The Federal Government announced significant reforms to the capital gains tax (CGT) discount and negative gearing in the Budget. These are the most ambitious changes to our housing system in 20 years (it’s a low bar), driven by independents.
The CGT discount and negative gearing made sense when they were introduced – to drive investment and account for inflation. But in a housing crisis, it’s hard to justify a system that consistently favours investors over first-home buyers.
Through four years of door-knocking and consultations, residents of Curtin told me again and again that housing should be treated as a necessity, not an investment. Many in our community have benefited from these concessions, but they also recognise that the same system is pricing their children and grandchildren out of the market.
I was told in 2022 that pushing for this was political suicide. But this is how community independents can drive long-term change. While Labor backbenchers wouldn’t speak out and the Coalition was busy tearing itself apart, the crossbench led this debate. I heard from thousands of constituents, ran community events, raised it repeatedly in Parliament and met directly with the Treasurer and Prime Minister. It is satisfying to see that persistence pays off.
From July next year, the CGT system reverts to the pre-1999 inflation adjusted indexation model. New housing builds are exempt and can retain the 50% discount. Transitional arrangements protect those who purchased assets before the change. Negative gearing will be abolished from July next year, except for new home builds, but if you are currently negatively gearing a property, you can continue to do so.
I do have concerns about the impact of CGT changes on new businesses and start-ups - we cannot afford to discourage investment that drives innovation and jobs. On Wednesday, I raised this issue in Parliament. The Treasurer has committed to consulting with the business community, and I will hold him to that commitment and push for the unique characteristics of the tech and start-up sector to be reflected in the final policy.
To everyone who wrote to me, came to a community event or had the conversation with me at their front door – thank you.
The playing field is now a little fairer for first-home buyers because of independents in Parliament and engaged communities like ours.