Albanese locks in plans to scrap investor tax breaks as way through housing crisis

Prime Minister Anthony Albanese has marked out a contentious tax reform package to boost home ownership as a way to counter populism, also pledging to rebuild Australia’s fuel stocks and floating the prospect of caps on coal and gas prices if the war in Iran further spikes commodity prices.

Albanese declared he would put housing affordability at the core of his agenda, giving the strongest indication to date that he plans to wind back the capital gains tax discount and negative gearing. Labor may also announce new supply measures to meet its target of building 1.2 million homes, which it is on track to miss.

Senior sources in the government, who sought anonymity to speak frankly about attitudes in the cabinet, said Albanese had firmed in his thinking to plough ahead with changes to investor tax breaks in the May budget. Since the war broke out, some had feared Albanese would back away from tax changes as voters’ mood soured.

In new language that he planned to use in a January speech upended by the Bondi massacre, the prime minister said the housing market demanded “continual reform” and was “our way through this global crisis”, tying it his 2022 election slogan of having “no one held back, and no one left behind”.

“There is no security in maintaining a status quo that doesn’t work for people,” Albanese said, as he failed to rule out inflationary cost-of-living relief to shield households in coming months.

“It is how we have been able to avoid the worst of the economic and social divisions that have taken hold elsewhere.”

Labor did not campaign on any changes to property taxes at last year’s election, leaving it open to an attack from the opposition. Opposition Leader Angus Taylor has described the proposals as an “assault on aspiration”, but frontbencher Andrew Hastie suggested the opposition should be open to the reforms as the battered Coalition seeks to build support among new groups of voters.

Treasurer Jim Chalmers has been pushing for the government not to shy away from bigger reforms, and Albanese echoed his language on Thursday for the first time.

Cabinet has not made any final decisions on the tax reform package, which could one or both of negative gearing and capital gains, as the war delays major calls until the closer to the budget.

An address by US President Donald Trump, flagging an end to the war in weeks but not before bombing Iran “back into the stone ages”, formed the backdrop of a National Press Club speech from Albanese on Thursday, in which he questioned what Trump’s “end point looks like”.

Albanese said Trump’s claim that the US was nearing completion, which failed to cool markets, was consistent with Australia’s recent calls to wrap up the war.

Albanese failed to rule out more stimulus, days after he adopted the Coalition’s policy to cut the fuel excise. He is facing pressure to counter inflation at the same time as demands grow to protect households from a downturn. Higher government spending, which has been at record levels, would add pressure on the Reserve Bank to hike interest rates, risking stagflation.

The federal government is preparing to ramp up its diplomatic efforts to secure fuel, as governments around the world scramble to buy oil ahead of a potential supply cliff after May.

Taylor pilloried Albanese for his Wednesday night televised address to the nation, saying “Australians were expecting answers and details [but] they received neither.”

Claiming Albanese had shown an absence of leadership, Taylor used his own televised address to argue that Labor had initially denied there was a crisis. The ABC is obliged to offer to the opposition leader their own video message after the prime minister seeks one, as was done when Albanese was opposition leader during the pandemic.

“Unlike the prime minister, I’m not going to talk down to you,” Taylor said. “Almost all Australians will do the right and responsible things in this crisis.”

After urging people to use public transport in his Wednesday night address, Albanese went further on Thursday and said working from home was a commonsense thing to do, if possible.

Albanese defended his televised address after receiving several critical questions from reporters, who cited complaints from members of the public that Albanese’s decision to speak to the nation led to more panic.

“I took the opportunity to talk directly to the nation: that is more important than ever because the nature of noise that is out there, the conspiracy theories that are out there,” Albanese said.

The oil shock has exposed Australia’s reliance on imports for more than 90 per cent of its oil and fuel, and its lowly fuel stocks that fall below global standards.

Albanese said that all options were on the table to ensure higher prices for coal and gas “do not flow into electricity prices”, suggesting Labor could emulate its wholesale price caps last used in 2022 to offset the price spike caused by Russia’s invasion of Ukraine.

He said he was looking at ideas, including biofuels and other new technologies, to increase Australia’s fuel holdings, and flagged investment in revitalising oil refineries.

“To strengthen our economic sovereignty, our energy security and our national resilience. To make the most of our resources and make more things here, so that Australia is not always the last link in the global supply chain,” he said.

With Albanese leaning on Asian partners to continue supplying oil to Australia, Albanese played down the prospect of putting a new tax on gas exports. Unions and independents MPs have been pushing for a tax that would raise billions, and which Labor could use to fund corporate tax relief in the budget.

Albanese rubbished some of the arguments of advocates who claim gas firms pay a tiny rate of tax.

“Just as we expect countries that supply us to stick to agreements which are there, we think it’s very important that the contracts that we have be fulfilled completely with countries in our region,” he said.

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