Record housing prices and rental costs are forcing the PM to face tough questions from his support base.
PM Anthony Albanese is facing a political time bomb as Labor’s biggest union backers demand negative gearing and capital gains cuts that helped destroy Bill Shorten’s 2019 election bid.
The Australian Council of Trade Unions today called for negative gearing to be limited to one investment property and capital gains tax discounts slashed from 50 per cent to 25 per cent – tax reforms Labor took to voters seven years ago and lost.
Australian Council of Trade Unions secretary, Sally McManus, warned “Australia’s tax system is upside down – working people pay first and in full, while wealth and windfall profits are undertaxed”.
The union intervention comes as PropTrack data shows property investors have pocketed massive gains across the country in the past year – with Perth values surging 17.5 per cent annually, Brisbane up 14.4 per cent and Adelaide climbing 13.8 per cent – while workers struggle with housing inflation and minimal wage growth.
MORE: Chinese owner behind trashed Australian island
Major bank: Aus’ house boom over for half the country
PM Anthony Albanese is at a political crossroad. Picture: Hilary Wardhaugh/Getty Images.
On a median-priced Perth house of $750,000, 2025’s 17.5 per cent annual surge amounts to an estimated $131k gain. Brisbane house prices saw a rise of $149k in just 12 months – double the average Queensland worker’s earnings – with units up 18.4 per cent or $127,500 to $811,000.
Ms McManus said “ordinary working people can’t shift their income to trusts or asset structures but pay every dollar through PAYG. When tax concessions push investment into property speculation instead of new housing and productive businesses, working people lose twice – through higher house prices and weaker wage growth”.
“That’s why unions want to limit negative gearing and wind back capital gains tax discounts, so capital flows into more productive investment, not just bidding up house prices.”
She said “the employers of Australia should support tax reform that addresses housing affordability and lifts the pressure on workers to carry the country with tax from income”.
“If employers want less wages pressure, they should be getting behind action on housing affordability.”
“Higher wages and action on housing affordability must both occur. We cannot have wage increases eaten up by increasing rents.”
Australian Council of Trade Unions Sally McManus is increasing pressure to tackle tough negative gearing and CGT benefits for investors. Picture: Martin Ollman/Getty Images
Higher costs are adding to pressure on wage discussions too – something the Reserve Bank would be watching closely given its twin inflation-full employment mandate.
Ms McManus said “working people will be pushing for pay rises this year because housing costs, rents and mortgage payments risk taking up more wages. Too many people cannot afford to live near where they work, even in regional parts of the country”.
Housing lobby group Everybody’s Home supported scaling back the 50 per cent CGT deduction and hoped for “significant reform” in the national budget in May to shake up speculation that’s making housing even more unaffordable.
It has consistently called on the government to abolish the CGT discount and negative gearing – property investor tax breaks that cost taxpayers billions of dollars annually.
Everybody’s Home spokesperson Maiy Azize said “tax breaks for property investors are making the housing crisis worse and everyday Australians are paying the price”.
“Lining the pockets of investors largely benefits higher income earners and makes housing more expensive for everyone else.”
“The federal government spends billions more on property investor tax breaks than on providing rentals that people can actually afford. That is the opposite of what we need to do to fix the housing crisis.”
“What matters now is whether any changes actually help fix the housing crisis. That means changes big enough to stop fuelling speculation and to free up money to build the public and community homes that Australia desperately needs – not just small tweaks that raise money for the budget.”
“These reforms should be about making homes more affordable and taking pressure off people bearing the brunt of the housing crisis.”
Whether Albanese can navigate demands from his union base for tax reform that proved electorally toxic in 2019 remains the central political question.
The Prime Minister, a former union official whose career was built through the movement, faces a choice between backing his traditional supporters and hoping the party’s current poll lead will hold or avoiding policies that contributed to Labor’s last election defeat and risking his support base.
English (US) · 