The backlash from vested interests was in full swing this week after the Federal Budget delivered real reforms that will make housing more affordable.
The changes to negative gearing and capital gains tax (CGT) will mean wealthy older people will pay a bit more tax when they sell assets for more than they bought them for.
But the vested interests have a problem. Getting sympathy for old rich people paying more tax does not do well in focus groups.
So, instead, they are trying to convince us that young people will be the biggest losers from these changes. The big problem with that is that it is entirely untrue. Young people get almost no benefit from the CGT discount.
Gen Z get just 2%, while Millennials get slightly more, but still only 14%. At the other end of the scale, baby boomers get more than half the benefit.
Benefit of the capital gains tax discount by generation
Source: Tax expenditure statement 2025-26
But the benefits of the discount are not evenly distributed among baby boomers. Most boomers get very little benefit. Only those at the very top do well. The top one per cent of people get more than half (59%) of the benefit.
That must be the most unequal of all tax concessions.
Trying to convince young people that they will lose from these reforms is even more cynical, because these reforms will slow the rapid house price growth and allow more young people to buy a home of their own.
House prices have increased by an average of $60,000 per year since 2020, including $115,000 in the last year alone.
If house prices level out, which is what most people are expecting, then young people looking to buy a house will be on average, $60,000 per year, better off.
The budget was good for young people in other ways as well. There was a focus on cutting taxes for people who earn their income through wages and salaries, and young people are more likely to earn their income that way.
Currently, people who earn their income by working pay more tax on average than those earning income from assets, like investment properties or shares. Put simply, there are more tax loopholes for those who get their income from assets.
This budget is trying to reduce that gap by taxing assets a bit more, through changes to capital gains, negative gearing, and trusts. But it is also cutting taxes for those earning wages. This has included a $1,000 instant write off for working expenses and the Working Australia Tax Offset (WATO) worth $250 per year.
Because more young people earn more of their income from wages, they will disproportionately benefit from this. Someone on a wage of $75,000 per year will be up to $1,106 a year better off.
What we know at The Australia Institute is that change is difficult and hard fought. We have made real progress with Labor supporting these reforms to capital gains tax, negative gearing, and trusts.
But the change hasn’t passed the parliament yet, and vested interests are going to continue to push the Labor Government to water down or scrap these important reforms.
I have covered over a dozen Federal Budgets, and this is the first time I have felt optimistic that housing affordability will get better, not worse. Young people deserve to be able to buy a home of their own and have the security that comes with that.
Let’s not let them down.