Photo by Tom Rumble on Unsplash
By Mark Kenny
A version of this article was originally published by The Canberra Times.
Anthony Albanese had his reservations about Labor's pledge in the 2019 election to scrap a generous tax break on share dividends.
A mere shadow minister at the time, Albanese worried that abolishing franking credits, however justified, presented a risk better avoided in election season - technical changes that are difficult to explain yet easy to misrepresent.
Tougher still to propose them from opposition as then leader Bill Shorten was attempting. Albanese told some close to him that he feared Labor would face a major scare campaign, could be defeated, and would then have to forswear future changes to dividend income rules.
That is precisely how things transpired.
During the campaign, Labor MPs fielded deep concerns from pensioners and others who owned no shares, received no dividends and thus stood to be unaffected. This spoke to the confusion in the electorate.
"We misread the mood about franking credits," Bill Shorten later conceded. "In hindsight there were a lot of people who felt vulnerable."
It is an example of how Labor's shock 2019 failure has played an outsized role in Albanese's thinking around promises, mandate, and the primacy of keeping faith with voters.
Which is why it is so telling that Albanese and Treasurer Jim Chalmers have pointedly not ruled out fixing another Howard-era boondoggle for the well-off, the 50 per cent capital gains tax concession.
All the signs are that some change will happen, although in what form has not yet been determined. "You can bank on the Albanese government doing the absolute minimum," quipped one Canberra cynic to me on Friday.
We'll see. Suffice it to say, the government will avoid the pitfalls of its franking credit careen which brought protests over retrospective impact and other tales of imminent ruin.
Allied with that other market-distorting incentive built into the property market - negative gearing - the 50 per cent CGT discount was the most political of policies when introduced by the Howard government in 1999. It was constructed to attract votes rather than improve equity or access.
Together, they have helped to supplant housing's primary function as a basic human requirement and made it a vehicle for wealth creation for those with the means to capitalise.
For those without, the incentives have fuelled prices contributing to housing precariousness, increased homelessness, and housing induced poverty.
In the past 50 years or so, the average home has risen in purchase price from roughly three or four times the average annual income to something closer to eight times.
The Australian dream has withered, debauched by a taxpayer-funded cost-containment scheme for people already sorted.
Little wonder that the Greens got so much under the major parties' skin last term when for the first time, somebody in mainstream politics spoke up vigorously for the third of all households who rent.
Before then, it was as if this cohort didn't exist.
The other two thirds are mortgage holders and those who own their home (or homes) outright.
Consider last week's cash-rate rise which brought earnest coverage of the deleterious impact on borrowers. Fair enough, but what about those locked out of even that possibility?
For decades, neither side has decisively intervened for fear of causing house prices to actually fall.
The Capital Gains Tax concession has another cost, too - the budget. The Parliamentary Budget Office has projected the revenue forgone under the current 50 per cent discount will nudge close to a quarter of a trillion dollars over the next decade.
This, while vast swathes of younger voters, including those in their 40s, struggle to even enter home ownership, competing as they do with cashed-up investors already doing well.
If you're looking for a key driver of primary vote contraction for the major parties, you could do worse than to start here.
As Labor grapples with how deeply to cut the discount, whether to apply it exclusively forward, and whether to apply it only to housing gains as distinct from profits in other asset classes, the attitude of the official opposition - such as it is currently configured - will also be interesting.
Opposition Treasurer spokesperson Ted O'Brien told Sky News the idea was simply a revenue grab.
"We are not going to be joining with Jim Chalmers on trying to ping Australians for more money because he can't stop his spending spree," O'Brien told Sky News.
Voters have seen this movie before. In fact, quite recently when the Dutton opposition reflexively promised to oppose Labor's re-drafting of stage three tax cuts.
After an initial flush of fury and outrage over Labor's broken election promise, the penny dropped that they, the Liberals, were about to stand between the vast bulk of Australians and a pretty handy tax cut.
To be fair, reducing the CGT discount is the opposite of a tax cut, but it has a strong equity component, nonetheless.
By reducing favourable tax treatments for developers and property investors, the government hopes to take some of the competitive heat out of the housing market. Improving access, while improving the budget bottom line.
That is not an outcome that the Liberal Party of Robert Menzies would have opposed.
Mark Kenny is the Director of the ANU Australian Studies Institute and host of the Democracy Sausage podcast.