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HIA says negative gearing, CGT and SMSF changes ‘should be red carded’

THE Housing Industry Association (HIA) has called the passage of changes to negative gearing, capital gains tax (CGT) and self-managed super fund (SMSF) investment rules a major setback for housing supply, warning the measures should have been ‘red carded’ before being legislated (for implementation July 1, 2027).

HIA chief executive for industry and policy, Simon Croft said the reforms risked ‘compounding Australia’s already critical housing shortage’ by undermining confidence and reducing capital flowing into new residential construction.

“These changes send exactly the wrong signal at the worst possible time and represent multiple own-goals in the national effort to boost housing supply,” Mr Croft said. 

“Australia is in the grip of a housing supply crisis, yet these measures will dampen investment in new housing and make it harder to deliver the homes Australians urgently need.”

A HIA report said the scaling back of negative gearing and CGT settings would weaken measures that have historically supported investment in residential construction, particularly in the delivery of new housing stock.

“The reality is that investors play a key role in funding new housing. Curtailing these incentives will lead to fewer homes being built and place further upward pressure on rents and prices,” Mr Croft said.

“At a time when all levels of government say increasing housing supply is the top priority, these reforms are an own goal. They actively work against that objective by discouraging the very investment needed to deliver new homes,” he said.

HIA also warned that changes to SMSF investment rules would strip an important source of funding from the housing market.

“SMSFs have become an increasingly important provider of capital for residential investment. Restricting their participation will further tighten housing supply and reduce market resilience.

“The combined effect of the legislated changes would ripple across the economy, reducing construction activity and putting jobs at risk in one of Australia’s largest employing industries.

“Instead of encouraging investment to boost housing supply, these changes risk driving investors out of the market entirely.”

HIA reiterated that improving housing affordability requires policies that increase supply—not measures that discourage investment.

“These reforms should have been red carded. Australia needs policies that unlock housing supply, not restrict it,” Mr Croft said.

The association urged the Federal Government to work closely with industry to mitigate the impacts of the changes and refocus efforts on practical solutions, including planning reform, faster approvals, cutting red tape and greater land availability.

www.hia.com.au

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Business case: Aged care bed costs to rise – for those ‘who can afford it’

By Leon Gettler, Talking Business >>

FROM NOVEMBER 1 this year, Australia’s aged care system will undergo a massive shift.

Basically, the Federal Government will be putting more money into it. But here’s the important part – families and aged care residents will be paying more too.

Michael Horin, a principal with Clarity Aged Care Advisors said the updated Aged Care Act will change everything.

“The premise of the new act is that aged care in Australia is not a profitable industry,” Mr Horin told Talking Business. 

“The latest figures that came out are that 30% of facilities are running at a loss and the quarter before that it was close to 50%. 

“But overall, a lot of facilities are losing money. So the government has said, ‘We need aged care to be profitable. We’re an aging population and we need more beds to be built and more facilities to be built with more beds in Australia so we need to change the funding model for aged care’.

“And the government is taking on more of that responsibility, they’re chipping in more but what’s relevant for the resident or the consumer is the government is also asking the consumer to pay more.

“The underlying impact is that people will be paying more for aged care after November 1.”

Average $20k-50k more per year

So the rough estimate is that self-funded retirees will have to pay between $20,000 and $50,000 more per year to receive aged care.

All of that depends on the facility, the room within that facility and what the person’s means are.

“We live in a fantastic country and no-one is denied an aged care bed,” Mr Horin said.

“The government is essentially saying those that can afford it will be paying more for their care.”

All of this will depend on the person’s means. It’s built on a sliding scale.

Those considered to be low means with roughly less than $200,000 to their name and who don’t own a home, won’t be paying more for their care. And then it goes up from there.

The key issue here is that Australia is an ageing society. The bottom line, Horin said, is we need more aged care beds.

“The main statistic is that there are approximately 200,000 beds in Australia at the moment in aged care,” he said.

“By 2050, which is not far away, they are estimating we will need about 800,000 beds, so 300% growth there.

“And beds aren’t being built. Facilities are closing down faster than new ones are being built.

“So they want more facilities to build beds and that’s why the government is trying to make it a profitable industry to encourage investment in the industry.”

More Australians needing care

The issue is, more and more Australians will need aged care.

“Nobody chooses to go into aged care,” Mr Horin said.

“Aged care is not a choice, it’s a necessity. You go into care when you need 24/7 care available and that is happening more and more.

“The trend is people are staying at home longer and they’re going to care later. The government has put a whole lot of investment into home care, allowing people to stay in their home as long as they can, which is great for everyone.

“It’s great for the government too. It’s a lot cheaper to keep people’s care in their home than it is to fund them in an aged care facility. 

“But, ultimately, more and more people are ending up in aged care and we’re an ageing population – so we will need more beds.”

www.clarityagedcare.com.au

www.leongettler.com

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

https://shows.acast.com/talkingbusiness/episodes/talking-business-33-interview-with-michael-horin-from-clarit

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Small business tax cut to 20% 'a $11.4b boon for economy' says COSBOA

ELECTION 2025 >> Economic modelling from the Council of Small Business Organisations Australia (COSBOA) has found reducing the small business company tax rate would boost the economy by up to $11.4 billion dollars and provide up to 3370 permanent jobs.

The independent modelling, based on a small business tax rate cut from 25% to 20%, found the move was “fiscally prudent” and “good economic policy”, stimulating cashflow and business growth to provide a “net benefit to the Australian community”.

COSBOA CEO Luke Achterstraat said the modelling clearly illustrated the proposal would lead to economic growth, innovation, higher productivity and more opportunities for Australian small businesses.  

“The modelling confirms what we have heard from countless small businesses across the country: a tax cut would boost small business cashflow, re-ignite investment and increase output, wages, jobs and economic growth,” Mr Achterstraat said.

“In aggregate, national income would rise appreciably, indicating that the policy provides a net benefit to the Australian community.

“Under this modelling, GDP would be boosted by up to $10 for every $1 in foregone tax revenue – that’s a compelling return,” he said. “The flow-on effects of higher incomes and job creation assists in significant tax clawback and minimal impact on the budget. It is not just a win for small business, it’s a win for all Australians.”
 
Mr Achterstraat said the 2025 election campaign has so far been devoid of any significant economic reform.

“With two weeks of campaigning left, this policy is free to be adopted by the major parties as a clear path forward for small businesses across Australia. The numbers are in – we can’t afford not to cut the small business tax rate to 20%.

“It is fiscally prudent, targeted and will produce a growth dividend in uncertain economic times,” he said.
 
“Moreover, this is good economic policy because it addresses a significant burden on small business — especially after the GFC and Covid periods: it improves access to cashflow and credit on reasonable terms.”
 
The economic impacts of the tax cut were modelled using three policy scenarios:
 

  • an immediate 5% reduction to 20% in 2025-26;
  • a phase-in approach where the rate reaches 20% in 2027-28;
  • a phase-in approach where the rate reaches 20% in 2029-30.

 
Across all scenarios, the modelling shows the tax rate reduction would boost small business cashflow, increase post-tax retained earnings, loosen credit constraints, reignite investment and spur productivity, wages, jobs and economic growth. In aggregate, national income would rise, with the boost to GDP significant relative to the low cost of replacing the foregone revenue.
 
Under the first scenario, in which the tax rate cut is immediately implemented, Australia’s GDP would be boosted by about $11.4 billion over five years, with about 3370 permanent jobs created. Over the period, foregone tax revenue would total $800 million, meaning GDP would ultimately be improved by $10.6 billion. This equates to a net GDP gain of about $10 for every $1 in lost tax revenue.
 
For states and territories this would equate to $3.4 billion in NSW; $2.5 billion in Victoria; $2.3 billion in Queensland; $620 million in South Australia; $2 billion in Western Australia; $177 million in Tasmania; $151 million in the Northern Territory; and $232 million in the ACT.
 
“Small businesses comprise 97.7% of all Australian businesses, employ more than 5.1 million people in our communities and contribute $500 billion a year to the economy. In regional and remote Australia, areas more reliant on small businesses, they are the heartbeat of the community,” Mr Achterstraat said.
 
“This tax cut is the one policy that can provide instant respite to Australian small businesses and let them focus on what they do best – running their businesses and serving our communities.”
 
COSBOA’s economic modelling was prepared by Tulipwood Advisory Pty Ltd (Tulipwood Economics), Qaive and Bellchambers Barrett.

www.cosboa.org.au

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Budget’s uni and TAFE ‘investments’ get thumbs up from Chartered Accountants

BUDGET REACTION – CHARTERED ACCOUNTANTS Australia and New Zealand (CA ANZ) has endorsed the Federal Budget’s university and TAFE investments after sustained calls for major reform of the higher education sector.

CA ANZ said it was “pleased to see an additional $2.5 billion over 11 years for a new higher education funding system” which will provide more Commonwealth Supported Places and extra support for disadvantaged students.

But it flagged that this new funding system “must not impose hard caps on university enrolments”. Instead, CA ANZ said, “it should extend these Commonwealth Supported Places to all Australian higher education providers to expand student choices”. 

CA ANZ education, skills and migration policy leader Sarah Davidson welcomed the 20 percent cut to student debts, wiping $16 billion from outstanding student loans.

“We have called for a reduction to student debt for many years now,” Ms Davidson said. 

“The accounting profession has experienced declining university degree enrolments for most of the past decade, leaving a critical shortfall of accounting, audit and finance professionals that we desperately need in Australia.

“This decline in enrolments is concerning as demand for the accounting profession has never been higher, with government employment projections prepared by Victoria University forecasting the number of accounting roles will increase from 201,600 in 2024 to 234,000 by 2034.”

Ms Davidson said the Federal Budget was missing a number of measures to further support the accounting profession, including lowering the cost of accounting degrees, which is a key source of student debt, and including accounting subjects at school.

“As we head towards an election, we would like to see more visionary policies from the government that support the accounting profession,” Ms Davidson said.

“CA ANZ would also like more schools supported to offer accounting subjects, and a robust national accounting curriculum for senior secondary students.

“We are also calling for more support for international students and graduates who have the qualifications to do complex accounting work but are forced to do work below their skill level due to archaic migration rules and a lack of support to prepare them for the workplace,” Ms Davidson said.

“As accountants play a critically important role in the functioning and sustainability of global financial markets, a strong pipeline of talent for the profession is key to ensuring economic stability.

“We look forward to working with the Federal Government on the rollout of this Budget to ensure we are fully addressing the key issues facing the accounting profession.” 

www.charteredaccountantsanz.com

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ACS welcomes tax cuts for technology professionals, calls for more focus on AI

BUDGET REACTION – ACS, the professional association for Australia’s technology sector, has welcomed the Federal Government’s 2025 Budget which will see tax cuts to benefit thousands of professionals in the technology and computing sectors.

The tax relief measures, introduced as part of the 2025–26 Budget, will provide financial relief to IT specialists, software engineers, cybersecurity experts, and other digital professionals who ACS calls “integral to Australia’s innovation-driven economy”.

ACS chief executive officer, Josh Griggs, applauded the initiative. 

“ACS welcomes these tax cuts as a positive step towards retaining and attracting the world-class technology talent that Australia needs,” Mr Griggs said.

“As the Australian digital economy grows, ensuring ICT professionals are fairly supported financially is critical. These measures will enable tech professionals to invest more in their careers, upskill, and contribute to Australia’s growing technology sector.

“However, ACS is concerned that the nation is not positioning itself to take advantage of the major changes artificial intelligence offers to the economy,” he said.

“We would like to see greater government investment and incentives for the private sector that would see increased funding for developing skills, investing in local data centres, boosting AI sovereignty, and bolstering Australia’s cyber security readiness, particularly in the small to medium enterprise sector.”

ACS president Helen McHugh emphasised the importance of financial incentives for the tech workforce.

“Our technology industry is a cornerstone of Australia’s economic future, and these tax reforms will ensure that our skilled professionals remain competitive in an increasingly globalised workforce,” Ms McHugh said. 

“However, we encourage the government to continue investing in STEM education, diversity, digital innovation, and infrastructure to complement these tax benefits so we can reap the benefits of this era of rapid change.”

Ms McHugh said ACS remained committed to supporting Australian technology professionals and looked forward to working with the Federal Government on building policies and programs that foster digital growth and innovation.

“In addition to tax relief, we hope to develop industry initiatives that will build the nation’s capability in skills development, cybersecurity funding, and digital infrastructure investment,” she said.

ACS represents more than 47,000 technology professionals across all industries nationwide. Its members work in industry, education, government, and the community delivering the digital services that drive the nation and provide the high-skilled jobs of today and tomorrow.

ACS – originally known as the Australian Computer Society, when founded more than 50 years ago – works to grow the technology sector while making sure IT professionals act ethically, responsibly, and in keeping with the best interests of not only their employers, but the wider community. ACS has branches in every state and territory, conducts its own innovation labs and education programs and works to help all Australians be part of the nation’s highest growth sector.

www.acs.org.au 

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Financial services sector okays ‘no surprises’ Federal Budget

BUDGET REACTION – THE FINANCIAL Services Council (FSC) has welcomed the 2025-26 ‘no surprises’ Federal Budget which, it said, “reinforces stability and provides certainty for the financial services industry and its consumers on the eve of the federal election”.

FSC CEO Blake Briggs said, “We congratulate the Treasurer for focusing on cost-of-living challenges facing Australians, and delivering stability and certainty for the financial services industry in advance of the federal election.” 

Mr Briggs said the Budget continued a multi-year focus on improving the funds management tax regime and integrity of the superannuation system, including:

  • Measures to clarify arrangements for managed investment trusts, to ensure legitimate investors can continue to access concessional withholding tax rates in Australia; and
  • $50 million over three years to extend the Tax Integrity Program to enable the ATO to ensure timely payment of superannuation liabilities by Australian businesses.

“As one of the largest contributors to the domestic economy, this continued fine tuning of the financial services framework is welcome, however there remains significant opportunity for the next parliament to refocus on economic growth and regulatory simplification opportunities to grow the economy,” Mr Briggs said.

“The FSC has recommended policy proposals that would increase financial services exports by almost $2 billion a year and lift the sector’s productivity by $800 million a year through a combination of reducing regulatory costs, lowering fees and investing in new markets.”

Among these policies are forming a red tape razor gang responsible for slashing inefficient regulation; simplifying the breach reporting regime; providing a level playing field under the foreign investment framework; allowing for the rationalisation of legacy superannuation and managed investment products; and the introduction of a product labelling regime for sustainable and responsible investments.

www.fsc.org.au

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Federal Budget did not address immigration ‘oversupply’ defeating new housing targets – SPA

BUDGET REACTION – WHILE SOME Federal Budget initiatives to increase housing supply have been welcomed by Sustainable Population Australia (SPA), Labor’s move to expand eligibility for the Help To Buy scheme is not one of them. SPA claims the move will “exacerbate demand”.

SPA research points to the housing crisis not being solved until demand is reduced and SPA communications manager Michael Bayliss said the Federal Budget 2025 was not heading in the desired direction.

SPA’s position is that Australia's housing crisis is “entirely due to rapidly rising demand, with an increase of 1.6 million people over the last three years”. They say the solution is to cut Net Overseas Migration to 70,000 per year “so that construction of new dwellings and other infrastructure can keep pace”. 

Mr Bayliss said the housing crisis had been driven, for most part, by record levels of population growth, including 1.6 million over the three years to September 30, 2024 and 8.7 million – or 45 percent – since 2000.

“Since the rising costs of living and lack of available housing has pushed Australia’s total fertility rate down to 1.5 children per woman, the only way to rapidly reduce demand is to cut net overseas migration (NOM),” Mr Bayliss said.

“The latest figures from the Australian Bureau of Statistics (ABS 3101.0), reveal that Australia grew by 484,000 people in the year to 30 September 2024, of which 379,800 or 78.5 percent, resulted from NOM.”

SPA national president Peter Strachan said, “As SPA noted last week, with an average occupancy of 2.5 people per household, an extra 193,600 dwellings are required to accommodate this population growth, before meeting existing demand from homeless people forced into tent-cities.

“Yet only 158,690 new homes were commenced in Australia last year, resulting in a shortfall of 35,000 dwellings, just to deal with latent demand.

“At the very least, NOM must be cut to reduce population growth to a level such that construction of new dwellings and other infrastructure can keep pace. 

“Ultimately, however, we need to reduce NOM to its long-term average of around 70,000 per annum, in line with post-war historical levels up until 2004.”

Mr Strachan said some Budget initiatives to increase supply were welcome including: an extra $54 million to states and territories for more prefabricated and modular homes; a ban on foreign investors buying existing homes for two years from next month; and doubling incentive payments for construction apprentices.

“On the other hand, expanding eligibility for its Help to Buy scheme for first home buyers will pour petrol onto the fire of over-demand,” Mr Strachan said.

Mr Bayliss said, “If Australia can stabilise its population below 30 million by managing immigration, scarce resources of capital and labour can then be reallocated away from housing construction towards more productive areas of the economy.”

www.population.org.au

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