News and politics live updates: Jenny Wilkinson derails Chalmers Budget claim, issues warning to Aussies

Tax changes in the Budget will lead to a “reallocation” of homes as investors choose to take their money out of the existing housing market, Treasury secretary Jenny Wilkinson has told business economists.

The government spent months in the lead-up to its May 12 Budget arguing that it needed to do everything it could to boost housing supply and help a generation of Australians locked out of the market.

But analysis in Budget papers and Treasurer Jim Chalmers’ rhetoric since that night has also pointed to the tax changes as necessary to rebalance an “out of whack” system that meant lower tax was paid on income from assets than wages.

It replaces the 50 per cent discount for tax on capital gains with an inflation-based discount and a 30 per cent minimum rate on the taxable portion.

Negative gearing will be limited to new housing stock only, and there will also be a minimum 30 per cent tax rate on income from discretionary trusts.

Treasury has estimated that these tax measures would lead to 35,000 fewer homes built over the next decade, but it said this would be more than offset by measures to encourage construction such as a new $2 billion infrastructure fund.

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Mark Butler has rejected fresh industry claims that Labor’s housing tax reforms will drive up rent prices and reduce home construction, accusing property groups of trying to protect the status quo.

New analysis by the Housing Industry Association, the Property Council and the Master Builders Association forecasts rents could rise by $9 per week and 9000 fewer homes be built over four years.

Speaking to Channel 7, the Health Minister said the government’s Treasury modelling, prepared in the “public interest”, showed rents would rise by only about $2 a week.

“We’ll back the officials in Treasury who are employed by the public to do this modelling in the public interest, not in the interest of vested interests,” Mr Butler said.

“They don’t want to see change. What a surprise that they’ve got some modelling that indicates the government should do absolutely nothing.”

Industry Minister Tim Ayres has defended the Albanese government’s refusal to offer major carve-outs to its controversial capital gains tax overhaul, insisting the position had been clear since Budget night.

The comments come after Prime Minister Anthony Albanese dismissed expectations of sweeping concessions for small businesses as legislation was introduced to parliament on Thursday.

Speaking to ABC Radio on Friday morning, Senator Ayres said the government’s stance was “entirely consistent” with what Jim Chalmers outlined when the reforms were first unveiled.

“Well, that’s entirely consistent with the approach that the Treasurer outlined on budget night, and we’ve been consistent about (that) ever since,” he said.

Mr Ayres added that consultation with industry groups was focussed on the “narrow question” of startup businesses with smaller cost bases, rather than broader exemptions from the tax changes.

“There are substantial benefits in the Budget for small business; making arrangements like loss carry back, instant asset write-offs, big changes to the research and development tax incentive,” he said.

Attorney -General Michelle Rowland has defended the government’s decision to withold parts of evidence from the Royal Commission into anti-Semitism and social cohesion, arguing cabinet protections are standard legal practice.

Ms Rowland said the Commonwealth has fully cooperated with the inquiry and provided redacted material where necessary, including information linked to ongoing criminal matters, security classifications and cabinet deliberations.

“I think we should also be very clear that we’ve assisted the Royal Commission to provide redacted versions of witness statements, which are suitable for publication,” she told ABC Breakfast on Friday.

“Some of those redactions are applied in some circumstances – so for example, when information is relevant to ongoing criminal proceedings. And these also include security-classified information, or information that goes to cabinet confidentiality.

“Whilst it’s not appropriate to comment on evidence that has been provided to the Royal Commission, there is nothing that the Commonwealth is doing that is novel in terms of there being cabinet confidentiality”

Oil prices eased and Wall Street rebounded to record highs early on Friday morning, after reports emerged that the US and Iran may agree to a 60-day ceasefire extension via a memorandum of understanding.

The potential deal that saw US shares swing higher, will re-open the Strait of Hormuz to shipping and offer sanctions relief to Iran including the release of frozen monetary funds.

The key issue of who controls Iran’s enriched uranium stockpile remained unclear, with news agency Axios reporting US President Trump is considering the terms of a proposed new deal.

“The market has placed its bets on a peace deal, so that’s almost fully priced into all asset prices now,” said Kyle Rodda a Senior Markets Strategist at Capital.com.

“Now, it’s without a doubt a situation where the where risk [for asset prices] is skewed to the downside if the conflict erupts again.”

In late trade on Thursday, the S&P 500 climbed 0.5 per cent to a record high of 7556 points to take its one-month rise to 6.1 per cent as traders once again expected a peace deal amid a seesaw flow of news. While the tech-heavy Nasdaq Index added 0.7 per cent to an all-time high of 26,835 points.

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Although Treasury chief Jenny Wikinson supported parts of Labor’s controversial tax changes, including to CGT and negative gearing, she revealed this week that the shake-up will not solve the dire supply issue in Australia, completely derailing the Albanese government’s claims.

“The changes in the tax elements of the package that were announced in Budget are really a bit more about changing the distribution of housing ownership, ­rather than addressing sort of, in an overarching sense, supply,” Ms Wilkinson said on Wednesday.

“The Government did make an explicit decision to allow negative gearing to continue for ... new dwellings in order to have a specific outcome there, which is to continue to encourage supply.

“But in aggregate, I think the better way to think about the impact of these tax changes is about changing the distribution of ownership rather than them being central to changing the sort of supply itself.”

Labor’s tax changes would have benefited nine in 10 young Australians if they had been in place since the turn of the century, the Treasury chief says as the chorus protesting the budget amps up.

Department secretary Jenny Wilkinson presented fresh analysis of the controversial tax package, which includes changes to negative gearing and capital gains tax concessions and a $250-a-year tax rebate for workers, during a post-bBudget address on Thursday.

While some younger people would not benefit from the tax changes, trade-offs were unavoidable in system-wide reform, Ms Wilkinson said.

The reforms, if implemented in the past 25 years, would have provided a cumulative benefit to about 90 per cent of young people, she said.

“These are the most significant reforms to the tax system in a quarter of a century,” she told the Australian Business Economists lunch in Sydney.

“Overall, our assessment is that these reforms will contribute to arresting the decline in home ownership rates, improve the efficiency of the taxation of capital, and support a modest reduction in the tax burden on labour income.”

The analysis found the top one per cent of income earners would have received $400,000 less per person in lifetime tax benefits if the new arrangements had been in place since 2000.

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The government has secured the first vessel in Australia’s maritime strategic fleet a year after it was due.

Transport Minister Catherine King said on Thursday night securing the first ship, ANL Kokoda, marks an “incredible chapter in Australia’s maritime history”.

The large cargo ship can be used to deliver supplies in the event of natural disasters or supply chain disruptions.

The vessel is the first of up to 12 privately owned, commercial operated ships in the fleet that was announced in 2019.

“Recent global events have emphasised the importance of Australia having a resilient domestic maritime sector,” Ms King said in a statement.

“The ANL Kokoda will provide critical maritime capabilities, including by adding a new tool to be able to respond to disruption events.”

Health Minister Mark Butler was forced to defend Labor’s controversial housing tax changes, insisting they will not trigger widespread rent hikes, despite mounting warnings from critics and rival modelling claiming the policy could deepen Australia’s housing crisis.

Speaking on Sunrise on Friday, Mr Butler rejected suggestions the reforms would place new pressure on tenants, arguing the overwhelming majority of existing landlords would be unaffected because negatively geared properties had been grandfathered under the changes.

“Existing landlords have no basis for increasing their rent because of these tax changes, because they’re grandparented,” he said.

Mr Butler pointed to official government modelling forecasting only a modest increase in rents - estimated at about $2 a week - while maintaining the long-term impact would place downward pressure on prices.

“Going forward, there’ll be a modest impact of rent, so about $2 a week,” he said.

“But over time, there’ll be downward pressure on rent, not upward pressure.”

The minister acknowledged landlords may still raise rents, but argued any increases would be driven by broader market conditions rather than Labor’s policy settings.

Deputy Leader of the Opposition Jane Hume delivered a starkly different assessment, arguing Labor lacked a public mandate for the changes and warning the measures could reduce housing construction while pushing rents higher.

“Now we’re hearing that these new housing changes, these toxic taxes, are actually going to reduce the number of houses built and push up rents, making it harder for Australians to get into their first home,” she said.

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