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The Budget was billed as tackling intergenerational fairness. But it’s hard to see how. \u00b7 Getty <\/p>\n The Budget was billed as tackling intergenerational fairness. But it’s hard to see how. \u00b7 Getty <\/p>\n
Changes in the Federal Budget will increase taxes on investors of all asset classes<\/a>. The overhaul of the capital gains tax discount being applied beyond housing has sparked fierce debate and resurfaced old ideas to tackle the government\u2019s stated objective of addressing intergenerational equity in the housing market.<\/p>\n That includes looking at the family home. Jim Chalmers is killing off two \u2018sacred cows\u2019 of the Aussie economy<\/a>, but perhaps nothing is quite as sacred as the status bestowed upon the primary place of residence.<\/p>\n Housing economist Cameron Kusher believes it could be time to look at whether that status should also be on the chopping block.<\/p>\n \u201cThis Budget has been framed as reform but I still think it’s largely tinkering around the edges,\u201d he told Yahoo Finance.<\/p>\n RELATED<\/strong><\/p>\n \u201cIf you’re serious about intergenerational equity, then you know a lot of people are sitting in family homes and they’re retired and they’re still getting a full pension. But through very little work of their own, they’ve seen a significant increase in the asset\u2019s value,\u201d he said.<\/p>\n Currently the family home is not included in the Age Pension asset test. That means older Australians can be eligible to claim a full pension while residing in multi-million dollar homes.<\/p>\n The Department of Social Services in July last year warned its Minister Tanya Plibersek about that very thing. In a brief, later published<\/a> by the AFR, is said \u201clow and middle-income taxpayers are subsidising the retirement incomes of seniors with significant wealth in addition to their homes\u201d.<\/p>\n A retiree \u201ccan be in Potts Point or Toorak with a $5 million house and receive the same pension that a person in a $500,000 unit in Bendigo or Bathurst is receiving,\u201d the Grattan Institute\u2019s Brendan Coates said at the time.<\/p>\n But re-examining the rules would help address what critics have described as a \u201chomeowners welfare state\u201d that exists in Australia.<\/p>\n \u201cI think that would be true reform,\u201d Kusher said. \u201cI think if they had included something like that in this budget, then potentially there’d be more support for what they’re doing in terms of the changes to the capital gains tax discount and negative gearing, but they chose not to.<\/p>\n \u201cMaybe in the next budget that’s the sort of thing they start to look at,\u201d he added.<\/p>\n Ahead of a productivity round table held by the government last year, researchers from the University of Technology Sydney and the University of Melbourne urged Labor to be bold, saying the exclusion of property wealth from the assets test meant \u201cpensions are not as targeted as they appear to be\u201d.<\/p>\n \u201cWe also believe there is a strong case for reconsidering the exemption of housing from the pension assets test. Many wealthy retirees benefit from public pensions, which are funded by taxes on the incomes of younger workers and renters,\u201d they wrote.<\/a><\/p>\n Labor is expected to potentially outline income tax cuts<\/a> for workers in next year\u2019s budget (ahead of an election) in order to shore up its argument about helping wage earners.<\/p>\n Without that, the government\u2019s message of trying to help younger Australians has rung hollow with many of them \u2013 especially those investing in shares to try and build wealth or a home deposit<\/a>, and who are now facing higher rates of tax on their gains.<\/p>\n \u201cIt’s being framed as intergenerational fairness, but it kind of feels a bit like pulling the ladder up on younger people that haven’t had the chance to invest yet,\u201d Kusher told Yahoo Finance.<\/p>\n RELATED: <\/strong>Young Aussies brace for higher taxes in the name of intergenerational equity<\/strong><\/a><\/p>\n Housing impact from Budget changes <\/p>\n For now, tilting the property market away from investors in favour of owner occupiers is expected to help first home buyers enter the market and banks have already started to reduce the amount they will lend to investors without negative gearing factored in<\/a>.<\/p>\n \u201cIn terms of the effect on the property market, I think prices will be a little bit lower than they would have been otherwise, not dramatically so,\u201d Kusher said.<\/p>\n \u201cYou probably will see an increase in first home buyers \u2013 they’re saying 75,000 over 10 years but that’s only a six and a half percent increase in first time buyer numbers if you look at the last decade average. So it’s not nothing, but it’s not huge.\u201d<\/p>\n Get the latest Yahoo Finance news – follow us on <\/strong>Facebook<\/strong><\/a>, <\/strong>LinkedIn<\/strong><\/a> and <\/strong>Instagram<\/strong><\/a>.<\/strong><\/p>\n The pension asset test could be re-examined, says Cameron Kusher. \u00b7 Cameron Kusher <\/p>\n