Australia's housing market and tax system is currently unfair and unacceptable, Treasurer Jim Chalmers says, again flagging major housing tax reforms in the upcoming federal budget, as he hosed down fears of an economic recession and hopes for major cost-of-living cash splashes.
In a pre-budget interview with SBS News on Sunday, Chalmers said it would be a "responsible budget" and Australians shouldn't expect major spending.
"People shouldn't expect there to be big, near-term cash splashes in the budget," he said.
"There's a lot of spending restraint, but within that, we found responsible ways to help people with the cost of living."
The 12 May budget will reportedly feature changes to the capital gains tax (CGT), negative gearing and the way trust funds are taxed, though exact details — such as whether the policies will be grandfathered — remain unclear.
Those policies also featured in Labor's unsuccessful 2019 election campaign, and, if put forward on Tuesday night, would break a 2025 election promise not to touch CGT or negative gearing.
Chalmers said there would be a tax reform package in the budget tied to "issues of fairness at the intersection of the housing market and the tax system".
"Our focus in housing is our housing supply. The challenge begins there, but it doesn't end there," he said.
"From our point of view, the status quo in the housing market and the tax system is unfair, and that makes it unacceptable to us.
"And so we will respond to some of those legitimate concerns that people have about intergenerational fairness and other issues, particularly when it comes to young people's ability to access the full opportunities of an economy like ours."
The proposals will serve as the centrepiece of a budget that will target young voters who now make up the majority of the electorate, the ABC reported.
Asked about the trust issues that could arise from breaking an election promise, Chalmers argued the government's focus was on building more homes.
Overnight the government announced it would pump an extra $2 billion in the next four years to fund critical infrastructure such as roads, water, power and sewerage needed for new home builds, in a move it said would help the construction of up to 65,000 dwellings.
Speaking on ABC's Insiders on Sunday morning, shadow treasurer Tim Wilson declined to say whether he would vote against any changes to housing tax until they were announced, but criticised Labor's messaging.
"We need to be having a tax system that's orientated towards encouraging wealth creation, jobs and growth for the next generation of Australians," Wilson said.
"Labor's plan is to feed resentment and redistribution. We have wildly different views about how to build the future of the country."
'Don't anticipate a recession'
Chalmers said the Australian economy is "hostage" to global developments around the war in the Middle East.
"There's a lot that is happening in (Washington) DC and Tehran and elsewhere which is impacting very, very substantially on our economy, on inflation, on growth."
"Australians are paying a very hefty price for this war in the Middle East."
Australians have faced a convergence of economic headwinds this year.
Last week, the Reserve Bank of Australia (RBA) hiked the case rate for the third time this year in a bid to curb already-high inflation that has been exacerbated by oil and supply chain shocks prompted by the conflict.
Some economic analysts warned the RBA's decision had raised the risk of a recession, given the war's role as the primary driver of inflation.
Chalmers said the budget's priority would be to assist Australians through a difficult patch, support fuel security and cost of living and housing concerns, "without forgetting some of our bigger, longer-term reform obligations, particularly when it comes to generational fairness".
The noted that the scenarios presented in the budget do not anticipate a recession.
"The Treasury expects our economy to continue to grow, but a bit more slowly, because of what we're seeing around the world."
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