Bulletin from Sydney: Australian budget ends decades of policy that favoured wealth-building for boomers
Jim Chalmers has become the lynchpin of Australia’s Labor government with a budget that targets under-45s and intergenerational inequality. Photo / Getty Images
Jim Chalmers is an amiable, lanky 48-year-old from a hardscrabble outer corner of Brisbane, a broken home and rough teen years. He has become the lynchpin of Australia’s Labor government.
As Treasurer – the equivalent of New Zealand’s Finance Minister Nicola Willis – Chalmers this month produced his fifth budget, a document that has upended Australia’s enriching favours for the nation’s property owners and investors, many of those now boomers.
Chalmers curbed decades of tax breaks for asset wealth in a budget unashamedly aimed at putting home ownership in the sights of the great disillusioned – the legions of Millennial and Gen Z voters who have studied, worked hard and feel like they’re on an endless treadmill seeking the financial security of their parents.
Chalmers axed the most popular and most lucrative tax break that has allowed investors for the past 30 years to buy multiple homes by using their costs of borrowing and maintenance to cut their tax bills – a policy that has seen the already wealthy price out aspiring first-home buyers.
Severely cut back, too, are lucrative tax breaks, which for the past quarter-century have allowed property investors to get a 50% discount in capital gains tax if they hold on to an asset for more than a year. No surprise that the top 10% of income earners hoover up more than 80% of the capital gains tax breaks.
This was a big, bold budget aimed at Australians under 45 and offered a simple pitch; a fairer go, a more level playing field and an end to the decades of policy emphasis that favoured wealth-building for a dying demographic.
It heralds a true break with the past and the baby boomers with a new emphasis on under-45 voters. There is a political logic to this; the under-45 bloc are described by one of Australia’s leading political pollsters, Kos Samaras, as Labor’s Praetorian Guard. They are the wall that holds against Pauline Hanson’s surging, populist One Nation party in the seats that decide federal elections. The under-45 cohort will deliver a combined 700,000 additional Millennial and Gen Z voters to the rolls by the next election.
“Only one in five of those voters considers themselves a Coalition [opposition] voter, on a good day, with the sun shining,” Samaras writes in the Australian Financial Review.
Hanson’s One Nation is on a tear across Australia, just as its compatriots, Nigel Farage’s Reform, surge in Britain. Donald Trump and the Maga movement have already triumphed.
When Australians went to the polls a year ago to re-elect the Anthony Albanese government, just over one in 20 – or 6.4% – voted for One Nation. Support for the party has since rocketed more than fourfold to 25-30%. Although it is the conservative Coalition that has leached support to Hanson’s party, Albanese’s Labor government is not immune.