None of Labor’s new budget changes will ‘do anything’ to increase housing supply

Key Concepts

• Capital Gains Tax (CGT) Reform: Changes to tax indexation models for property investments.
• Negative Gearing: A tax strategy where investment losses are deducted from taxable income; changes here impact rental market supply.
• Trust Structures: Legal entities used for family businesses and future financial planning, now facing regulatory scrutiny.
• Housing Supply Shortfall: The gap between current construction rates and the national target of 1.2 million homes.
• Windfall Gains Tax: A specific Victorian state tax impacting property development.
• Regulatory Overload: The cumulative burden of daily policy changes on builders and developers.

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1. The Federal Budget and Housing Implications

The discussion characterizes the federal budget as a "give with the right hand, take with the left" scenario. While there are positive elements—such as infrastructure funding and reforms to the Environment Protection and Biodiversity Conservation (EPBC) Act—these are overshadowed by significant tax changes.

• Taxation Concerns: The shift in CGT to a pre-1999 indexation model adds complexity. Furthermore, changes to negative gearing and trust structures are viewed as detrimental to investors and family businesses.
• Supply Impact: Treasury papers themselves estimate that these budget changes will reduce housing supply by 35,000 homes over the next decade. This is particularly critical given the current deficit of 71,000 homes against the annual target.

2. Victorian State Election Policy Agenda

The Housing Industry Association (HIA) launched its 2026 policy agenda in Pakenham, a marginal seat in a Melbourne growth corridor.

• Core Message: "Builders want to build." The industry reports feeling overwhelmed by a constant stream of new regulatory changes.
• Market Interference: The HIA argues against government mandates that dictate housing types (e.g., forcing inner-city apartments) rather than allowing consumer preference and market demand to drive development.
• Taxation Barriers: The industry is struggling under the weight of multiple state-level taxes, including payroll taxes and the windfall gains tax, which hinder business viability.

3. Structural Reform and Governance

A central argument presented is that the housing crisis is a result of 40 years of systemic failure across all levels of government.

• Ministerial Accountability: There is a call for a more coordinated approach. Currently, the portfolios of building, planning, and housing are often split across different ministers, leading to fragmented decision-making.
• Long-term Strategy: The industry advocates for policies that transcend short-term election cycles, focusing instead on long-term solutions for skill shortages, land release, and infrastructure delivery.

4. Transparency and Delivery

The discussion highlights a disconnect between government funding announcements and actual on-the-ground results.

• "Use it or Lose it": Simon Croft emphasizes that funding for infrastructure must be tied to concrete delivery milestones. He argues for a "use it or lose it" approach to ensure that government money actually results in new housing rather than being absorbed into existing, stagnant programs.

Notable Quotes

• "We've often talked about this budget as giving with the right hand and taking with the left hand." — Simon Croft, regarding the mixed impact of budget measures.
• "We've had 40 years of failing in this from all sides of government and from all levels of government." — Quoting Housing Minister Clare O'Neil, acknowledging the systemic nature of the housing crisis.

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Synthesis and Conclusion

The primary takeaway is that current government interventions—specifically tax reforms—are counterproductive to the urgent need for increased housing supply. Despite ambitious national targets, the industry is being stifled by regulatory complexity, fragmented ministerial responsibility, and a lack of transparency in infrastructure delivery. The HIA advocates for a shift toward market-led development, reduced regulatory burden, and a unified, long-term governance framework that prioritizes the actual construction of homes over short-term political cycles.