A Liberal change transformed landlord behaviour. Switching it back won’t fix the housing crisis

April 22, 2026 — 11:23am

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I wish we could make one change to the tax system and solve all of our housing problems.

In all the responses and comments this week to my story that the government is leaning towards a return to the pre-1999 arrangement for capital gains tax, there was this one overriding theme – the housing market is cooked and someone has to do something.

We live in a country where the median house price is north of $1 million in four capital cities, where asking rents on places that should be condemned would get you a small château in France, where homes are so expensive they mean couples are giving up on having a family.

So the idea that a single reform to the 50 per cent capital gains tax (CGT) concession could turn this all around is attractive.

But it’s a long way from reality.

Paul Keating introduced the CGT in the mid-1980s at a time when wealthy Australians who earned money from the buying and selling of assets made off like bandits. These capital gains went virtually untaxed.

Keating brought in his tax as part of a broad reform that included deep cuts in personal tax (the top marginal rate was 60 per cent) and company tax.

His tax was predicated on an important concept. He wanted to tax the after-inflation gain made by an asset holder, ensuring a person wasn’t financially penalised simply because what they owned increased in value in line with inflation.

This was the system until 1999 when Peter Costello, in response to an inquiry into business taxation, suggested making the system simpler (and more generous) by........

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