Treasury said on Thursday that around 90% of young Australians would be better off under Labor’s tax proposals, with newly released modelling showing the changes would mostly help people early in their working lives. Jenny Wilkinson presented the figures at an Australian Business Economists lunch in Sydney, just as the government introduced the package to parliament.
The modelling linked the result to the combined effect of the automatic $1,000 tax deduction, the $250 working Australians tax offset and the changes to capital gains tax and negative gearing. Wilkinson said the reforms were assessed as benefiting around 90% of young people even before any effect from the housing market was taken into account.
That is the number Labor will lean on as it tries to sell the package beyond the usual tax-policy crowd. Treasury’s work said around 90% of Australians would have been better off by age 30 had the proposed changes been in place from 2000, using total lifetime income across all Australians as the test. By that measure, the top 10% of lifetime earners would have been worse off under the new settings by the time they turned 30.
The argument is not landing cleanly with everyone. Critics say some young people with significant share market investments may pay more tax under the package, even as Treasury says the broad result still favours most people under 35. Tax office data show about one in 10 Australians under 35 own shares, which helps explain why the debate is not only about wages and deductions but also about who holds assets and when.
Wilkinson framed the package as a system-wide reform, not a housing-only change, and said the trade-offs were unavoidable. She said there was no conclusive evidence that the new settings would worsen productivity, and pointed to OECD research saying there is not clear evidence for favourable treatment of capital gains beyond compensating for inflation. She also said applying the new arrangements to income across all assets mattered for tax design because it avoided creating a large new distortion in the system.
The housing and investment effects are still the unanswered part. Reserve Bank research shows younger people made up 35% of property investors in 2000 but about 20% by 2023, while investors over 60 rose from 12% to 28% over the same period. That shift gives the reforms a political edge as well as a tax one: Labor is trying to show the package redistributes within a changing investor market, while opponents are likely to focus on the people who may lose out. The next test is whether parliament turns the modelling into law, and whether the market responds the way Treasury expects.
