Prime Minister Anthony Albanese’s bid to make housing more affordable for young Australians has widespread support despite the growing political pushback to his overhaul of the tax system, with new polling showing most voters are comfortable with a fall in house prices.
As former Treasury secretary Ken Henry claimed start-up businesses demanding protection from the government’s tax changes were seeking relief that’s unavailable to ordinary working people, a special Resolve Political Monitor poll revealed even Coalition and One Nation voters support a fall in property values.
The broad parameters of the government’s tax changes, including the restriction of negative gearing to new properties and a return to the pre-1999 capital tax gains concession system, go to the Senate on Monday for debate.
The government believes it will have the support of the Greens to push through the changes that Albanese said on Sunday were aimed at making housing more affordable to young people.
“What this reform is about fundamentally is making sure that young Australians can aspire to having a roof over their head. This is what this change is all about,” he told Sky News.
The Resolve poll, of 1800 people, found 54 per cent supported lower house prices, compared with just 11 per cent who were opposed. Another 35 per cent said they were unsure or neutral.
Support was strongest among Labor voters (64 per cent), property investors (62 per cent), uncommitted voters (57 per cent) and people aged between 18 and 34 (60 per cent). Among people aged 55 or over, support was at 47 per cent, compared with 13 per cent in opposition.
While 41 per cent of Coalition supporters backed a decline in prices, only 20 per cent said they were opposed. Among “other voters”, which includes One Nation and independents, support was at 52 per cent, while opposition was just 12 per cent.
Every income group backed a fall, from 51 per cent among low-income earners to 56 per cent among high-income earners. More than half of home owners backed a fall, compared with 13 per cent who were opposed, while among those with a mortgage, supporters outnumbered opponents 55 to 11.
Cotality’s daily dwelling value measure shows values have fallen by 0.8 per cent so far this month in Sydney and by 0.5 per cent in Melbourne. Sydney’s values are down 2.9 per cent from their peak at the beginning of the year, while Melbourne’s are down by 3.4 per cent.
However, values have continued to climb through June in other capitals, albeit at a slower rate. They are up by 0.3 per cent in Brisbane, by 0.4 per cent in Adelaide and by 0.7 per cent in Perth.
The tax package, especially its overhaul of the capital gains tax concession, has come under heavy fire from business groups. The start-up and tech sector is particularly critical.
On Sunday, Liberal leader Angus Taylor said the changes would ultimately devastate the economy by hurting business aspiration.
“What we will see as a result is investment drying up, risk-taking drying up, prosperity drying up and a continuation of what we have seen in recent times, which is the biggest collapse of any developed country in our standard of living,” he told Sky News.
However, former Treasury secretary Henry, who headed a review of the entire tax and welfare system in 2010, has used an academic paper to attack criticism of the government’s proposals.
Henry said the complaints were at odds with the business sector’s criticism of the tax system before the budget was released.
“I had no idea, prior to budget night, that Australia’s post-1999 tax system enjoyed such strong support within the business community. It is not what I was hearing,” he said in a paper released by the Australian National University’s Tax and Transfer Policy Institute.
Entrepreneurs in the start-up and tech sectors have argued they will be particularly hard-hit by the government’s changes, claiming they are effectively sacrificing income to create their businesses in the hope of a substantial capital gain when the firm is eventually sold.
Henry said this was a method of turning ordinary income into a capital gain that delivered a substantial tax benefit to start-up staff.
This was the way many businesses operated before the advent of capital gains tax and fringe benefits tax in 1985, as businesses sought to turn income into a capital gain to avoid paying income tax like ordinary workers.
According to Henry, someone who trained as a professional – such as a lawyer or architect – made long-term financial sacrifices but did not enjoy the tax benefit sought by the start-up sector, whose technology plans could ultimately wipe out income tax-paying workers.
“In 1985 the CGT and fringe benefits tax were in part motivated to remove opportunities for tax-effective remuneration structuring,” he said.
“Forty years later it might again be worth asking why a high-risk commercial venture with a distant payoff should be tax-preferred, relative to a human capital investment that involves many years of income sacrifice in the expectation of a future income gain that is also risky but fully taxable.
“Despite the volumes of commentary, the case has not been made.”
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Shane Wright is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X or email.
