Has a policy ever worked as quickly as the changes to the capital gains tax (CGT) discount? It hasn’t even become law yet and already it is having an impact despite conservatives loudly telling everyone the discount was not the cause of the housing affordability crisis.

Last week in my role as chief economist for the Australia Institute, I appeared before the Senate committee into the tax changes.

I stated what regular readers of this column have long known – that my research showed the CGT 50% discount was ground zero of the housing affordability crisis.

The opposition finance spokesperson, Claire Chandler, took issue with this assertion and regurgitated economist Richard Holden’s argument that the deregulation of the banking system by Paul Keating, the Reserve Bank of Australia targeting inflation and the Basel I and II banking accords all played a bigger role.

Now perhaps there is a reason why dwelling prices remained at around the same level in relation to household income during this deregulation-inflation-targeting-Basel-that period, and why those things only began to have an impact after the CGT discount was introduced in 1999, but it’s not one I’d want to try to sell:

If the graph does not........

© The Guardian