Treasurer Jim Chalmers has defended the government's decision not to fully abolish negative gearing in the 2026 budget, arguing that the reforms strike the right balance for Australia. Responding to a question from Guardian Australia's economics editor, Patrick Commins, about whether fully scrapping negative gearing would have raised more revenue, Chalmers said the government had carefully weighed the impact on existing investments.
Balancing Past and Future
“We’ve balanced respecting and recognising those former investments at the same time as we’re changing the system for the future, so that we continue to provide a discount in the CGT system, but calculated in a way that minimises some of these other distortions,” Chalmers explained. The treasurer emphasised that the reforms aim to reduce distortions in the housing market while maintaining support for investors.
Budget Implications Across Generations
The budget has drawn attention for its generational impact, with analysis showing how it affects Gen Z, millennials, Gen X, and baby boomers differently. Critics argue that capital gains tax and negative gearing disproportionately benefit the top 1% of earners, a point highlighted by a recent chart showing the concentration of benefits.
The government’s approach has sparked debate about housing affordability and tax fairness, with the Labor party defending its incremental reform as a pragmatic step forward.
