. The Budget is tipped to increase taxes on family trusts.
The details of the exact changes and how they will be phased in have been kept under wraps.
But a string of ministers have insisted in recent days that “if we do change our position on any policy, we will explain why it is that that is occurring”, Mr Albanese said Monday.
“We do need to do more and use every lever at our disposal,” the Prime Minister said.
It’s a big shift from a year ago.
He repeatedly ruled out changes to capital gains tax and negative gearing during last year’s election campaign.
“Yes. How hard is it? For the 50th time,” he said in Cairns on April 8 last year when asked if he ruled out any changes to the capital gains and negative gearing tax settings if re-elected.
The Opposition seized on this to accuse the Government of lying to voters.
“Isn’t it extraordinary that only a year ago, Labor was saying that, for the 50th time, no, we will not be changing these taxes in the next term of government,” deputy leader Jane Hume said.
“I’m interested to know what it is that has changed, because Labor have failed their own test on increasing the number of houses… All of that has been a lie.”
Shadow treasurer Tim Wilson said grandfathering or “grace periods” on any cuts on the taxes – which he opposes anyway – would only serve to entrench the inequality the Government says it’s tackling.
“(Dr Chalmers) has been going out and saying this is going to be a Budget for young Australians; now he’s locking in the benefits for one generation and harming young Australians,” he said.
“This Government’s Budget process is in complete disarray because they have broken their word and Australians have woken up to the dishonesty at the heart of this government and its budget.”
Accommodation Australia is ready to back in the changes once they see them, having told the government last year it should cut back negative gearing on properties being used for short-term rentals like Airbnbs.
The tax changes will come in addition to more measures aimed at increasing the supply of houses.
This includes $2 billion for infrastructure such as sewers, electricity connections, and roads to enable new housing estates, and $500 million to speed up approvals.
Another $59.4m will go to helping thousands of young, homeless Australians to get into community housing, Dr Chalmers announced on Monday evening.
The money will go to community housing providers who charge rent based on a tenant’s income – disadvantaging young people on Youth Allowance or Abstudy because those payments are lower than other welfare.
“Right now, it’s too hard for too many Australians to get into their own home and get ahead and that’s why we’re building more homes, fast-tracking approvals, and helping thousands of young people to pay the rent,” Dr Chalmers said.
The Budget will contain a significant productivity package and some $64b in savings and redirected spending as well as the tax changes.
The plan to slash red tape is forecast to save businesses $10b and boost GDP by $13b a year.
It will make the $20,000 instant asset write-off for small businesses permanent, streamline interactions with government departments, and make it faster and easier to recognise trades qualifications.
Other big-ticket items in the Budget include a $10b fuel security package to increase storage and secure fuel shipments to Australia.
The bulk of the savings come from a $35b cut to the NDIS, while tax breaks for electric vehicles will be scaled back and the troubled inland rail project has been scrapped.
Dr Chalmers has promised there will be more savings than spending, with an improvement to the bottom line over the net four years but no return to surplus in that time frame.
He has also cautioned people not to expect “near-term cash splashes” as he strives to curtail rising inflation.
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