Federal budget: a false dawn for first home buyers

Hinzugefügt: 2026-05-18

[00:00:00]But let's go to well, the best in the business, I say. He's going to give us an expert opinion on the federal budget.

[00:00:05]Is the unconventional economist, Leith van Onselen. Hello, mates.

[00:00:09]Good day, mate. How's things?

[00:00:10]>> Oh, you know. I'm I'm feeling really chipper today about that budget last night. Well, we we knew everything before he started talking at 7:30 last night, didn't we? Yeah, pretty much. The The only hand grenade that was thrown that I didn't see coming was the 30% minimum tax tax rate on capital gains.

[00:00:28]So, so so that So, so that was new on we you know, we knew the indexation method was coming to the pre-1999 method. We knew the negative gearing changes are coming, but I didn't I wasn't necessarily expecting to bring in a minimum 30% tax rate for capital gains, which is obviously going to impact sort of self-funded retirees and lower income earners, that sort of thing. Um so, that's that's that's obviously pretty brutal. My My My read on it is I didn't necessarily care if I was doing this sort of stuff provided, and this is a big proviso, that they were going to reduce taxes on income on on personal income uh you know, earners. Yeah.

[00:01:02]We We We have an issue in Australia whereby the federal government is ridiculously reliant on personal income taxes. It raises more than half its revenue on from workers through personal income taxes. We're one of the most reliant countries in the world. The top marginal tax rate of 190,000 kicks in at 1.9 times median full-time earnings, Yeah.

[00:01:21]>> which are about $100,000, which is just a ridiculously low rate. Put that into perspective.

[00:01:24]>> Compare that to New Zealand. I was going to say, compare that.

[00:01:27]Yeah, yeah. So, in So, in New Zealand, it's like over three times. Yeah.

[00:01:30]>> And we are the highest in the English-speaking world by by you know, we we have the the top marginal tax rate kicks in at a very low threshold compared to every other English-speaking country. And the problem with this is just that it doesn't actually fix fix this budget on tax scales.

[00:01:46]Uh just And we've got obviously in a high inflationary period, which means they're going to get higher nominal wage growth, but our wages won't rise. And And over time, it just means that we're going to be pushed into higher and higher um you know, tax brackets. So, for example, using the federal budget's uh, wage growth forecast, by 2027-28, the median full-time um, income's going to be about 108,000 or 108,500.

[00:02:08]Yeah. And that means by then it's going to only have to earn 1.75 times the median full-time earnings to hit top marginal tax rate. And if you extrapolate that over a decade, we're going to get closer and closer to that.

[00:02:20]And so, what what what this means is that the the through inflation and bracket creep, we're going to continually pay a higher average tax rate, we're going to be pushed into higher tax brackets, and the federal budget does not does nothing to fix that. And if the if So, so basically, I see it as a tax grab, all right? So, they've they're going to raise more money from capital gains taxes and negative gearing reforms and stuff like that, that's fine, provided you do proper tax reform, and you then take the pain off [snorts] wage and salary earners, which they haven't done. Yeah, you know what? If the the smartest and the brightest that are coming through now, you know what?

[00:02:52]There is no incentive for me, if I've got a brilliant idea and I want to be the the the king or queen of industry, and I'm straight out of uni, whatever, straight out of school, I've got this brilliant idea, I'm not going to set it up in Australia. See you later, I'm going to Singapore, I'm going to New Zealand, I'm going to I'm going to the US, where the government rewards me for hard work, great thinking thinking, and earning money. Why why would I do it in Australia? Oh, absolutely. We The Australian tax system is broken, all right? We are so heavily relying on wage and salary earners to to, you know, raise the nation's tax. We don't we don't tax effectively.

[00:03:28]And unfortunately, because we've got an aging population, we're just squeezing a diminishing pool of workers That's right. harder and harder every single year to pay the tax on behalf of everybody. Just to keep up with the cost of living, Leith. Yeah, yeah, yeah. And and and the whole thing about it is, like, this none of this is rocket science. The the Henry Tax Review that came out in 2010, under the former, you know, Rudd-Gillard governments, that set the template of the sort of reforms we need to do to actually improve the tax system and and spread the burden. And every single government since then has ignored it, and the problem just keeps getting worse. And unfortunately, we're in a situation whereby the government is is going to raise less and less from indirect sources like fuel excise because they want us to all drive electric vehicles. Guess what? They don't pay fuel excise. They um we're we're they've obviously completely stuffed up the tobacco excise. They've taxed smokes so hard that they're now losing money on that.

[00:04:15]>> Yeah. Um etc. etc. So, they're we we have diminishing tax pools in all these different areas, but the one area where they continue to slug us ridiculously hard and grows every single year cuz of inflation and bracket creep, are personal income taxes. So, they're just basically squeezing uh wage and salary earners like lemons for every last drop. And unfortunately, with the negative gearing capital gains tax changes, I don't have a problem with them in principle provided they were going to use the savings to then cut personal income taxes, which they have not done. No, they've not done that at all. Every worker gets 68 cents a day.

[00:04:47]Um we're focusing on the big stuff. Is there anything in the weeds that you liked?

[00:04:51]>> Yeah, well, not not liked, actually disliked. So, as you all buried buried right back in uh you know, I think budget paper number three, appendix A is the federal government has upgraded net overseas migration forecast by 55,000.

[00:05:03]So, uh over last year's budget. So, basically, um in during a housing crisis when we have a rental crisis, we're not building enough infrastructure, everything else, the government has upgraded migration net overseas migration by 55,000 on last year's budget. And that obviously means 55,000 more people requiring housing.

[00:05:22]Mhm. At a at a time when we can't build enough homes and and the supply situation is getting worse cuz of the Middle East oil shock, which has driven up the cost of everything. And builders are now screaming because, you know, the cost of cement, bricks, PVC pipes, everything is going through the roof, which means that we're going to get less homes built. It's just logic.

[00:05:39]>> Yeah.

[00:05:40]>> And at the same time, the federal government is fire hosing additional people into the country. And they're again, they've upgraded um over this current financial year or next year an extra 55,000 net overseas migrants in their forecast last year. So, it's just again they've lost control of migration.

[00:05:54]>> We've got to keep the Ponzi scheme going, Lee. I mean, you can't you can't crush the Ponzi scheme. Otherwise, where are we going to get our tax revenue from? And that's why that's the priority because we just keep importing taxpayers. And you're right, there's no housing. There's zero housing for anybody. It's It's not right.

[00:06:10]Yeah, it's it's crazy because they they they they uh, you know, catch this budget as a as trying to help first-time buyers, right? Through the negative gearing capital gains tax reforms. But at the same time, they're they're crushing first-time buyers through their ridiculously immigration levels. And the reason why it's bad for first-time buyers is most first-time buyers rent before they buy.

[00:06:27]And if you import more people than you have housing for, you drive up rents as we've seen, which makes it harder to save a deposit to then buy a house. And also, it also puts upward pressure on home prices. So, it's a double whammy for for first-time buyers. And I just I think that's the reason why I'm raising it cuz I want the media to get on their backs about this. Good on you. Lee Evans on another I've got to run I've run out of time. Um, you are the unconventional economist. Appreciate your time as always on 4BC Mornings.

[00:06:53]Yeah, no problem. What are the common