CANBERRA, ACT, May 13 -- The Treasurer of Australia issued the following transcript:
Note
Subjects: federal Budget 2026, housing, tax reform
James Glenday:
The Treasurer, Jim Chalmers, has arrived. He was flanked by the Prime Minister, too. Jim, welcome to News Breakfast. Thank you for joining us.
Jim Chalmers:
Nice to see you both.
Glenday:
Now, you have the look of a man who has finally got his way. Is this something you had been looking at for a very, very long time, particularly these changes to property taxes?
Chalmers:
No. The emphasis for most of the life of this government has been on building more homes and that's still the primary focus. But it became increasingly clear to us that even though the problem begins with not having enough housing supply, it doesn't end there. Too many young people are locked out of home ownership in particular, and the steps that we took last night, which we understand are contentious, they're difficult decisions, they are about trying to level the playing field for first home buyers, and particularly younger Australians who've been locked out for too long.
Emma Rebellato:
Let's talk about younger Australians. So, some of the ways that they are trying to get ahead is by investing either in shares or they're trying to buy properties in regional areas, for instance, and then they're renting elsewhere. They're now going to get caught up in this, aren't they?
Chalmers:
Well, no. If you look at what's happened in the quarter‑century or so since the big change to capital gains tax, it created a big distortion when it came to how investment is encouraged in our economy. And so if you look at, there's about a 20‑year period where, on average, people were being dramatically overcompensated for investing in existing housing and undercompensated for investing in shares or units or other kinds of housing. And so what this tries to do is it tries to normalise the benefit that people get, there's still a capital gains discount, but it's calculated in a more rational way based on real earnings.
Glenday:
I think property owners tuning in this morning are probably going to be thinking, what does it mean for my main asset? Are the values of Australian houses going to go down? If they do go down over the next couple of years, is your government going to be blamed for it?
Chalmers:
Well, what the Treasury modelling says that we released last night, when we released the Budget, is we still expect house prices to grow, but about 2percent slower than they would have otherwise. If you apply that to a median house, that's about $19,000. But we're not targeting a particular price outcome here, what we're trying to do is to make sure there are more affordable options for people. Everyone's got stories about first home buyers rocking up to auctions, being outbid by people who might have 8 or 9 or 10 properties. And we're trying to address that, I think, very real concern people have.
Rebellato:
Your forecast is saying that 75,000 households will be able to buy homes, but it's over 10years, that doesn't sound like a lot.
Chalmers:
Well, 75,000 first home buyers is a good outcome over the course of that period. It's 75,000 more than would otherwise be the case. And that's really one of the main reasons why we took this difficult decision. One of the main reasons why we came to a different view in some of these contentious areas, is because we want to level the playing field. We want to make sure, and we will make sure, that more first home buyers can get a toehold in the market. The way that the housing market and the tax system has interacted has locked too many people out and we're addressing that.
Glenday:
Just on grandfathering, obviously, if you own an existing negatively geared property, nothing really changes until you sell now. Did you give any thought to phasing out some of those perks? Because overwhelmingly older Australians have benefited from these and the ladder is now being pulled up. Obviously, there'll be young people watching this morning, who might be thinking, well, this might help me get into a home, but it's not going to help me to build wealth into the future.
Chalmers:
Well, first of all, we want to recognise and respect decisions that people have taken in the past. Overwhelmingly, this tax package is prospective rather than retrospective. But you need to remember as well, James, that these properties that are negatively geared right now, at some point they become positively geared. And so there's an element of phasing out automatically. People can continue to negatively gear a new property and that's because we want to make sure that where these tax breaks are made available, people are making a contribution to this major challenge that we have with housing supply.
Glenday:
Is it 5years? How long until you see a really big drop in the number of negatively geared existing properties?
Chalmers:
Well, typically it depends on which modelling you rely on, but between 5 and 10years, typically a property will tip over from negatively geared to positively geared, and so that will phase out of the system. But people can continue to invest in new properties because we desperately need to build more homes.
Rebellato:
The 13million workers to get the WATO tax cuts, it's not until mid‑2028 a lot of people are saying, but what about now? I need help now.
Chalmers:
Well, there's a tax cut coming in on the 1st of July and another one coming in on the 1st of July next year. We've got the instant deduction which provides a bit more tax relief as well. And then we've got the Working Australians Tax Offset. We provide as much tax relief as we can afford to do as we can responsibly do. And so the new tax cut in last night's Budget is timed to coincide with some of the revenue that we will raise in some of these other ways we've been talking about this morning.
Glenday:
You're mentioning these relatively small tax cuts. One of the lessons I think that a lot of your colleagues took from the 2019 election is that big changes, particularly to tax and property, needed to be accompanied by big income taxes. Reading between the lines of your Budget last night, is there space for you to move in this area, if not next year, certainly before the next election?
Chalmers:
Well, first of all, in the forward estimates in the four‑year period of the Budget, we are returning the money we raise on capital gains and negative gearing, we are returning to workers and small businesses in the budget. So, it's broadly neutral over the four‑year period. But we have been upfront in the Budget papers and in other interviews in saying this is a government that likes to return bracket creep. We've done it in 5 different ways already. There will be room in the future to do that. And so we will provide more tax relief when we can afford to do that in the most responsible way we can.
Glenday:
Coincidentally, just before the next election, do you think?
Chalmers:
Well, if you look at some of these changes, you know, some of the changes come in over the course of the next couple of years, then we need to make sure that there's room in the budget. There's a very substantial improvement in the budget over the 10‑year period and if that makes more room for tax cuts, that's a good thing.
Glenday:
Jim Chalmers, you are a very busy person this morning. Thank you so much for joining us.
Disclaimer: Curated by HT Syndication.
