A major trade union has urged the federal government to radically overhaul Australia’s housing tax settings, warning that decades of policy have turned homes into financial assets rather than places to live, deepening inequality and locking younger Australians out of ownership.
In a submission to a Greens-led Senate inquiry, the Australian Manufacturing Workers’ Union (AMWU) called for the capital gains tax discount on investment properties to be phased out entirely and for negative gearing to be effectively abolished. The union argued that existing tax breaks have fuelled speculation, distorted the housing market and undermined the social purpose of home ownership.
The inquiry is examining the 50% capital gains tax discount introduced during the Howard government era, a concession that allows investors to halve the tax payable on profits from assets held for more than a year. The discount, combined with negative gearing rules that allow investors to offset property losses against other income, has long been controversial, particularly amid Australia’s worsening housing affordability crisis.
The AMWU is also proposing a rethink of government assistance for first-home buyers. Instead of the current federal scheme that allows eligible buyers to purchase with a 5% deposit, the union wants a model that would enable renters to divert a portion of their rent payments toward eventually buying the property they live in.
In its submission, the union said the national housing debate needed a fundamental “reframing”.
“The commodification of houses into a vehicle for accumulating and hoarding wealth has exacerbated inequality and allowed property developers, real estate agents and investors to profit from denying working people the dignity of home ownership,” the AMWU said.
The union recommended that the capital gains tax discount for investment properties be immediately reduced and then phased out over two years. Treasury estimates show the concession is expected to cost the federal budget $21.8 billion in forgone revenue in the 2025–26 financial year.
It also called for an end to negative gearing by preventing investors from using property losses to reduce their income tax bills. According to the AMWU, money recouped from winding back the concessions should be redirected into building a domestic modular housing industry, boosting supply while creating secure, well-paid manufacturing jobs.
“The economic and social opportunity of home ownership is slipping out of reach for most workers,” the submission said. “Without substantial and real changes to our mindset and to policy, a whole generation is going to miss out.”
Other unions echoed similar concerns. The Australian Nursing and Midwifery Federation urged the inquiry to recommend abolishing the capital gains tax discount altogether, arguing it was worsening housing affordability and eroding Australia’s long-term social and economic wellbeing.
The renewed push comes despite repeated refusals by the Albanese government to revisit housing tax concessions. In opposition, Labor under Bill Shorten went to the 2016 and 2019 elections with policies to curb negative gearing and cut the capital gains tax discount, but those proposals were politically contentious and were later shelved.
Since taking office, the government has argued that boosting housing supply — through measures such as incentives for new construction and agreements with states — is a more effective way to address affordability. Although Treasury modelled potential changes to the concessions in 2024, the government opted not to pursue reform ahead of the most recent federal election.
The AMWU’s stance goes further than that of the Australian Council of Trade Unions, which last year proposed limiting negative gearing and capital gains concessions to a single investment property, with existing arrangements grandfathered for five years. The Greens have also advocated similar limits, taking a policy to the election that would cap the concessions at one property per investor.
Pressure from within Labor-aligned organisations is expected to intensify as the party prepares for its national conference in Adelaide in July, where housing affordability and tax reform are likely to feature prominently.
Thinktanks have also weighed in. In its submission, the Grattan Institute argued that the 50% capital gains tax discount was overly generous and had “overcompensated” investors for inflation over the past quarter-century. It recommended reducing the concession to 25% and phasing it in over five years — a model similar to the one proposed by Shorten — which it estimates could raise about $6.5 billion annually. That revenue, Grattan said, could be used to strengthen the budget, reduce tax pressures on younger Australians or increase Commonwealth rent assistance.
By contrast, the conservative Centre for Independent Studies defended the current system, arguing the 50% discount was simple, well understood and did not warrant major change.
With housing costs continuing to climb and home ownership rates falling among younger Australians, the inquiry has become a focal point for broader debates about inequality, intergenerational fairness and the role of tax policy in shaping the housing market. The Senate committee is due to hand down its final report on 17 March, setting the stage for what could be a renewed political battle over one of Australia’s most sensitive economic issues.
