It's time to broaden the tax horizon and make Australia's richest cough up

Only three of the 151 members of the House of Representatives are renters who own no residential property - less than 2 per cent - compared to 30 per cent nationwide.

Oddly enough, Labor MPs are more likely to own two or more properties - 77 of 103, or 75 per cent. Of Coalition MPs, 55 of 86 own two or more properties, or 64 per cent.

It is a massive conflict of interest. Usually, when a vote comes up and there is a conflict of interest, an MP will declare the interest and not vote. But here there is no declaration because the conflict arises in the non-decision to do nothing and not have a vote.

At the height of home ownership, more than 70 per cent of Australians owned or were paying off their own home. In the past 20 to 25 years that has shrunk to 60 per cent and is falling.

Moreover, when 70 per cent owned or were paying off their home, most of the other 30 per cent were young people who could aspire to home ownership. Now most of them can't.

The trend began in 1999 when then-treasurer Peter Costello introduced the capital gains tax concession which pretty much halved capital gains tax.

Combined with negative gearing, the effect was deadly for aspiring home buyers. Investors flocked to housing, writing off interest and other costs against their income from labour and waiting for the property to increase in value so they could sell it with minimal tax - a maximum of 23.5 per cent.

People on high incomes found it very attractive to, in effect, convert a 47.5 per cent tax rate to just 23.5 per cent by just holding on to an investment property for a few years.

The fallout has been appalling. First home buyers could not compete with investors who could deduct interest payments. They were stuck in the rental market. That has been made much worse by massive immigration.

The investors overwhelmingly bought existing dwellings, not adding to the housing stock.

Worse, they did not make good landlords in the way that, say, Defence Housing, or public housing authorities (here and overseas) operate as landlords.

The great majority of Investors have just one property. Any monthly expense puts a big hole in their monthly income, so they are reluctant to repair, maintain or improve their properties.

Few investors have enough properties in the same place so that they can benefit from economies of scale when renovating in the way public authorities can.

Very few investors put in solar panels or other energy-efficiencies because there is no return for them - so renters get stuck with energy-costly dwellings.

The whole Australian way of doing housing is a crock. It is cementing intergenerational inequality and social discontent.

The social danger of a dysfunctional housing sector and the growing inequality-producing health and education sectors is disguised by the way we use economic measurements to calculate our wellbeing. Australia is really going backwards.

Gross domestic product (or even GDP per head) is not a good indicator of overall wellbeing or even economic wellbeing in times of growing inequality.

GDP shows Australia's economic position improving with a couple of points of economic growth per year. But if the increase is loaded to the already wealthy, overall wellbeing does not increase.

An Oxfam report last month revealed the total wealth of the three richest Australians - Gina Rinehart, Andrew Forrest and Harry Triguboff - has more than doubled since 2020.

The wealth of the top 47 of Australia's 141 billionaires increased by 70.5 per cent between 2020 and 2023. That extra wealth does not contribute one iota to their wellbeing because there is a limit to how much one can spend. The money keeps piling up. At least Forrest gives sizeable amounts to charitable and environmental work.

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At the lower end, of course, wages barely move and prices go up. Wellbeing goes backwards. The days of easy bulk-billing and reachable house prices of the 1980s are gone. That tells you Australia has gone backwards.

If you change measures to things like home ownership; hospital waiting times; costs of GP or dental visits as a portion of income; and educational output, the wellbeing of Australia has gone down starkly in the past 30 years or so.

And it went down in parallel with lower tax for companies and for higher income earners; privatisations; and laxer regulation.

Better still, we should only count the wellbeing and economic growth of the bottom three-quarters when measuring changes to national being as their lives are profoundly affected by changes to income and wealth whereas the lives and wellbeing of the top quarter are not affected even by large increases or decreases in income and wealth.

The favourable reaction to the revamping of the stage three tax cuts to favour people on middle and lower incomes tells us there is a public appetite for significant tax reform.

Alas, politicians take the wrong lessons from the decade-and-a-half of political turmoil up to 2022. Carbon, GST, inheritance, principal residence, and property have been foolishly ruled out for fear of the short-term political cost of scare campaigns.

But there is growing evidence more people, especially younger women, are sick of the growing inequality and would welcome broader taxes. Australia has been there before. For example, there were property, inheritance and gift taxes during the prime ministership of that well-known rabid socialist, Robert Menzies.

We should broaden the tax horizon to stop growing inequality.