Calls for significant reform of Australia’s housing tax system are gaining momentum, with the Australian Manufacturing Workers’ Union (AMWU) advocating for sweeping changes it argues will address growing inequality. The union’s submission to a Senate inquiry centers on the idea that current tax breaks have “commodified” property, making homeownership increasingly unattainable for many.
Union Calls for Major Tax Overhaul
The AMWU is urging the phasing out of the capital gains tax discount for investment properties and the effective abolition of negative gearing. It also proposes replacing the current 5% home deposit scheme with a program allowing renters to allocate portions of their rent towards a property purchase. These proposals were made in a submission to a Greens-led Senate inquiry examining the John Howard-era 50% capital gains tax discount.
The AMWU is not alone in its call for change. The Australian Nursing and Midwifery Federation has also recommended winding back the capital gains tax discount, expressing concerns it is “exacerbating inequality, worsening housing affordability and undermining Australia’s long-term social and economic wellbeing.”
Past Proposals and Current Government Stance
This isn’t the first time such proposals have been put forward. In both 2016 and 2019, the Labor opposition, then led by Bill Shorten, proposed cutting capital gains tax concessions and restricting negative gearing. However, the current Albanese government has repeatedly rejected similar calls, maintaining that increasing housing supply is the most effective approach to the housing crisis. Treasury modelling of potential changes to these concessions was undertaken in 2024, but the government ultimately decided against pursuing them before the last federal election.
The AMWU argues a fundamental shift in perspective is needed, stating that the “commodification of houses into a vehicle for accumulating and hoarding wealth” is denying working people the opportunity to own a home. The union suggests revenue generated from winding back the concessions should be invested in developing Australia’s modular housing industry.
Broader Political Landscape
The AMWU’s stance is more assertive than that of the Australian Council of Trade Unions (ACTU), which previously proposed restricting negative gearing and capital gains tax breaks to a single investment property, grandfathered for five years. The Greens also campaigned on limiting these concessions to one property, also with a grandfathering provision. With the Labor party preparing for its national conference in Adelaide in July, pressure from within the movement to revisit these policies is expected to intensify.
The Grattan Institute has also weighed in, arguing the 50% discount is overly generous and has “overcompensated” property investors for inflation over the past 25 years, recommending a 25% concession phased in over five years. Conversely, the Centre for Independent Studies maintains the current 50% discount is “simple and well understood” and doesn’t require alteration. The Senate inquiry is scheduled to report its findings on March 17th.
Frequently Asked Questions
What is capital gains tax?
Capital gains tax applies to the profit made from selling an asset, such as a property, that has increased in value. The current discount allows investors to reduce the taxable amount of that profit by 50% if the asset is held for more than 12 months.
What is negative gearing?
Negative gearing occurs when the costs of owning an investment property – such as mortgage interest and maintenance – exceed the rental income it generates. Investors can then deduct this loss from their taxable income.
What is the purpose of the Senate inquiry?
The Senate inquiry, led by the Greens, is examining the operation of the capital gains tax discount, originally introduced by John Howard, and is receiving submissions from various stakeholders to assess its impact and potential reforms.
How might these proposed changes affect the housing market in the long term?