Well, the Budget was a great song and dance about very little. It wound back a 27-year-old Howard freebie to the rich, middle-aged which should never have been given in the first place and brought negative-gearing and trusts into line with most other developed countries.
What a sorry state Australia is in if that is called major reform. It was just one wind-back of a myriad of egregious Howard Government hand-outs to mainly male, middle-aged or elderly, wealthy people. It was not reform – unless it is the first part of a project to unwind the 30-year dominance of economic “rationalism” that took so much wealth from the collective many and put it into the hands of the well-off few.
That resulted in higher taxes on labour, lower taxes on capital and the greater inequality that has manifested itself with so much resentment and discontent.
Some of it cannot be unwound. For example, the Commonwealth Bank, Qantas and CSL – owned by us all – were sold for a total of just $10.5 billion. They are now worth $320 billion, but it private hands. But changing the tax system with its perks and concessions can go a long way.
The Budget was a small start. The trouble is that it is likely to have such a profound effect on the housing market that it might scare the government off more wind-backs of inequality-generating shifts in wealth.
The Government will achieve its aim of housing becoming more “affordable”. Treasury says prices will not go up as quickly as in recent years, but they would continue to go up. However, that estimate appears to have come from economic modelling uninfluenced by behavioural psychology.
Investors read changing data and look at changing policies and react to them. They often act as a herd – after all they are looking at the same facts and being advised by the same group of people: a herd of zebras looking at the same lion.
This is why you get occasional big, sudden crashes in a short space of time (sometimes less than a day) in share markets whereas rising markets only rise slowly.
In the latest quarter, investor input comprised a tad over 40 per cent of total housing finance. If suddenly a major advantage is taken away, many of thosee investors will flee. There will be fewer buyers and a growing glut of housing on the market. People desperate to sell will drop their price accordingly.
The dramatic fall in prices will not so much come from investors selling their holdings but from investors no longer buying housing that comes on to the market.
Buyers, usually not under pressure, will see the falling prices and wait to see if they will fall further.
The important point, though, is that the falling prices will be a good thing.
Incomes are not going up much. Interest rates are not going down. So, the only way for housing to be more “affordable” is for prices to go down.
But governments much prefer the euphemism “more affordable” to the reality of “falling house prices”.
The political question is whether people buying are more appreciative than sellers are angry. My guess is yes because there is another element to the equation. Many people have expressed disquiet for a long time about the way many home-buyers have been shut out by investors subsidised by the taxpayer.
These people recognise that that problem had to be dealt with and will probably accept falling house prices.
And fall they will. Even if only a quarter of investors flee, that will be a 10 per cent drop in buyers.
After a quarter century of this warped capital-gains policy there is bound to be some blood on the floor in correcting it. But it had to be corrected. So, yes, there will be some individual losers, but overall Australia will benefit from the fairness and cohesion that come with the transition of the housing market from an investment and inheritance vehicle to a market where people buy a dwelling to live in.
A good start, but another half dozen or more Howard measures would have to be wound back before a real reform agenda could be even be started.
In education, public schools in all states and territories except the ACT are funded below the Schooling Resource Standard (SRS) which is required to meet basic educational outcomes while the Federal Government over the past 30 years has continued to increase its funding to private schools which already have good educational outcomes.
Maybe the Feds should hand over education entirely to the states and take the whole health and hospital system from them.
In health, tax breaks are handed out for the inefficient private sector while the public system is starved. In the late 1980s Australians could get free, timely, quality healthcare. That is no longer the case. Specialists’ fees are out of control.
We have a two-tier health and education system, adding to discontent and resentment.
Aged care has gone backwards since the Howard privatisations. The Government is slowly straightening out childcare.
The gig economy makes life a drudgery for low-income, unskilled people.
The universities have become businesses, rather than providers of undergraduate education. And it saddles young people with large debts even after the recent tinkering.
Coalition changes to superannuation have made it a wealth- and inheritance-management system rather than a scheme to provide retirement income for most people. All the tax breaks for balances over $3 million should be scrapped.
Australia is a wealthy country. Yes, hard work, skill, and talent should be rewarded, but the whole system should not have been so skewed in favour of the already wealthy.
Let’s hope the Budget is just a start. Then we can talk about some real reform: a Bill of Rights, four-year terms, an end to the monarchy, a treaty, more care for the environment, ending fossil-fuel mining and use, inheritance taxes, proper resource taxes, and more tax cuts for people who earn their income from labour.
Crispin Hull
This article first appeared in The Canberra Times and other Australian media on 19 May 2026.