Treasurer Jim Chalmers announces the most significant property tax reforms of the century in Tuesday’s budget, alongside deep cuts to the National Disability Insurance Scheme (NDIS), business cost reductions, and initiatives to boost affordable housing for young Australians. These measures address inflation pressures prompting recent Reserve Bank interest rate hikes, while delivering a $45 billion boost to national finances through saved tax revenue.
Major Property Tax Changes
The budget centers on tax reforms, including restrictions on negative gearing, a rollback of the capital gains tax (CGT) concession to its original form, and minimum tax rates for family trusts. Wage earners will receive tax cuts, likely as offsets starting in the 2027-28 financial year.
Prime Minister Anthony Albanese confirms shifts in property tax settings to tackle the housing crisis. “For a long period of time, young people have tried to save for a home. Another year has passed since the election and not enough has changed,” he stated on ABC Radio. “So many people have had another year of missing out at auctions, of renting and paying someone else’s mortgage. And too many young people are close to giving up on the opportunity of owning their own home.”
Albanese emphasized the need for action at a caucus meeting: “A responsible government needs to be prepared to make tough decisions.”
Opposition Criticism
The Coalition opposes the changes, with Shadow Treasurer Tim Wilson labeling them “deceit and betrayal.” He argues the reforms will harm intended beneficiaries. “It’s extremely clear that this government’s intention is to hit every single Australian, to tap into their wealth because they cannot control their spending addiction,” Wilson said. “This government’s budget process is in complete disarray because they have broken their word and Australians have woken up to the dishonesty at the heart of this government and its budget.”
Housing and Youth Support
Nearly $60 million over four years targets housing for Youth Allowance or Austudy recipients, funding community providers to house 2,325 people this financial year, rising to 4,355 by 2029-30.
Analysts from UBS suggest the reforms could shift investment toward shares, easing property price pressures. Strategists Richard Schellbach and Lily Huang note that current tax treatments, especially negative gearing, have fueled decades of house price booms. The changes would “level the playing field” for other investments.
Financial Outlook and Savings
Despite projected deficits over four years and gross debt exceeding $1 trillion this year, Chalmers highlights a $44.9 billion improvement in finances from 2025-26 to 2029-30, driven by $64 billion in spending cuts and reprioritizations, plus higher revenue partly from elevated oil prices amid the Iran conflict.
Brent crude surged nearly 5% to $US105 per barrel as conflict resolution hopes fade. Inflation may hit 5% mid-year due to rising petrol costs, with economic growth likely downgraded from 2.25%. Persistent high oil prices could prolong inflation and slow job growth.
Chalmers credits savings and restraint: “We’ve delivered a big improvement in the budget bottom line since we were elected and another improvement since the last update in December. What’s driving this improvement in the budget are the savings we’ve found and the spending restraint we’ve shown.”
Key Spending Cuts and Reprioritizations
The largest cut targets the NDIS with $35 billion trimmed over four years. An additional $3 billion saves by ending the private health insurance rebate discount for those over 65. Redirected funds support $25 billion for state hospitals and $6 billion for new Pharmaceutical Benefits Scheme listings.
Productivity and Business Measures
A productivity package accelerates economic growth without fueling inflation, featuring a permanent $20,000 instant asset write-off for small businesses, elimination of fees on construction and safety firms, and faster building approvals.
