Labor faces a fight on housing. Could negative gearing reform help it get its groove back?

Labor’s signature housing policy, a shared equity scheme called Help to Buy, will go to a Senate vote this week. The Greens have used the bill to push for cuts to negative gearing and capital gains tax concessions but in negotiations the government has not budged.
In February, Anthony Albanese said: “The Greens can vote for it, or they can vote against it … it’s as simple as that.” Since then, nothing has changed.
Gone are the days of Labor offering billions more for social and affordable housing during negotiations for the Housing Australia Future Fund (Haff), a move which appeared to give Labor’s chief antagonist, Max Chandler-Mather, a major win.
On Thursday, Albanese snapped at the Greens leader, Adam Bandt, in question time, saying Labor has “a $32bn homes for Australia plan, some of which is still being blocked by the Greens and the Coalition in the Senate”. “We will wait and see how they vote next week,” he added.
In 2023, the Coalition and Greens teamed up to delay the Haff before the Greens eventually passed it. In June the same alliance delayed tax changes to encourage build-to-rent housing. It’s a good bet the same dynamic will play out this week on Help to Buy.
On Thursday the shadow assistant minister of housing affordability, Andrew Bragg, told the Senate it was a “tiny scheme”, with just 10,000 places a year. He called it a “bad idea”, a “distraction” and “cruel” to hold out as a solution.
According to polling, housing is shaping up as a major election battleground, with 13 interest rate rises putting the squeeze on mortgage holders and rents rising faster than wages.
The Guardian Essential shows Australians don’t rate the federal government’s handling of the issue.
On Monday Labor will try to get on the front foot by releasing figures for new home commitments from Haff funding to rebut Bragg’s characterisation of it as a “failed supply policy”.
All the major parties are leaning in. The Greens are positioning themselves as the party of renters with a populist call for a rent freeze and the Coalition are offering buyers a chunk of their super to get into the market.
In one sense, they are all right to do so because voters clearly care about this issue. From another perspective, they can’t all be right because voting is ultimately zero-sum.
As the treasurer, Jim Chalmers, has criticised the Reserve Bank for interest rate rises “smashing” the economy, I have been thinking about what sort of circuit breaker Labor needs to get out of the minority government – or maybe worse – spiral it seems stuck in.
Interest rate cuts would be one possibility. Perhaps mortgage holders would breathe a sigh of relief that they’re on the way down and put away their baseball bats.
In addition, Labor will need at least one big policy idea to run on at the next election, beyond scares about Peter Dutton’s plans for wages and nuclear (which it is already campaigning on). Universal childcare is one such possibility, but it may be more fruitful to go for housing, which we all need in one form or another.
As Bill Shorten retired, he was asked if his 2019 platform on negative gearing and capital gains tax provided a roadmap for Labor to do more on housing affordability. Australians had delivered their “verdict” at that election, he said, which sounds like the final word.
But he added people “weren’t ready” at that time. Times change, and given skyrocketing unaffordability, perhaps people are ready now.
Last Monday, the housing minister, Clare O’Neil, appeared on ABC’s Q&A and said reforming these tax concessions was “not the approach of the government” and “it’s not something our government is considering”.
Very similar was said of the stage-three income tax cuts. Nevertheless, before the 2023-24 summer holidays the Albanese government tasked Treasury bureaucrats to give it a look.
Albanese then returned in the new year with a bang, promising to revamp the tax cuts to deliver greater benefit to low- and middle-income earners. Labor won the politics as the Coalition waved the changes through. It was the last time the government truly seemed to have its mojo back.
Labor might face more of a fight on negative gearing and capital gains, but with the Greens, Jacqui Lambie and David Pocock, the Senate votes are likely there for it.
On Sky News, Shorten mused if he’d had his time again maybe “all that money” raised from housing tax changes “should have gone perhaps back in income tax cuts”. That was exactly Labor’s approach to stage three: almost dollar for dollar, it went back to those who needed it more.
Labor should give reforming housing taxes another go. Not to help pass their other housing bills or because the Greens told them to. But because tilting the playing field away from investors and towards home buyers would help affordability and show those doing it tough Labor is on their side.
The verdict at the 2019 election on housing taxes may not be final after all – just as it wasn’t for income taxes.