Negative gearing reform is back on the agenda, but younger voters now hold the power

Australia Broadcast Center

2 days ago

It's time to put the 2019 election to bed, along with the messages we pretend were sent from voters from that disastrous campaign for Labor.
It has been six years since Labor leader Bill Shorten took what were quite radical proposals to the voting public, including negative gearing reforms.
Since that election, Australia has changed profoundly. We have endured a global pandemic with consequences we are only beginning to realise, and an acute housing crisis that has changed us.
We have seen the biggest change to the demographics of the dominant voting bloc, with millennials and Gen Z now being the largest voting group in Australia, outnumbering boomers. By the next election, that shift will be even more profound.
Voters younger than their mid-40s are consistently telling pollsters they believe the system is stacked against them. They have made it crystal clear they are hungry for change.
The treasurer's productivity roundtable has now morphed into something much broader than simply delivering productivity reforms, and this is both worrying and exciting some stakeholders.
Some in business circles believe it is increasingly being used to push for higher taxes. Those who want the tax conversation say it's about more effective taxes. Even fairer taxes. Remember fairness?
Senior government sources strongly contest that this is an excuse to raise taxes. They say they are keen to cut taxes too, but need to pay for it somehow. That can't be from spending cuts alone. A reconfiguration of that tax system is the only answer.
The Australian Council of Trade Unions yesterday declared they will use the productivity platform to call for bold reform to negative gearing and the capital gains tax at the government's productivity roundtable this month, proposing that the tax breaks be limited to one investment property.
Sally McManus, the union's secretary, told Insiders the current arrangements should continue for five years, but after that date, "we've got to bite the bullet".
"Otherwise, we're just saying 'too bad, young people, you're not going to be able to ever own a home,'" she said.
"Since 2019, the problem has just gotten worse. It's going to continue to get worse unless the government is brave enough to do something about it."
When it was in opposition, Labor took negative gearing reforms to the 2016 and 2019 federal elections, at which they were defeated. But they were defeated for a myriad of reasons. Their tax policies were only part of the story of that defeat.
The ACTU's manifesto for reform will be resisted by some quarters, but their proposals achieve one important thing. They have restarted a conversation that Australians have said they want their leaders to be having.
The tax burden is not being shared fairly, and governments that continue to ignore this reality risk losing the trust of younger voters who are hungry for reform.
At the same time, the Productivity Commission has called for a 20 per cent tax rate on profits for companies with revenue of up to $1 billion.
The commission also called for a new 5 per cent tax on net cashflow rather than profits, which could see some large companies pay a higher rate but would provide immediate tax relief for smaller companies seeking to build their capital.
Already, this is being fiercely resisted by the big end of town. But it's time to involve a wider range of Australians from across the tax scale to have an input on what is fair and what is just.
Perhaps the proposal won't work — who knows — but we should ventilate big and radical ideas, and we should applaud the Productivity Commission for thinking radically and creatively.
Returning to the negative gearing conversation, you'll recall this was a scare campaign Peter Dutton unsuccessfully tried to inject into the May campaign.
At the time, it forced Prime Minister Anthony Albanese and Treasurer Jim Chalmers to deny that Labor was preparing to make changes to negative gearing.
The issue re-emerged during the leaders' debate on the ABC, when Mr Albanese said he had not commissioned Treasury modelling on the potential economic impact of changes to the policy.
His response prompted Opposition Leader Peter Dutton to laugh and accuse him of lying.
Reports first emerged last year that the federal Treasury had investigated a potential overhaul of the tax concessions awarded to property owners.
"It certainly wasn't commissioned by us to do so," the PM said when asked during the second debate about the Treasury modelling.
But Treasurer Jim Chalmers had publicly stated back in September that he had asked Treasury for "advice" about the subject, leading Dutton to claim in the debate that Albanese had a "problem with the truth".
Chalmers then tried to draw a difference between that advice and "modelling".
"I've said on a number of occasions now that I sought a view," the treasurer said.
"Now that's different to commissioning modelling. The prime minister was asked about commissioning modelling. I sought a view."
Chalmers said it was "normal practice" to seek advice on such a matter and that the Treasury's view was a change to negative gearing "wouldn't get the sort of improvement that we desperately need to see in our economy when it comes to supply".
One thing is clear: the treasurer wants this debate. Whether the PM would be willing to champion this change is another matter.
We do, however, have one precedent worth remembering.
The PM was deeply resistant to changing the stage 3 tax cuts until the case had been made with the public, and then suddenly, he was into it.
I suspect the same thing would occur on some of the bigger reform ideas.
Kos Samaras, director at the political consultancy firm Redbridge, said there are profound generational shifts between the 2019 and 2025 elections.
In 2019, Millennials and Gen Z made up just 26 per cent of the electoral roll, whilst Baby Boomers and older Australians still held sway, culturally and politically. But that was the last election where the latter group's decades-long dominance would be felt.
"By May 2025, Millennials and Gen Z accounted for 42 per cent of enrolled voters, a generational bloc shaped by vastly different life experiences," he tells this column.
"This is the first cohort since the Great Depression to believe their quality of life is worse than that of their parents.
"They've come of age amid a housing crisis, climate anxiety, a global pandemic, inflation shocks, and broken career promises.
"At the next federal election, this generational tide will become even more pronounced.
"Millennials and Gen Z will be the most dominant voting bloc in the country, while Baby Boomers and older Australians will comprise just 27 per cent of the roll.
"Hence, the ACTU-proposed negative gearing changes will resonate with younger Australians, and it would be a brave politician to ignore such a proposal."
Over to you.
Patricia Karvelas is host of ABC News Afternoon Briefing at 4pm weekdays on ABC News Channel, co-host of the weekly Party Room podcast with Fran Kelly and host of politics and news podcast Politics Now.