Australian renters face a bitter political dispute over Labor’s housing tax changes, after competing forecasts suggested the reforms could add between $2 and $10 a week to rents over time.
Health Minister Mark Butler has backed Treasury’s estimate, while Deputy Opposition Leader Jane Hume accused the government of ignoring warnings from the property industry that the impact on tenants could be several times greater.
The changes, due to begin in 2027–28, would restrict negative gearing on residential property to new builds and replace the existing 50 per cent capital gains tax discount with inflation-adjusted indexation. Existing investments made before the Budget announcement would retain their current negative gearing arrangements.
Modelling commissioned by Master Builders Australia, the Property Council of Australia, the Real Estate Institute of Australia and the Housing Industry Association forecasts that rents could rise by about $9 to $10 a week by 2029–30. It also estimates that the combined effect of the tax changes and the government’s housing support programme could result in 8,742 fewer dwelling starts over four years.
The analysis predicts a decline of 3,854 full-time equivalent construction jobs over the same period. It differs sharply from Treasury’s assessment that the broader housing measures would support an additional 30,000 homes over a decade.
Housing tax changes spark clash over rent forecasts
Appearing on Sunrise, Mr Butler dismissed the industry analysis as self-interested and said he trusted Treasury officials’ assessment.
“Yeah, I’m very confident,” he said when asked whether the government’s figures were accurate.
“Time and time again we see industry modelling usually from industry bodies who don’t want governments to change anything, any way in which they’re making a profit. Frankly, overstate the position.”
Mr Butler argued that landlords with properties already covered by negative gearing would not be affected by the reforms, because those arrangements had been grandfathered. He said rents had risen more slowly since the Budget than during the equivalent period beforehand.
“Existing landlords have no basis for increasing their rent because of these tax changes because they’re grandparented,” he said, while acknowledging that rents could rise for other reasons.
Senator Hume said Labor was in “denial of reality” and claimed the government had presided over fewer homes being built, higher rents and weaker investment.
“There’s a trifecta of failures that Labor have overseen in the housing market. Fewer homes are being built, rents are higher, and now there is less investment as well,” she said.
She said the property industry’s forecast suggested the effect on renters could be “about five times higher than Treasury anticipated”, and claimed loan approvals and new-home borrowing had fallen sharply.
Mr Butler rejected that assessment, pointing to Australian Bureau of Statistics figures which he said showed lending for new housing was at record levels. The latest ABS data, however, showed total new dwelling loan commitments fell by 5.4 per cent in the June quarter, while investor commitments dropped by 8.6 per cent.
The government says its reforms will help about 75,000 more Australians become homeowners over the next decade and redirect investment towards new housing supply. The competing forecasts have nevertheless intensified the argument over whether the changes will improve affordability or place another burden on renters.
