Zoomers, boomers and a federal budget that could fix housing

Added: 2026-05-12

[00:00:01]Hi, it's Samantha Celinger Morris here, your host of the morning edition and I am recording tonight in Parliament House in Canberra where just a couple of floors away from where I'm sitting, treasurer Jim Chomemers has just handed down the government's federal budget.

[00:00:16]And joining me is our senior economics correspondent, Shane Wright. He's got one of the toughest jobs, I reckon, in journalism, explaining the economy to those of us who uh don't necessarily always understand what's happening.

[00:00:29]Shane, how you feeling?

[00:00:30]>> Just happy to be here. Where else would I rather be? Samantha, >> I mean, of course, but like to the point, are you feeling richer? You feeling poorer?

[00:00:38]>> I'm feeling energized by an interesting budget. It's not It is not a boring budget. So, that's the saving grace.

[00:00:44]>> Well, absolutely. Let's get to that point because I'm going to pin you down here because only two months ago, you wrote that this budget will be quote the most important one this century. You had good company. The prime minister, Anthony Albanes, said it would deliver quote big reform. And Treasurer Jim Chomemer said this is quote the most important and ambitious budget in decades. Now, are all of you overegging the pudding here, or is this really like for you the budget equivalent of like a new Kate Bush album?

[00:01:12]>> Well, nothing will ever be as big as a Kate Bush album. Let's let's get that clear. So, let's put that to one side.

[00:01:19]In terms of what that has been announced, I still maintain it is the biggest and this this is qualificate qualified by saying if it occurs, if it all goes through.

[00:01:31]So I think it's it clearly surpasses what Joe Hockey tried to do in 2014 cuz he was only focused on one side of the budget. Um whereas this one has movement on both sides. It is bigger than Wayne Swans in 2010 because so much of that actually never occurred.

[00:01:50]>> Well, let's get stuck into the nitty-gritty because there really are three groups of people that both the prime minister and the treasurer said they'd really be focused on helping in this budget and that's young people, the working class and Australians trying to get into the housing market. So, let's walk through, you know, whether they were playing footsies with promises or whether they've actually come through for each of those groups. So let's start with Australians trying to get into the housing market. What sort of measures are they planning on introducing and how much would it actually help them?

[00:02:20]>> Yeah, this is like and this is the area that's going to it crosses all three of those areas and it's the one that's going to be the most contentious and which is going to create >> so many interesting headlines over the next couple of days, couple of months.

[00:02:33]These are around capital gains tax and the concession that was introduced by Peter Castello back in 1999. It's about negative gearing which was introduced by Joe Lions in the 1930s and the taxation of trusts um and the way that they get used uh by people with the financial wherewithal to effectively choose their tax rates. These three areas ultimately some economists will say well they're not that big a deal in terms of what they do. However, the fact that no one has been able to change them. Peter Castello wanted to deal with trusts back in around 2002, but he got shouted down by the National Party at the time. Um, negative gearing, the ne intersection of negative gearing with the capital gains tax concession, which Treasury has been belting on every uh treasurer since about 2000 to do something about. They've finally found a treasurer. One who's prepared to do it and two has is part of a government that has a monster majority in the parliament with which to deal with that. And also going straight to young people, a growing number of people who are just absolutely priced out of the housing market. Now, CGT, neging trusts, they aren't the cause of the stupidity that is the Australian property market, but they they don't help.

[00:04:00]>> Well, well, just I guess walk us through what are the changes that the government plans on introducing to the capital gains tax to negative gearing and then to the trusts, >> right? So negative gearing, negative gearing will continue to exist, but you actually have to build a new >> explain to us what it is and then negative gearing is the ability to reduce your taxable income with the losses that you acrew on a residential property. Now, Australia is the only country in the world that enables you to reduce your taxable income by the losses on investment properties. If you're in other countries, the loss actually only occurs to what's happening on that property, not the entire income.

[00:04:39]>> Y >> um and people move and and this is what's what happened in 1999. The capital gains tax concession was introduced. Peter Castello was assured people this what this will do was encourage people to buy shares. They did not. They bought property. And there's some beautiful if you like you if you like graphs have a look have a look in budget paper number one because there's some great graphs from Treasury about what actually happened. People really did go into h into houses not even units. They went into houses >> and houses take up a lot of space. Um people want them on big blocks and you can only >> you limit the number of people that you can have in a particular area. And this is really central to the problem, right?

[00:05:21]Because people started buying houses as a means of investment as opposed to just shelter. Yeah, exactly. So, okay. So, tell us about the other changes and how this is going to realistically help or not help uh young Australians or Australians trying to get into the housing market.

[00:05:35]>> So, the capital gains tax concession, the 50% concession that was introduced by Cassello is gone largely. like there's some grandfathering and I'm not going to try and explain the ins and outs of grandfathering right now but going forward if you have a capital gain on an investment property or on shares or on your crypto or your Birkin bags and there are some people out there who do that um you will have to effectively take into account what inflation has done to the value of that pri that product since you bought it. So this is what how the CGT system worked before Castello's change.

[00:06:13]>> So essentially you're being net taxed now on the real gain, >> the inflation adjusted gain and it'll be at your at your marginal tax rate but there's a little winkle in that in which they've said right we there's a minimum tax rate of 30%. Now that's really important which and it's connected to what uh happening in trusts where a minimum tax rate of 30% has also been set for trusts discretionary trusts which are used by people. There are legitimate ways to make make sure that you can pass on particularly in the farming sector. I want to pass on this to my my kids that people put these things into trusts. uh but there are more creative people who use them to minimize the tax that they pay and their kids pay or things like that.

[00:06:58]>> And how does so how does how does changing or how does introducing this tax on on the trusts how does that um help Australians to get into the housing market?

[00:07:07]>> It's this this is it's not in the housing market. It's not even intergenerational equity. It is equi it is equality between income. Now I'll explain it this way.

[00:07:19]If you and I, we're wage slaves. We get taxed.

[00:07:25]And the average tax rate for a wage and salary earner in this country is about 30%.

[00:07:30]Remember that number. 30% is really important. If you invest in capital, >> the tax rate becomes lower. And this is what the argument is, especially from tax experts who effectively argue there shouldn't be a difference between a real difference between the tax rates if you are earning income from sweat or from your ingrained ability to uh pick an increase in the value of Birkin bags.

[00:08:00]>> And essentially this is this is kind of cuts to the heart I guess of what Anthony Albanese has been saying he wants to do which is realign the budget, right? realign the tax system so it's fairer. So, and this is really tipping it more uh equally I guess uh to to workers as it is to say investors at least in this taxing way >> that that is they're upfront about it and Charas is upfront through it through the budget papers that that's largely what you're getting at and there is a large amount of tax literature saying right why would why is there a difference between income earned that way but between working and between investing >> I mean essentially it was just favoring rich people yeah >> yeah because they are the ones who have the money to invest things. That's part of the argument.

[00:08:42]There are legitimate arguments, don't get me wrong. There are legitimate arguments that there should be lower taxes to encourage uh like in entrepreneurial abilities.

[00:08:52]>> Yeah.

[00:08:52]>> And there are carve outs here particularly around startups and venture capital.

[00:08:56]>> Yes.

[00:08:57]>> Which is a a recognition that you in some cases you do want to give people that incentive to do something. housing.

[00:09:05]It's really shot us in the foot because you've written um just recently about how many capital cities in our country I think now the median house price is a million dollars and you were saying this is really quite horrible but just to focus on the housing cuz treasurer Jim Chalmer's every year on budget night he comes down the press gallery where we work and he visits the offices and you know he fields questions and uh tonight he defended the figure of you know he says that there's an additional 75,000 homes that he says that the changes that we've just been discussing these tax changes they will provide over the next decade these extra 75,000 homes. Now, not to sound too critical, but my first thought was is 75,000 homes like is it is that enough? Because of course there are millions of Australians dreaming of owning a home right now, right?

[00:09:50]>> Yep. 75,000 outwardly doesn't sound a lot. It's about 1% of the uh ownership market. M.

[00:09:57]>> However, he didn't mention what else is going on like like there's a $2 billion fund that's going to give councils and utilities organizations the chance to put in the infrastructure to build more homes. The estimate from that is another 65,000.

[00:10:13]There are other programs like their 100,000 homes for first home buyers.

[00:10:17]That's in addition to this. During his press conference, he actually said the once you pull in all these things, price growth for homes will fall will slow by 2%.

[00:10:30]>> Or about $19,000.

[00:10:32]>> Yeah.

[00:10:32]>> Now, if you're a first home buyer where the first what is it I think the f it takes now a first home buyer about almost 12 years to save for their deposit. If I go back 20 years, it was 7 and 1/2 years. These are one of some of the these are some of the things that have got them.

[00:10:47]>> Wow. a big deal. I mean, it's all break.

[00:10:50]>> Yeah.

[00:10:50]>> And it's better than like the crazy systems that we've put in place like the Howard government said, "Right, we'll give you a a bonus like a first home buyers bonus, which are just immediately capitalized into the selling price." So, this is >> it. Okay. You don't hear like the number of MPs who've said we need slower house price growth. M look yeah I've got one hand and yeah I'm going to might remove remove all of the fingers to count them all who said that. So that is >> so just looking at the one number as opposed to what it might do to prices growth >> which is what has literally killed the aspirations of every millennial every zoomer who've looked at the housing market and gone how the hell am I going to get into how the hell am I going to get a home? So 0 to 10 millennials, Gen Z's, how happy should they be by these changes in terms of it enabling them to actually achieve this dream that for so long they've thought they've thought, you know, so many have thought it's over for me. I just won't be able to get into the housing market.

[00:11:50]>> Oh, they should be happy. But it's not as if there's going to be this rush of every millennial out the door saying, "You beauty, give me a give me the keys." Cuz the average house price is still 850,000. Yes. The average new mortgage in Sydney is it's close is about 34 of a million dollars. Like it is this is we dug ourselves into this problem.

[00:12:13]>> We did Shane >> and it is going to take a long time to find our way to out of that hole.

[00:12:19]>> Well, tell us about renters then. What do these changes in particular to capital gains tax and negative gearing mean for them? Yeah, this is interesting because you've had this push back with from the real estate industry and particularly from uh investors who might have more than two or three homes saying, "Ah, this is outrageous. I'm going to sell up." Who are they going to sell to? Are they going to sell to the renter who can't get into the the market? The house doesn't disappear.

[00:12:46]>> If and this is part of the problem with the arguments being pushed saying this is end of days for renters. Look, and there is some analysis saying that you might see a about one or maybe 1 to 2% increase in rents.

[00:13:01]>> However, you there's also this argument that house prices will fall to like 2 to 4%. There's so you you've got an offset there saying the person who who's a renter who wants to buy, which is a large proportion of them, might now have a better chance of transitioning from renter to home buyer.

[00:13:21]>> Okay. So if they can make that leap then and if they can't they're they're stuck buying I think Treasury has said about $2 per week for a household paying the medium amount is what rent they think will >> yeah and there's and there's a large number of programs we are really in the middle of it's a this government and the states particularly particularly Victoria and New South Wales are throwing a lot at trying to get housing built in the right places like around transit centers like railway stations and getting say the superanuation sector getting more investors in there uh which is how the rest of the world like where you don't have huge amounts of public construction you have companies or non nonprofits investing in housing we have left it to private individuals to supply it so we have like it's almost 10% of the population is a landlord you cannot go to another country and find that sort of proportion and it's because we've said housing should be it rather than being shelter >> yeah it's an investment >> it's an investment And with making an investment, there are consequences which are is part of the reason this government is trying to deal with it tonight.

[00:14:27]>> Well, tell us about the working class then because the government also was sort of saying in the leadup to this budget, well, we're going to be helping the working class. So, how much is there in the budget for them? Uh there's an income tax to start off with, right? An income tax cut, >> right? So, when you talk about working class, you're talking about working people all the way up, I think. So the uh working age tax off offset 13 million people will eventually get that. So in >> and how much of an offset is that?

[00:14:54]>> It's $250 which will not be paid until 2028.

[00:14:58]>> Right.

[00:14:59]>> However, so we've got the first income tax cut. It's worth $5 a week which kicks in from July 1. Now >> that's for everybody.

[00:15:09]>> That's for everybody because they're reducing the bottom tax rate from 16 to 15 cents. And there's also the standard tax deduction which is estimated to be worth uh for most people $300 to $400 plus. And there's a large package of productivity measures in tonight's budget. So there's actually an estimate that the standard tax deduction will save Australians about $380 million in um better economic activi outcomes.

[00:15:41]It costs the budget because people as many as people say like people say your accountant promises, "Yep, I'll look after you." Standard tax deduction.

[00:15:50]Bang. Don't have to go to the accountant. You probably There's a large proportion of people who will be better off going. Not not just the fact they're not collecting receipts in shoe boxes, but because they don't have to spend time, >> of course, >> 45 minutes talking to a an accountant.

[00:16:04]>> And and don't get me wrong, I like accountants. Some of my best friends are accountants.

[00:16:08]>> Yes. I'm sure. I'm sure. So that's so that we're coming back to tax. So that kicks in from this the coming financial year.

[00:16:15]>> Okay.

[00:16:15]>> There's another tax cut that starts on July 1, 2027.

[00:16:20]And the the WO the working age tax offset kicks in for that financial year.

[00:16:26]The surprise tonight was the fact that that is going to be ongoing. There was speculation that this would be just a one-off. It's now been built into the budget. Um, and look, I for the last eight months I've been saying there'd be a tax cut announced in this budget.

[00:16:44]There's a tick for me because that's what's occurred. I would put money that that working age tax offset gets increased over the next two years somewhere really, >> particularly in the run-up to the next election.

[00:16:55]>> Okay. Now, we do have to address all of the investors out there, all the people that are thinking, "Dear Lord, I've worked really hard. I've got a fair amount of money. So, have the rich been robbed in this budget? Or is it something more along the lines of what our colleague Peter Harter has written this evening, which which is that it's not so much robbing the rich as it is robbing mom and dad to pay son and daughter?

[00:17:16]>> How dare how could I contradict Peter Harter? But he but he's right. Um, yes, we know that the the fifth largest lender in this country is the Bank of Mad. And it's because one, they've they've been able to benefit from the tax advantages that have flowed to them.

[00:17:34]Uh that's pushed up property prices >> as in through capital gains and >> capital gains and such. Yep.

[00:17:40]um and the demographic tailwinds that the the boomer generation really enjoyed and good luck to them because like where they started from and where like they have bent and shaped the tax system to to their to their gain which every generation wants to do.

[00:17:59]>> Yeah. But does everyone do it in the in the same way that the boomers have they been as successful as the boomers? Oh, >> no one's been as successful as the boomers.

[00:18:05]>> Why why is that shame? because it's such a a large bulge of them.

[00:18:10]>> Oh, it's just a large cohort.

[00:18:11]>> Like we haven't seen such a large generational cohort as the boomers.

[00:18:18]>> And I think there was some analysis in the the budget just in terms of >> the number of working age people that the budget is relying on.

[00:18:26]>> Peak Boomer, it was about 5.6 u taxpayers to everyone who's requiring financial support. as the boomers die and then and X's start moving into age care, it's falling down to 2.2 2.4.

[00:18:43]>> Okay. So, tell me if I'm reading some punishment for the boomers in this budget in this one particular measure because the government's removing the discount on private health insurance rebate for people over 65. This is going to save the government $6 billion. So, their bills are going to increase by about $240 a year. Is this punishing the boomers?

[00:19:01]It is like there's no like the government Mark Butler who made this announcement a couple of weeks ago trying to couch it as like why would why would you offer this incentive? It's not it's not an incentive. Give you are giving older people a discount on their their health insurance when they are the biggest users of health insurance.

[00:19:20]>> Who did who brought this in? machine >> John Howard.

[00:19:23]>> Mhm.

[00:19:24]>> At the time when the great generation, the greatest generation, so the pre World War II, preWorld War II generation were moving into their later years, that government did have a lot of money and they really focused it on the boomer population who were their electoral base. The problem is the boomers are dying. There is no they've moved into age care and the cost of age care continues to explode.

[00:19:52]>> We have to look and the way that uh we were trying to deal look after people in age care was an was an abomination >> and there's just not there are not enough millennial zoom zoomers or exes to pay for >> yes >> what boomers deserve which is good care.

[00:20:10]>> Okay. And so if the rich haven't exactly been robbed in this budget and it's more that you know the moms and dads who are being robbed to help you know their sons and daughters is there anything else in the budget that's sort of that in which that manifests you know that mom and dad are being robbed like are they are they coming out worse from this budget >> these moms and dads >> some of them some of them are like it's interesting there's so many grandfathering elements around say CGT negative gearing if you build a new home you can still negatively gear that. Yes.

[00:20:40]>> Um, >> it's existing stock which you can >> It's existing stock which is part of the problem. It has been always the problem ever since Joe Lions introduced this is that about 85% of negatively geared properties exist already.

[00:20:56]>> So the people who are buying them are competing against first home buyers largely. What is it? I think there was some analysis tonight showing that from Treasury showing a third of all uh landlords are subsidized for the entire time they hold their asset.

[00:21:12]>> And does this does this change any of that?

[00:21:14]>> This will change this act really does change the uh the financials around negatively gearing. Okay. So there there's nothing like about half the population is still positively geared.

[00:21:25]>> Yes. But so we're talking about those who negatively gear and those who are they are using the tax system >> to reduce their taxable income subsidize their life choices and then get this great capital gain further down the track.

[00:21:40]>> Now I wanted to ask you Shane just about the overarching framing I guess of this budget because we know that Jim Chalmer's and Anthony Albanzy when they when they were basically flagging that they were going to roll back you know uh negative gearing and capital gains tax.

[00:21:54]Obviously, this is the the plans that really did in Bill Shorton. He essentially lost uh well, he lost an election over he lost the unusable Yeah, he lost the unlusible election, I believe. And I think the way that they've sort of pitched this is, you know, very much um this is going to, you know, be about intergenerational change.

[00:22:13]And I think that's how they're trying to get support for it, I guess. So, how far do the changes that we've discussed in the budget or whatever else is in there, how far do they go to really accomplishing this? like does this really realign uh the tax system? I know our colleague Jack Mey has written it's an attempt at realignment from old to young, from wealthy to wage earners. How much does it accomplish that?

[00:22:35]>> Well, unless you were going to seize the uh everyone's wealth, there's only so so many ways you can do it.

[00:22:42]>> So, absent Robin Hood, literally.

[00:22:44]>> Yeah. And or Ned Kelly given let's say we're in Australia, we may as well go with the local.

[00:22:50]>> That's right.

[00:22:50]>> Yep. um that that the options are relatively limited in terms of the tax system cuz at the end of the day we just need to build a hell of a lot more homes and >> so how so how much in the budget is is supporting that other than what we've discussed actually providing >> we're talking about billions there are this government for >> enough billions because you know often they put these large figures in budgets but then what you know in a you know >> well this is why you aren't you aren't on the reserve bank board Samantha correct I know it's surprising to bring this up, but if we know that there are some capacity constraints at the moment because so much is going on trying to get homes built.

[00:23:31]>> Yes.

[00:23:31]>> The the war in Iran is just Yeah.

[00:23:35]Sprinkles, more than sprinkles on top.

[00:23:37]It's pushing up the cost that builders are facing. Anyone who's got anything to do with a plastic like think of a a sewer pipe as much as people might not want to think too much of that early morning. I'm purpose I'm glad we have sewage.

[00:23:50]>> Yeah, sewage sewage sewer pipes they are going up in price because the hydrocarbons that you make them Yes.

[00:23:57]have gone up in price. So you've got that aspect, but you're trying to build a lot all at once because we this government is spending literally tens of billions while the states and the states are also doing something similar because they've woken up to the fact >> one of the reasons one of the reasons we saw the Pharaoh result uh just a few days ago >> is that people are damn angry. They are angry at what life is delivering them and they are absolutely within their rights to be angry because they've been stuffed around >> like reaching a breaking point angry >> beyond that. Yeah. And you can you can argue right we must do something for older Australians who are particularly angry um and regional Australians or and they're like to be blunt they're a smaller cohort than the millions of millennials and zoomers who are going how the hell do I get a house and ultimately you have to make a choice what's more important investment returns or a a a roof over your head >> and like I like I write extensively about this as you know Samantha we have got to the point that couples are putting off having children because of the price of housing now >> and you can see that in the fertility rates you can see that in the surveys that keep coming through >> now that's a terrible situ that is a terrible situation where we're telling young people right you've got a choice you can you can negatively geared gear >> or you can have kids >> you can't have both >> that's where they've got to Well, Shane, I love spending bed at night discussing this with you, so thanks so much for your time.

[00:25:33]>> Very happy to be here with you.

[00:25:38]>> Today's episode was produced by Chi Wong with technical assistance by Debbie Harrington. Our executive producer is Tammy Mills and our podcasts are overseen by Lisa Muxworthy and Tom Mckendendrick. If you like our show, follow the Morning Edition and leave a review for us on Apple or Spotify.

[00:25:57]Thanks for listening.