Changing the Capital Gains Tax discount won't fix the housing crisis - and risks making it worse. That's why Coalition Senators have issued a Dissenting Report in the Senate's CGT Inquiry.
Labor's housing failures have put the Australian dream under enormous pressure, and now Labor members on the inquiry are trying to blame one tax setting for a crisis caused by a collapse in supply.
After four years of Labor, Australians are getting housing gimmicks, not solutions. The Housing Australia Future Fund has $11.4 billion but has delivered only a handful of homes. Labor's 5% deposit schemes have driven up house prices at the entry level and left young Australians in high debt and exposed to interest rate rises. Labor is also badly off track on its own housing targets.
If Labor pursues changes to the CGT discount, it will be another simplistic and one-dimensional response that sidesteps the central problem in housing, that not enough homes are being built. You cannot tax your way out of a supply shortage. Whilst Labor moves to punish mum and dad investors with tax hikes, they're simultaneously angling to give big institutions and super funds tax breaks to become Australia's perpetual corporate landlords.
Housing supply has collapsed as population growth has surged. Australia has gone from building around 220,000 new dwellings in 2018 to around 170,000 last year. Australia has only around 400 dwellings per 1,000 people, well below the OECD average of nearly 500. That is the real housing story, fewer homes, more pressure, and a government squibbing its responsibility.
The suggestion that Australia's housing crisis can be solved by changing the CGT discount is as silly as it is cruel. Weakening or abolishing it would do little for affordability, while cutting rental stocks, pushing up rents, and discouraging investment.
The real answer to housing affordability is more supply, not another Labor housing gimmick.
