Younger voters put negative gearing back on the agenda

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Productivity is shaping up to be the word of the month for the federal government.

Hello August.

And with the big roundtable fast approaching that's been organised by the Treasurer to come up with solutions on productivity, is it time for Labor to finally make a move on changes to negative gearing and capital gains.

And two years after the failure of the voice referendum, the Prime Minister has a new plan for First Nations Australians.

But what was left off the agenda at Garma?

Welcome to Politics Now.

Hi, I'm Patricia Carvellis.

And I'm Jacob Greber, Master of Productivity.

Here we are, you know, leaping around.

I'm

talking to the other

Monday co-host.

You are Mr.

Capital P productivity, but are you a capital T tax man?

Because it's really becoming more tax than just productivity.

Just to put a little caveat on that, if you don't get more productive taxes, you cannot also deal with productivity.

So I get why tax is on the agenda.

I think it's healthy.

The Secretary of the Australian Council of Trade Unions, Sally McManus,

has asked for the Treasurer Jim Chalmers to bite the bullet on changes to negative gearing and capital gains tax.

Negative gearing and capital gains tax should be reformed, that they should be limited to one investment property and grandfathered for the existing arrangements for five years to allow property.

Ideas are plenty.

We're going to get to some of the ideas on the table.

We're going to start on this one because Jacob, if I hear about 2019 again and the election where Labor

had policies in relation to capital gains and negative gearing rejected, I'll scream.

2019 is seriously a lifetime away given all the things that have happened since.

So I reckon it's ripe for a conversation.

What do you reckon?

You forgot franking credits, Piko.

Who could forget franking credits?

I don't need to go see a therapist today.

Yes, I forgot franking credits.

I forgot death taxes, which were never on the agenda, but it was certainly part of the scare campaign.

If you can't have a debate about these things in the lee of an election, then when are you supposed to have a debate about these things?

All of these topics are completely legitimate and it's time to look at them again.

The government has decided it wants to sort of draw attention to that by having this round table.

It's not called a productivity roundtable, mind you.

I think it's just called an economic roundtable now.

They've realized, like I have always known, that if you put the word productivity in a headline, you have told everybody not to read your story.

It's just I did worry about leading the podcast with the word productivity on that basis.

So

please stay with us.

Let's be bold.

Yeah, stick to that.

Stick to that headline, productivity.

Anyway, look, it is,

we're back now having a debate about these things.

Just before we go on to what we're talking about now, the 2019 thing is always interesting to me.

There's a view, I think, among people

in the in the observer class about that election in particular.

Had Labour maybe gone with one fewer item, just any one single fewer item, probably the franking credits thing, because

that gave the Liberal Party a very potent weapon against Labour back in 2019.

But if they'd maybe not done that, we probably would have done negative gearing reform by now, you know, on housing.

There would have been a bunch of other stuff might have happened.

So

it's one of those sliding door moments in politics, isn't it?

And there's so much that's missed in the analysis of 2019, like for instance, 2016, where negative gearing was also on the table and Labor went forward.

In fact, you know, Bill Shorten for a minute there was like almost on a victory lap.

He certainly did not win.

But you know what?

Malcolm Turnbull didn't do as well as he would have liked, that's for sure.

He won the election, but there were some radical proposals already on the table then.

So I always think it's just a little bit of an overreading.

And even if...

Even if, like, whatever you want to think about that result,

look at Howard and the GST for crying out loud.

Like Howard.

Because the lesson, isn't it?

The lesson is don't take big, bold things to elections.

You'll only get punished.

That's sort of what the narrative of that 2019 campaign is.

But anyway,

we're in 2025, almost

halfway done, more than halfway done.

And you were on the show yesterday, Insiders, when ACTU head Sally McManus.

came up with her list of

what the priorities should be.

Negative gearing, capital gains,

but also I think the big one is really on the investment properties, isn't it?

Limiting those.

And I think the one that's red hot, I can't see a government ever touching this, but grandfathering existing arrangements for five years.

To me, that feels a bit like an ambit claim.

You limit the ability to get a capital gains discount on your second, third, or fourth investment property for argument's sake.

I don't know what the proposal is in detail, but that's the sort of idea.

You can do it on the first one.

Your primary home, obviously, is different.

But what McManus is suggesting is that this applies retrospectively to anyone who's currently got an investment property

that they would have to, well, they'd no longer get the tax benefit.

After five years.

Yeah, after five years.

As opposed to a forever kind of grandfathering.

Because often the word grandfathering for those not across it is, you know, that.

Another gendered term, PK.

Oh, it is.

Yeah.

There's no grandmothering, is there?

All right, so let me just change it just in this podcast.

So what grandmothering usually means,

this is weird,

is

that you don't touch the arrangement.

You just leave the people on it so you don't freak the people out.

So yes, there's an unfairness to that.

They continue to enjoy the advantage.

And then anyone new can't use the thing.

That's the way you deal with the fact that these people made all these decisions and it's not very fair to just take the rug under their feet away from them right that's the idea look

this is what i reckon i reckon this is kind of an amber claim to get the two issues on the table so the the actu says you you know you can then beyond that have one property that you negatively gear

again just that's their proposal

This doesn't mean that, you know, if the government were to consider looking at negative gearing, they land at the ACTU proposal.

It's just about getting it on the table full stop.

Now, what are the facts?

Well, a lot of the research shows that it wouldn't have a huge impact on housing supply.

You'd agree with that, Jacob?

Yeah, I think sometimes this debate feels like this is going to be the magic bullet that solves housing.

I really don't think that's the case.

It's an important element.

to the whole picture.

And just going back one more time to 2019, I won't do it again, but if you recall, the policy was you would not have been able to get a tax perk for an investment property if the building already existed.

I think it had to be, you know, it has to be a new building.

A new property, and that's about

supervising

new builds.

So, yeah, there was a smart.

construct in that, although, you know, that's dead and buried in that election.

But I think it's just about getting this back on the table full stop.

I agree with you.

It's not a silver bullet for housing supply, although to say it has no impact is not true either.

It would have some impact.

Absolutely.

Especially if you did the the five-year thing, that would absolutely have an impact.

It would, right?

Because most, I mean, there's an extraordinary, and this is what's so perverse about what we do in this country with property, is we allow people to operate, we actually encourage people to purchase property that will run at a loss, in effect.

That's what negative gearing is.

You are encouraging people to buy properties probably for way more than they should have.

And then the whole thing is run at a negative yield.

And so you get this tax break to so you can offset interest payments and what have you.

So you're ultimately minimising.

Well you need a capital gain to justify making such a decision and if at the end of five years you're saying this tax break ends there'll be an awful lot of people who own investment properties that are actually uneconomic.

And the most rational thing to do will be then to sell those properties as fast as they can.

Now that might solve the housing problem.

There might be a bunch of housing problems.

It'll potentially crash a market, it sounds like.

Yeah, but it's sort of

it's interesting to talk to economists about that because you would send a hell of a price signal out there.

I think that's right.

And so this model, well, I feel pretty confident in saying this model won't be adopted.

But is the government ready to have those tax ideas generally, not this manifestation, not this version, looking tinkering on the table?

Well, yeah, I reckon they're interested in talking about it,

not landing on it, because the Prime Minister is still quite apprehensive about change that might freak people out, but they definitely want to talk about it.

And Jacob, there's another reason.

It's not just about housing supply.

It's about intergenerational taxation fairness, right?

It's about where you get the tax from too.

So it's not just about the house prices or that element, isn't it?

Just about who you're taxing and how much you're taking from them.

Undoubtedly, an intergenerational aspect to this, and that's where the politics I think is fascinating.

Someone just the other day was pointing out to me that come the next election, there'll be an additional one million voters on the roll,

a huge number of young people in that cohort,

and they are facing a world where the basics, like buying a house, is very, very difficult.

And so this might be attractive to that cohort of voters.

But the problem, PK,

tell me I'm wrong here, but the problem is they want to make these big changes.

Let's say they go down this road without a political mandate to do so.

They never talked about it before the last election.

There was none of this debate before their last election.

If you recall, we were frustrated that there was no real policy debate in the lead-up to the last election.

So that's the consequence.

Here we are on the other side of it.

Yes, they've got a 94-seat majority, but that didn't come with a thing saying, yeah, now you can go and do CGT discounts you know get rid of that so is it about using this term of parliament to then get people behind ideas like that and then take them to the next election in terms of implementation after it's essentially what they did over super right it's a smaller reform so can the can can the prime minister do this we know he's inherently conservative about these sort of political risks he doesn't he does he takes a lot of convincing he likes to do it in his own

way and at his own pace.

But is there a political constituency out there at the next election for Labour to do these things?

Or is the coalition

given it something to fight on and bring its people back?

Oh, yeah.

It will.

What you just said is exactly

what happens.

I think the numbers are with Labor.

If Labor can sell it, and that's a big if, because, you know, they haven't always been fantastic at that bit, but if they can sell it, I think the numbers and the demographics are with Labour.

Does it give the coalition a rallying cry around its traditional constituency?

Yes, it does.

That's true.

But you know what?

Don't miss the words I just used, traditional constituency.

Yeah.

You know, maybe some of its boomers who are voting teal come back to them or something.

But man,

that is not the main game anymore.

And you know this from the number of, you know, youth podcasts that Susan Lee's engaging with.

That is not the demographic answer for them.

So it gives them a little sugar hit in terms of being able to talk to its traditional constituents.

It does not deal with their bigger problem.

And so they can be all no, no, no, no to these ideas, go crazy, but you're not dealing with your fundamental problem, which is that people do want to shake up.

They do want something bigger.

I think actually if Labor were to mount this case properly and also design something properly, I don't think the ACTU's answer is the answer.

And this is my perfect place to bring in the other big idea that's coming on.

So the economic roundtable.

Just before we go to that, can I just make one.

I was a little bit surprised, I have to say, that the Liberal Party didn't actually

do an incredible reverse ferret before the last election, a sort of Nixon to China moment, and actually have a policy of reining back some of, not all, they could have done it in their own way, a much more kind of cautious way to rein in some of the benefits for property investors.

That would have been a game changer.

I remember you said it on the podcast.

I thought it was.

Yeah, you did.

So you've said it.

So, you know, proof of life, it's happened.

You did say, you know, they could go here.

They're sort of, they're hardwired to oppose some of this stuff, yeah?

They're just hardwired.

And some of the people who I know are interested in this on their backbench have lost their seats.

So there were people who were interested, who thought they should be crazy brave and think outside of the way they always think to appeal to different constituencies.

They didn't go there.

The other thing that they'll need to start looking at is broader taxation reform.

Now, they keep saying it has to be, you know, this can't be a blank check to raise taxes.

Well, let's interrogate that.

I think that's broadly, even the government concedes that, right?

Like,

my understanding is that's the treasurer's view, too.

Like, he doesn't, you know, this idea that he's desperate to just increase taxes is not quite right.

He does want to reduce taxes in some areas.

That would be, you know, a reforming treasurer's dream.

But if you're going to reduce taxes in some places, like, for instance, the corporate tax rate, as suggested by the Productivity Commission, you know, getting it to 20% 20% for businesses of a turnover of a billion dollars or less, that would be potentially a game changer in terms of investment.

But what have they also added?

This 5% tax for the top end, so more tax for the top, top end of ASX listed companies.

Well, the business community has lost their marbles over that.

They don't like it.

Okay.

Sure, guys.

But how are you going to pay for that other tax cut?

There's never a solution that anyone gives to this other than saying spending restraint, spending restraint, sure, some spending restraint is needed, but the truth is Australians want a lot of this stuff.

NDIS,

you're going to have to pay for it, guys.

You cannot want tax cuts without an answer.

Am I right or have I lost my marbles?

No, and this is why this debate has a circular quality to it and a Groundhog Day quality to it as well.

But

I'm coming at it.

I'm trying not to be cynical about it all.

I do think the government needs or wants, I should say wants to expand the revenue envelope.

It sort of,

I mean, those subs don't come cheap.

The NDIS isn't cheap.

The government wants to do dental.

The government wants to do childcare.

None of those things come cheap.

So something has to give.

Spending restraint is very, very difficult to do.

And so, yeah,

I'm a bit more sceptical that the Treasurer doesn't actually want to increase the tax takeover to pay for all the things I've just mentioned.

But there is also a very large debate to be had about the way we tax and what it is we're trying to achieve with these various levels of taxation.

We want companies to be encouraged to take more risk.

And so maybe that system of a cash flow tax where that ends up making companies bring forward their investment is a good idea.

And that also hits what economists like to call rent taxes, which is where companies make super profits.

And I'm using these words deliberately because that's part of that debate that we had 15 years ago with the mining tax that was aimed at hitting super profits.

Politically, it was very difficult to get through.

We're back into that space now with this.

But one of the other things you might do is reduce bracket creep, which is where people, as they earn more money money and inflation gives them higher wages, you end up getting taxed more.

And that's also hitting younger cohorts of Australians much harder and will continue to hit them harder.

So, yeah, what's the priority?

I think we have to use it to lower taxes elsewhere.

I do not think the government can get away with not delivering an intergenerational dividend, if I can call it that, for young people as well.

So I think tax-paying individuals, younger cohorts who are doing a lot of the heavy lifting in our tax system need to be compensated, I do.

And I think the government gets that.

So

it can't just all go into coffers, although some will have to, right?

Because we do have

increased demands on the budget, Jacob.

We all know that.

And you know what?

Just ask anyone who's pushing for more defence funding, right?

Like some of these people who are, you know, all sort of

wanting spending restraint are pretty loose on the old defence spending.

So you've got to pay for this stuff.

So you have to think about how to do it.

But you do have to provide some fairness for people who are doing all of the heavy lifting in the world.

I would encourage people to read Gareth Hutchins' piece.

on the ABC website, Hike Taxes.

He's done a whole analysis of this.

Really interesting.

I'm not saying I agree with everything, but it lays lays out the issues and it and it talks about how some people are thinking about these issues really good read excellent plug actually because yes that is a very we'll put that in the show notes okay I want to talk about what happened over the weekend three years ago Anthony Albanese came to Gama he made some solemn promise to implement the Uluru statement from the heart that's voice treaty truth We all know what happened with voice.

Australia said no to the voice,

but the other elements still sit there.

We've had this report into Closing the Gap, which showed some pretty, pretty

just devastating results.

Then he went to Gama over the weekend.

He turns up to Gama, and I think that's an important thing that he has committed to to front Indigenous leaders and also the Yolnu people who

put on this pretty important landmark, really, 25 years of this festival.

And he announces an economic plan.

But

Jacob,

I've covered Aboriginal affairs for so many years of my career, both

very closely and now still with

oversight, obviously, onto other things too.

And I can say, I've heard this before.

I've heard the economic development songbook before.

There is frustration that the government is kind of

not

flexing its muscle on other things, like the justice issues.

We're seeing incarceration rates go backwards.

Now, they're not responsible for Northern Territory jails, but man, oh man, do they have the muscle to push the territory if they want to as their main funder?

Are they going to do it?

Do they want to have these arguments?

The question in my mind is always, what's the level of commitment?

And it just feels like it's very low at the moment.

So we fronted up.

I think Susan Lee should have gone too.

Now, she says

she did some counter-programming, didn't she?

She did her own tour.

She did her visit to WA and the Kimberley, met with people on the ground there.

Okay,

that absolutely should happen.

Like, the Kimberley has some horrendous statistics coming out of there, right, when it comes to issues of suicide for young people.

Like, horrendous.

So, absolutely, she should do that work.

But I think engaging with Aboriginal leadership at their premier event is a mark of respect as well, especially if you're a new opposition leader.

But either way, hasn't made that judgment.

Returning to the Prime Minister, who's the dude with all the power, given his seat majority, there is an onus on him to front up on these issues.

I think the Economic Development Plan personally, you know, does have some merit.

There'll be some good things that come out of it, mobile TAFE, things like that.

I think they're all good things.

I don't think you can say that they're not.

But there's a butt here.

What's the butt?

Well, the but is you need to deeply engage with how you can deliver the closing the gap targets targets.

And don't have targets about adult imprisonment rates and children in out-of-home care and suicide rates if you're not interested in using every lever you can to push the states and territories that are quite frankly flying in the face of all of the evidence, Jacob.

All of the evidence.

Why did we have a Royal Commission nine years ago?

to look at these issues of justice in the NT, to have a government that's operating on a populist basis completely ignore all the evidence.

And if they want to ignore all the evidence because they've run such a tough crime agenda, there will be consequences that all of us will have to own up to.

There is a collective responsibility.

If we are going to be putting more Aboriginal kids in jail,

that is going to leave a pretty big stain on our country.

Does this lead to pressure for an intervention at some point?

Yeah, a federal intervention has all of the

overhang, of course, of the Howard government's intervention.

That was seen as pretty punitive.

And even people like Tony Abbott ended up years later saying was not a good idea, right?

And many of us have had our own soul searching about how that, you know, our own scrutiny of that.

It did not end well for a lot of Aboriginal people and they feared institutions again.

They feared the police.

That was, you know, you don't want that.

But should the federal government be prepared to put you know, cause and effect into their agreements around some of these things?

If you're locking up more kids, well, we're worried about that.

That's something the federal government should be doing.

Now, Melandira McCarthy is talking a lot about concerns about their direction, but I haven't heard the hard word in relation to this yet.

Doesn't mean it's not coming, Jacob, and I know I respect that you haven't.

I have done a lot of reporting on this, and I know that the NT should be held to account only as a, you know,

this is a warning shot.

The Productivity Commission's report is the biggest warning shot.

Like, do we want to just have another Royal Commission in another 10, 20 years to learn what we know right now?

Because we know it right now.

It's happening right now.

We don't have to wait.

We don't have to do another one.

We know right now that they're doing things that are going to make it worse.

Anyway, look, watch this space.

There is nothing massive that's emerged other than we have the stats and they're not good.

Jacob, one more thing, which I just have to have on our agenda because it's huge.

Those scenes across the harbour bridge, at least 90,000 people, and that's in Sydney on that iconic bridge in rain, turning out to say that the war should stop.

They want more action from the Albanese government.

But what I found really interesting is you've got all of a sudden, you know, Ed Husix in the demonstration.

Other Labour MPs, Tony Sheldon's a senator, he's in the demonstration.

We've got Mins government ministers like Jihad Dib in the demonstration.

Something's shifting.

There's a next layer.

Yeah, look, I think it's impossible to ignore

images of that magnitude.

Imagine what it would have been like if it wasn't raining like some kind of biblical flood in Sydney yesterday.

The crowd would have been maybe even larger.

I think the New South Wales government has looked pretty out of step here

with its resistance to that march and the lead-up and sort of some of the reports that have come out since about

fears of a perilous situation on the Harbour Bridge.

I think that's wound people up who took part and who felt that it was a very peaceful,

respectful demonstration.

I think a lot of people will be thinking hard about

and possibly across the political spectrum about what it all means.

Because it's sort of, it did look like it was more than your

sort of, what do they call them, the renter crowd for protest.

It was much more than that.

There was families, there were older people, all making the same sort of point about the war in Gaza.

Yeah, and I think Ed Husick said that.

He said, this is Middle Australia turning out, not just, you know, the usual sort of people.

And, you know, the usual people.

Some of them are very concerned for a long period of time about what they've seen unfold, and they have a right to protest too.

But I suppose that's no, when I say rent a crowd, that's not

denigrated.

I get what people do.

People have strong views and should be allowed to express.

But it just shows that this is a much more mainstream issue than just something at the edges.

I think it's quite clear.

Australians and I think the international community says

it's gone on too long.

Jacob, that was good.

Cathartic.

Thank you.

We're going to get letters about grandmothering.

Well, it's about time we grandmother everything.

Tomorrow, Brett Worthington will join me to unpack all of the politics happening here on Politics Now.

We can take questions too to the partyroom at abc.net.au, Fran, and I will answer them.

See you, Jacob.

See you, PK.