You would have to be living under a rock not to know what transpired in Canberra this May. The Federal Government deployed the most sweeping, aggressive tax changes the property sector has seen in decades, sweeping up every asset class from real estate to equities.
But if you step out of the parliament houses and onto the pavements of Sydney, the street reaction has been swift, fierce, and completely unified: it is nearly impossible to find anyone who agrees with this approach.
Let's establish the baseline logic. There is absolutely no argument that we want our children to be able to live in Sydney, afford a roof over their heads, build wealth, and live a prosperous life. But the government’s grand solution to this problem is to lift Capital Gains Tax (CGT) to the highest effective level in the developed world. It is an utterly bizarre way to convince the community that you are in their corner.
It is flawed on every single level. Unfortunately, when you have bureaucratic bean counters pouring over spreadsheets in Canberra, they completely miss the fundamental mechanics of how markets actually work. History is littered with examples showing that when governments clumsily step into complex ecosystems to "solve" a problem, the inverse outcome is almost always what gets delivered.
Smashed at the starting line
We see the human cost of this bad policy within our own agency walls. We have young staff members doing everything right - making immense personal sacrifices, skipping holidays, and living with their parents well into their twenties just to build a deposit. They are investing in shares, getting their money working for them, and following the exact blueprint we are all told to follow to get ahead.
And then, whack. The government reaches deep into their pockets and punishes the exact productivity and success they supposedly want to encourage.
Take one young gentleman in our office as a case in point. He’s been doing the heavy lifting, acting responsibly, and mapping out his future. His strategic plan was classic, time-tested Australian wealth-building: buy an entry-level property, lease it out for a few years until his salary grew, and then comfortably move into it.
Now? The budget has stripped that property of its meagre negative gearing advantage because it's established stock. And if the property achieves even modest capital growth over the long term, he is forced to split that gain with a money-hungry government, on top of the exorbitant stamp duty and land tax he has already coughed up.
This is the exact path generations of young Australians have used to climb the housing ladder. But politicians are incapable of looking at downstream consequences. Taxing people is simply the lazy solution. It is far easier to paint property investors as the villains to gain favour with the media than it is to actually fix the structural issues of this country.
As Christopher Joye bluntly wrote in the Australian Financial Review, Canberra is acting like a greedy python squeezing the Australian dream to death. He is spot on. The land of opportunity and prosperity has been beaten into submission, and our Treasurer has officially earned the title of the highest-taxing Treasurer in Australian history. Doesn't that just scream national ambition?
