Cabinet documents from 2004 reveal that then-Prime Minister John Howard and Treasurer Peter Costello shelved a report recommending substantial tax reforms to address the escalating housing crisis. The report, commissioned by the Productivity Commission, suggested winding back capital gains tax discounts and means-testing homebuyer grants. However, Howard and Costello feared public backlash and volatile property market fluctuations.
Prime Minister John Howard and his treasurer, Peter Costello, shelved a report that proposed substantial changes to their own tax reforms to fix spiralling house prices, instead telling cabinet the reforms were largely a job for the states.
Documents released today by the National Archives from John Howard’s cabinet of 2004 reveal a report, the then Coalition government had commissioned into problems facing first home buyers recommended winding back capitals gains tax discounts and means-testing homebuyer grants, but Howard and Costello feared large property price swings and public anger if they tackled reforms. Peter Costello, left, and John Howard – a joint submission from them on spiralling housing costs in 2004 in effect pushed off any contentious changes.After a surge in house prices across the country and a drop in the proportion of young people entering the property market, then-treasurer Costello had the Productivity Commission examine the housing sector. In every capital city, prices had increased faster than wages, prompting a substantial increase in average mortgage sizes. Between March 2002 and March 2004, Sydney’s median price for an established home jumped by 43 per cent, from $365,000 to $523,000. Melbourne’s median price rose by 27 per cent to $305,000, while in Brisbane it jumped 64 per cent.debates about housing, the cabinet was briefed in June 2004 on the commission’s recommendations to improve supply and demand.They included getting states and territories to remove stamp duty and replace that revenue source through another impost such as a land tax. Twenty years on, the ACT is the only jurisdiction to have started to axe stamp duty. The report recommended encouraging the states to release more land while improving planning laws to allow higher densities in sought-after parts of the nation’s major citie
HOUSING CRISIS TAX REFORMS JOHN HOWARD PETER COSTELO PRODUCTIVITY COMMISSION AUSTRALIAN POLITICS
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