Budget must send signal to house investors

A prominent economist believes it is critical the federal government adjusts tax concessions in the budget to ease pressures in the housing market.


Treasurer Scott Morrison has made tackling housing affordability a key component of his second budget to be handed down on May 9.

AMP Capital chief economist Shane Oliver said the 2017/18 budget must send a message to investors banking on strong price rises in the future.

“Change in the capital gains tax discount would be a great way to do that, particularly at a time when the regulators have swung into gear and the banks have been raising rates for investors,” Dr Oliver told ABC television on Tuesday.

However, Finance Minister Mathias Cormann has reiterated the government remains committed to its election promise not to change housing tax concessions, including the capital gains tax discount.

Figures this week showed Sydney house prices jumped nearly 19 per cent in the past year, while in Melbourne prices rose by more than 15 per cent.

A new report by the Australian Institute of Company Directors warns the country could be stuck in “policy limbo and partisan paralysis” if there isn’t substantial reform.

“It’s time to stop tinkering around the edges and deliver a real plan for our future,” AICD head Elizabeth Proust said.

The institute is calling for fixed four-year terms for federal parliament and tax reform that includes a higher and broader GST.

The government is facing a $36 billion budget deficit for this financial year.

“It is clear we have a spending and revenue problem,” AICD chief economist Stephen Walters said.

Separately, the government plans to sell four commonwealth properties in Canberra’s Parliamentary Triangle, two of which used to house the Australian Electoral Commission and the National Archives.

These are two of the original three buildings in the triangle. The other is Old Parliament House.

“This is the first time that land has been offered for sale within the Parliamentary Triangle,” Senator Cormann said in a statement.