{"id":299410,"date":"2026-02-24T07:44:08","date_gmt":"2026-02-24T07:44:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/299410\/"},"modified":"2026-02-24T07:44:08","modified_gmt":"2026-02-24T07:44:08","slug":"former-rba-governor-bernie-fraser-calls-for-capital-gains-tax-discount-to-be-scrapped","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/299410\/","title":{"rendered":"Former RBA governor Bernie Fraser calls for capital gains tax discount to be scrapped"},"content":{"rendered":"

A former Reserve Bank governor has told a parliamentary hearing the capital gains tax discount should be scrapped altogether to help improve housing affordability.<\/p>\n

Bernie Fraser told a Senate committee hearing on capital gains tax (CGT) that, if it were up to him, he would abolish the discount.<\/p>\n

He conceded that a “cartel” of vested interests in the economy, including politicians, home owners and investors, would like to keep the status quo.<\/p>\n

“Despite that sort of toxic approach to tax changes, I think that a case can be made for doing away with the discount on the gains, capital gains tax, abolishing it altogether,” Mr Fraser said in Canberra.<\/p>\n

“I believe that that would be a useful step, one of many steps that are required to moving back to an affordable housing market for all Australians.”<\/p>\n

\"Former<\/p>\n

Bernie Fraser sees a case for abolishing the capital gains tax discount altogether. (ABC News: Callum Flinn)<\/p>\n

CGT is paid on the profits made from selling an asset. The current 50 per cent CGT discount allows Australians to only pay tax on half the profit if they have held the asset for 12 months.<\/p>\n

Main residences, or people’s homes, are generally exempt from CGT.<\/p>\n

The Albanese government has left the door open to changing the CGT discount<\/a> for property investors, as it looks to develop a new housing affordability policy.<\/p>\n

Mr Fraser acknowledged that scrapping the CGT discount would meet fierce resistance from certain groups.<\/p>\n

“I believe it’s true that there are some sectors of the community \u2014 there is, in fact, what Alan Kohler called a ‘cartel’ of people who are against changing the tax, dealing with the tax changes,” Mr Fraser said, referring to Mr Kohler’s appearance before the same committee on Monday.<\/p>\n

“This cartel, which comprises existing home owners, property developers and, not least, lots of politicians who like to see house prices rise and go on rising, because there are votes in it.”Loading…Aspiring home buyers watch market with ‘dismay’<\/p>\n

Mr Fraser said there were “profits in it for banks and for developers, and the people who own the houses benefit from their wealth [that] goes up as the prices go up”.<\/p>\n

He described the “cartel’s” approach to property tax concessions as “toxic”.<\/p>\n

How capital gains tax changes could impact you<\/a><\/p>\n

According to a well-sourced leak, changes to capital gains tax discounts could form the centrepiece of the next federal budget in May. And while the government has downplayed the idea, it has not been ruled out.<\/p>\n

“We all know what explosion in house prices has occurred over the last 20-odd years or so.”<\/p>\n

Mr Fraser said the increase in house prices had seen the dream of owning a home “fade away”, particularly for Australians on modest incomes.<\/p>\n

“It’s not just those people in the housing markets now \u2026 feeling the disappointment,” he said.<\/p>\n

“There are all those other generations of people \u2014 young home buyers \u2014 that are watching what’s going on in the marketplace, but they must be watching with awful dismay.”<\/p>\n

Housing supply also under microscope<\/p>\n

Despite the focus on CGT tax concessions as an avenue that might be unfairly driving up demand, the committee was also asked to look at housing supply as a critical piece of the puzzle.<\/p>\n

“If we were able to better use our existing properties, it would help reduce rents,” economist Cathal Leslie said.<\/p>\n

“Eighty-five per cent of properties have a spare bedroom, so there’s a lot of slack out there, it’s just not being used.<\/p>\n

“Of course, people have spare bedrooms for all kinds of reasons, but if we could just utilise some of that, it would make a big dent in our housing crisis.”<\/p>\n

YouTube economist warns Australia is losing the ‘fair go’<\/a><\/p>\n

British economist Gary Stevenson is on a speaking tour, warning Australia will follow the path of the UK with “poverty exploding” unless politicians deal with inequality.<\/p>\n

Senators heard how tackling perceived rising inequality would require addressing taxation policy and the forces affecting housing demand and supply.<\/p>\n

But Tax and Transfer Policy Institute director Robert Breunig told the committee that any change could be difficult and unpopular.<\/p>\n

Professor Breunig said the lack of enthusiasm for any changes to the tax arrangement around property ownership was down to the proportion of the population that owned property.<\/p>\n

“The average voter is a home owner and has seen a big wealth increase, and doesn’t feel like they should have to share any of that with the government,” Professor Breunig said.<\/p>\n

“It’s probably a question about democracy, I think.”<\/p>\n

The Senate committee also discussed how the amount of money funnelled into the property market because of tax concessions could impede productivity.<\/p>\n

“I want to stress owner-occupied housing, which is where I think the egregious under-taxation is, and that is generating a lot of unproductive behaviour,” Professor Breunig said.<\/p>\n

Labor senator Ellie Whitaker asked where the money could go instead.<\/p>\n

Mr Leslie, a former Treasury economist, said: “It could be the education sector, the technology sector \u2014 it would depend on what activities are not currently feasible based on current arrangements.”<\/p>\n

\"Senators<\/p>\n

Senate hearings on the capital gains tax discount are being held in Melbourne, Canberra and Sydney this week. (ABC News: Callum Flinn)<\/p>\n

Treasury says impact on housing would be ‘relatively small’<\/p>\n

Greens senator Nick McKim asked Organisation for Economic Co-operation and Development (OECD) economist Diana Hourani if reducing the CGT concession for property would reduce inequality in Australia.<\/p>\n

“It would get at one of the drivers of inequality,” she responded.<\/p>\n

However, Treasury has told the committee its research showed any changes to the CGT discount would have a minimal impact on the supply and pricing of housing.<\/p>\n

“The impact on the housing market seems to be relatively small,” Treasury first assistant secretary Shane Johnson said.<\/p>\n

“Where you are likely to see more of an effect is around the ownership mix [of housing].<\/p>\n

“These things are very complex.”<\/p>\n","protected":false},"excerpt":{"rendered":"A former Reserve Bank governor has told a parliamentary hearing the capital gains tax discount should be scrapped…\n","protected":false},"author":2,"featured_media":299411,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[164594,138,25416,76366,164597,219,3911,111,139,69,35671,32354,164596,164595,109794],"class_list":{"0":"post-299410","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bernie-fraser","9":"tag-business","10":"tag-capital-gains-tax","11":"tag-cgt","12":"tag-cgt-discount","13":"tag-economy","14":"tag-inequality","15":"tag-new-zealand","16":"tag-newzealand","17":"tag-nz","18":"tag-oecd","19":"tag-property-prices","20":"tag-robert-breunig","21":"tag-tax-and-transfer-policy-institute","22":"tag-tax-reform"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/299410","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=299410"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/299410\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/299411"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=299410"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=299410"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=299410"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}