Treasurer Jim Chalmers is standing behind the Labor Party's controversial budget tax reforms, despite mounting backlash from mortgage brokers, lenders and property investors warning that the changes could place further upward pressure on rents and property prices.
The government’s proposed overhaul to capital gains tax (CGT) concessions and negative gearing — including the removal of the blanket CGT discount and a restriction of negative gearing benefits to newly built homes starting in the 2026 to 2027 financial year — has sparked opposition across the property and finance sectors, with critics arguing the measures risk discouraging investment at a time when both housing and rental supply remain low.
But Chalmers rejected claims that the reforms will hurt younger Australians trying to build wealth through property or shares, insisting the government is focused on creating a fairer tax system and improving long-term housing affordability.
"We're taking one of the big distortions out of the market," Chalmers told David Speers, host of ABC's television show Insiders, arguing that it is better for young Australians to buy shares or property because the investment itself makes economic sense, not because tax concessions make it more attractive.
The Treasurer also dismissed warnings that scaling back tax incentives would trigger a spike in rents, saying that young people can continue to rentvest "for the home that they already own, and they continue to do that in the future for new builds, which would be a very positive contribution that they would be making to our communities."
He added that rentvestors — those who buy an investment property in an affordable area, rent it out and then live in another area by renting — represented a small proportion of people under 35.
"In terms of numbers, it's much less than 5% of people under 35 [who] have got rental income," Chalmers said. "But that includes owner-occupiers, and includes people who are positively and negatively geared."
Speaking to reporters in Queensland on Monday, Chalmers accused opponents with “partisan or commercial interests” of running an “unhinged scare campaign” against the budget measures.
"We've taken a political hit for [the budget]; we expected that," he said. "There are no easy decisions left when it comes to making a genuine difference to housing in this country, and so we’ve taken some difficult decisions."
During the recent budget reveal, the government said the updated tax laws were designed to boost housing supply and reduce speculative investment in established properties.
Industry groups, brokers and lenders have argued the changes could instead deter investors from entering the market, reducing rental stock and pushing up rents further as vacancy rates remain near historic lows.
"It is not obvious at this time how a reduced supply of rental properties coupled with increasing demand due to factors including population growth can do anything except drive up rental prices for many who are already struggling," said Peter White, interim chief executive officer of the Finance Brokers Association of Australia (FBAA).
Nerida Conisbee, chief economist at Ray White Group, added: "Affordability pressure does not disappear when you reduce investor incentives; it shifts onto tenants. We have seen this play out before."
Despite the criticism, Chalmers was steadfast that the reforms are necessary to improve intergenerational equity and rebalance incentives within the tax system.
"By taking that distortion out of the system, it is a fairer, more neutral treatment of investment," he said.
