The Albanese government’s biggest economic test will not be the size of the Budget, but whether it is prepared to take on vested interests and structural inequality.
OK let’s talk about ‘structural reform’ and ‘inter-generational equity’
Rather than targeting CGT and negative gearing (an obvious con & cynical tax grab that won’t work and will benefit no one), perhaps Dr Jim’s budget might target the Australian Public Service (APS).
Since Albanese became PM, APS headcount has increased by ~40,000 employees (+~25%). It is the fastest APS expansion in at least a decade, returning headcount to near-record highs (~200k).
Why this is in Australia’s interests or why we need this bloated workforce, which produces nothing of real value, is anyone’s guess. It’s a disgrace.
Anyway - using a total salary of $140k per annum per public servant, this has already cost Australia an extra $10–15 billion cumulative since 2022. It is costing Australians ~$5–6.5 billion per year, ongoing.
Halving this outrageous expense is not just achievable but can be done quickly, saving Australians $2.5-3 billion AUD a year.
Let’s see what happens. Given how useless Dr Jim is as Treasurer, I’m not holding my breath.
The distortions to the housing market have been known about for a good length of time, so I sincerely hope this government has enough political courage to act now. There are variations to the policy changes that could be implemented.
Change CGT discount of 50% to a lesser amount (find the sweet spot) EITHER for ALL classes of assets OR for real property only OR for real property used for housing only. There are ways to limit the change to target housing only if that is the market with the distortion. Grandfather assets purchased pre-announcement - just like the commencement of the CGT rules in 1986.
Change negative gearing by quarantining LOSSES from negative gearing to the same class of asset, eg losses arising from deductions for rental property may be offset and carried forward against income from rental property only, ie carry forward the loss for use in future years against that class of asset. Alternatively, the deductions could be allowed only to the extent of the income earned, ie NO loss generated. There are options throughout the current and past iterations of the tax system.
Something that gets missed in all these discussions is the essential nature of housing. Every human needs shelter. It is a basic human right - just like food, water and clean air!
Instead of seeing housing as an investment, we need to focus on satisfying the basic human needs of safe accommodation for all. Anyone who thinks this is an overreach, I suggest they sleep rough or couch surf or worry about being evicted and then reassess their values and show some compassion. Some of us are lucky enough to have a safe home and we should be grateful for being in that position, but that doesn't give us the right to say to others "you are less deserving and you can sleep in a doorway". My tolerance for the cruelty of 21st C society is very low.
Time for ALP to get off their arses and help people with genuine needs. Let's hope they have the guts.
Good piece but I think your assumptions are incorrect.
You are assuming that Albo and Dr Jim actually give a sh&t about Australians and the Australian economy.
You also seem to think that they have the intelligence and courage required, to actually engage in serious reform.
Respectfully, you must be joking. Albanese and Chalmers, being snake oil salesmen, aren’t interested in real reform.
They know full well that Australia is facing a fiscal disaster and they plan to steal $$ whenever and wherever they can, as long as it doesn’t lose them votes.
And so they’ll target those who don’t vote for them - wealthy people but also people who aren’t wealthy, but who have (gasp) purchased an apartment somewhere as an investment.
But of course they will - both these guys are unimpressive ALP dinosaurs, political hacks, whose horizons are limited to the next election.
We aren’t talking about serious leaders here such as Hawke, Keating or Howard. In fact, the idea of journeymen like Albo and Dr Jim engaging in structural reform is in itself laughable.
Neither men have the intellect, vision, guts or work ethic to even start the process.
Their CGT / negative gearing plan is incredibly stupid, from an economic perspective.
It will decrease housing supply, increase rents and disincentivise new construction and property development.
It won’t deliver positive outcomes for investors, renters or indeed the Federal government (as it’s not going to increase tax revenues).
But then again, their plan is to use this to win votes, pure and simple.
The frustrating thing is that there are solutions right in front of them, that could save Australia an absolute fortune.
The easiest way they could save $ billions? Take an axe to the APS. No more outrageous salary rises for politicians and public servants. This is costing an eye watering ~$5 billion AUD annually.
The most effective way to free up housing supply and increase opportunity for employment for Australians? Cut the mind boggling volume of immigration of people that Australian corporations use for cheap labour.
These two decisions alone would work far better than targeting investors, but they require an average IQ to understand and basic competence to execute, which rules out Albo and Dr Jim.
And so what we will get is a politicised budget, a divisive one, wrapped up in the nonsensical Canberra spin that we have become accustomed to in Australia, that will be aimed at one thing and one thing only - votes.
Mr “I grew up in Public housing” is unlikely to change his timidity , and fear of upsetting
his corporate donors . Hollow rhetoric is likely to continue to be his agenda .
Does he not see what is happening to Starmer in the UK ??
OK let’s talk about ‘structural reform’ and ‘inter-generational equity’
Rather than targeting CGT and negative gearing (an obvious con & cynical tax grab that won’t work and will benefit no one), perhaps Dr Jim’s budget might target the Australian Public Service (APS).
Since Albanese became PM, APS headcount has increased by ~40,000 employees (+~25%). It is the fastest APS expansion in at least a decade, returning headcount to near-record highs (~200k).
Why this is in Australia’s interests or why we need this bloated workforce, which produces nothing of real value, is anyone’s guess. It’s a disgrace.
Anyway - using a total salary of $140k per annum per public servant, this has already cost Australia an extra $10–15 billion cumulative since 2022. It is costing Australians ~$5–6.5 billion per year, ongoing.
Halving this outrageous expense is not just achievable but can be done quickly, saving Australians $2.5-3 billion AUD a year.
Let’s see what happens. Given how useless Dr Jim is as Treasurer, I’m not holding my breath.
The distortions to the housing market have been known about for a good length of time, so I sincerely hope this government has enough political courage to act now. There are variations to the policy changes that could be implemented.
Change CGT discount of 50% to a lesser amount (find the sweet spot) EITHER for ALL classes of assets OR for real property only OR for real property used for housing only. There are ways to limit the change to target housing only if that is the market with the distortion. Grandfather assets purchased pre-announcement - just like the commencement of the CGT rules in 1986.
Change negative gearing by quarantining LOSSES from negative gearing to the same class of asset, eg losses arising from deductions for rental property may be offset and carried forward against income from rental property only, ie carry forward the loss for use in future years against that class of asset. Alternatively, the deductions could be allowed only to the extent of the income earned, ie NO loss generated. There are options throughout the current and past iterations of the tax system.
Something that gets missed in all these discussions is the essential nature of housing. Every human needs shelter. It is a basic human right - just like food, water and clean air!
Instead of seeing housing as an investment, we need to focus on satisfying the basic human needs of safe accommodation for all. Anyone who thinks this is an overreach, I suggest they sleep rough or couch surf or worry about being evicted and then reassess their values and show some compassion. Some of us are lucky enough to have a safe home and we should be grateful for being in that position, but that doesn't give us the right to say to others "you are less deserving and you can sleep in a doorway". My tolerance for the cruelty of 21st C society is very low.
Time for ALP to get off their arses and help people with genuine needs. Let's hope they have the guts.
Good piece but I think your assumptions are incorrect.
You are assuming that Albo and Dr Jim actually give a sh&t about Australians and the Australian economy.
You also seem to think that they have the intelligence and courage required, to actually engage in serious reform.
Respectfully, you must be joking. Albanese and Chalmers, being snake oil salesmen, aren’t interested in real reform.
They know full well that Australia is facing a fiscal disaster and they plan to steal $$ whenever and wherever they can, as long as it doesn’t lose them votes.
And so they’ll target those who don’t vote for them - wealthy people but also people who aren’t wealthy, but who have (gasp) purchased an apartment somewhere as an investment.
But of course they will - both these guys are unimpressive ALP dinosaurs, political hacks, whose horizons are limited to the next election.
We aren’t talking about serious leaders here such as Hawke, Keating or Howard. In fact, the idea of journeymen like Albo and Dr Jim engaging in structural reform is in itself laughable.
Neither men have the intellect, vision, guts or work ethic to even start the process.
Their CGT / negative gearing plan is incredibly stupid, from an economic perspective.
It will decrease housing supply, increase rents and disincentivise new construction and property development.
It won’t deliver positive outcomes for investors, renters or indeed the Federal government (as it’s not going to increase tax revenues).
But then again, their plan is to use this to win votes, pure and simple.
The frustrating thing is that there are solutions right in front of them, that could save Australia an absolute fortune.
The easiest way they could save $ billions? Take an axe to the APS. No more outrageous salary rises for politicians and public servants. This is costing an eye watering ~$5 billion AUD annually.
The most effective way to free up housing supply and increase opportunity for employment for Australians? Cut the mind boggling volume of immigration of people that Australian corporations use for cheap labour.
These two decisions alone would work far better than targeting investors, but they require an average IQ to understand and basic competence to execute, which rules out Albo and Dr Jim.
And so what we will get is a politicised budget, a divisive one, wrapped up in the nonsensical Canberra spin that we have become accustomed to in Australia, that will be aimed at one thing and one thing only - votes.