Labor happy with softer housing market since budget
Jacob Shteyman |
Softer auction rates are a sign tax changes in the federal budget are making things easier for first home buyers, the housing minister says, as Labor weathered another day of criticism from investors and entrepreneurs.
Auction clearance rates held below 60 per cent nationally for a second straight weekend following the budget, according to property data firm Cotality.
Housing Minister Clare O’Neil said she was happy with the results so far.
“We want a level playing field between first home buyers and investors in the housing market and that’s what we’ve seen in the past two weekends,” she told the ABC on Monday.
Treasury modelling estimated that abolishing negative gearing for established properties and replacing the 50 per cent capital gains tax discount with an indexation-based system would result in home prices growing two per cent slower compared to no change.
Morgan Stanley economists forecast home prices could fall as far as 10 per cent nationwide, driven by the tax changes and interest rate rises.
“Seven million people around the country who are renting right now will end up with a fairer housing market because of what we’re doing,” Ms O’Neil said.
Those changes will be included, alongside $250 a year tax cuts and a standard $1000 deduction announced in 2025, in an omnibus bill that will be introduced to parliament on Thursday, before consultation has wrapped up on a proposed carve-out for startups.
The government plans to move amendments once the bill is before parliament.
It follows a backlash from entrepreneurs and venture capitalists, who argue the proposal could scare talent and capital offshore.
Because startups often have a negligible initial cost base and founders rely on large capital uplift when they sell their business to justify the high risk they take on, the proposed changes would mean their top marginal tax rate could rise from 23.5 per cent to near 47 per cent.
Independent MP Allegra Spender urged the government not to rush the changes through parliament.
“I really urge the government to take a breath,” she said.
“We need to be sure … that the unintended consequences are ironed out.”
Asked why a potential carve-out for startups would be tacked onto the legislation after it was introduced, rather than included from the outset, Prime Minister Anthony Albanese said that was the “normal way” tax reform was usually implemented.
If consultation had started before budget night, some people would have had an unfair advantage, he said.
“That’s called insider knowledge,” he told reporters.
But Ms O’Neil said the government had been engaging in conversations with startups even before the budget.
“There’s recognition of course that CGT arrangements need to take account of the specifics that are quite different for startups in terms of the economics of how they begin their businesses,” Ms O’Neil told reporters in Canberra.
Ms O’Neil brushed off a billboard campaign at Canberra airport urging MPs flying into the nation’s capital to “stop the ambition tax”.
Most Australians were not worrying about the impact the tax changes would have on their investment property or family trust arrangements, she said.
“They are sitting around the kitchen table with a pile of bills, trying to think about how they’re going to make ends meet and how they’re going to save for a deposit for a home,” she said.
“Our budget is for those Australians.”
Ms O’Neil said the carve-out would be narrowly targeted at startups, but that would not stop the prime minister from consulting widely on the issue.
Australian Chamber of Commerce and Industry chief of policy and advocacy David Alexander warned against keeping the carve-out for just tech startups.
“This is going to go into all industries – small, medium, and large businesses – so ameliorating the damage in one sub-sector is really not going to cut it,” he told ABC Radio.
AAP