Statement: Budget 2026 housing tax changes prove that bold ideas still matter
Budget 2026/7 has unveiled the most significant changes to Australia’s tax settings in a generation, in a vindication of the notion that bold, progressive and evidenced-based ideas and advocacy still matter.
For over a decade, the McKell Institute has consistently advocated for a recalibration of the housing tax system.
Our 2015 report, Switching Gears, disrupted the debate and showed how sensible changes to the tax treatment of housing can be a positive for both supply and
Our July 2025 report, Harnessing Aspiration, proposed a ‘circuit breaker’ reform to the capital gains treatment of housing, after years of government inaction and inattention.
Tonight’s budget handed down the most comprehensive changes to these areas of reform.
The negative gearing adjustment mirrors McKell’s original 2015 proposal, orienting the powerful incentives of negative gearing concessions towards new construction.
On the CGT discount, we welcome the government going further than our 2025 proposal, making the CGT discount fairer across all asset classes.
These twin reforms won’t solve the housing crisis on their own.
But the government’s bravery in tackling these two complex and contentious areas of public policy reform should be lauded by all who believe that government should do big things.
Quotes Attributable to Ed Cavanough, CEO:
“In today’s febrile political climate, progressive administrations must own the disruption of the status quo, lest themselves be disrupted by powerful populist forces. The government’s budget recognises this new political reality.
“As politics changes, timid reform approaches won’t meet the moment. Tonight’s ambitious budget can now open the door to a season of reform that places the interests of working people at its heart, and seizes upon the growing public appetite for change to do so.
“Tonight is a vindication of pragmatic, evidence-led reform. For a decade, we’ve argued the answer to the housing crisis isn’t to fight a moral war over negative gearing and capital gains tax, it’s to calibrate them so they actually serve a national objective. The Government has done that.
“This is the most significant housing tax reform in a generation. It protects existing investors, it harnesses the aspiration of everyday Australians who want to invest in property, and it channels capital toward the new supply the country desperately needs.”
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