Saul Eslake: Most Australians don’t want housing affordability to be fixed, and politicians know it

June 21, 2026 — 5:00am

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Independent economist Saul Eslake welcomed last month’s budget. Not everyone agrees.

Fitz: Mr Eslake. Thank you for making the time at such short notice.

SE: Pleasure, Peter I remember meeting you at that banking function in Queenstown 15 years ago, when you had to drive through that storm because all the flights were cancelled.

Fitz: I remember, but didn’t think you would! You and I talked till late, and I was struck then that you had a singular capacity to explain economic theory and practice in terms that even the more economically obtuse of us could grasp … which is why I turn to you now, as the backlash against the federal budget still goes on. The Herald’s own Ross Gittins is a hard marker, and he thought it a good one. What about you?

SE: I think it is the best budget that [Treasurer] Jim Chalmers has brought down, in the sense that at least by scrapping negative gearing, other than for “new builds”, and abolishing the 50 per cent capital gains tax discount for assets held longer than 12 months he was trying to use some of the tools at his disposal to achieve meaningful reforms, something that he hasn’t tried to do, or I suspect hasn’t been allowed by his prime minister to do, in the four budgets he brought down previously.

SE: That’s because political conventional wisdom in Australia now is that you cannot win government from opposition for the first time on a platform of bold reform because the government of the day will use all the vastly superior powers that it has at its disposal to frighten the bejesus out of voters as to what would happen if by some chance the opposition ever won. The last person to win an election on a platform with bold reform was Gough Whitlam in 1972. And subsequently John Hewson and Bill Shorten showed that if you try to do the same thing again, you’ll lose an election that everyone expects you to win.

Fitz: While the “true believers”, and those who’ve “always believed in miracles”, celebrate …

SE: Yes, so, the only way you win an election for the first time is to promise not to do anything at all, just to do it more competently than the mob that you say have been there too long. That’s how John Howard got elected in 1996, saying that there’d “never ever be a GST”. It’s how Kevin Rudd got elected in 2007. It’s how Tony Abbott got elected in 2013, saying, “there’ll be no cuts to education health and the ABC and SBS”. And it’s how Anthony Albanese got in, in 2022, and repeated the dose at the 2025 election. “Vote for me and you’ll get more of the same.” And one of the problems that he and Chalmers have had in selling what I think is essentially good policy is that they said they wouldn’t do it.

Fitz: Bearing in mind my own economic illiteracy, my understanding is that Chalmers was trying to rebalance the seesaw so that things are less favourable for my generation of Boomers and make it easier for the 20-somethings, 30-somethings – including making it easier to get their first home. But the problem that he’s got, is that to make it easier for first home buyers, he’s got to make housing prices come down. But now they are coming down, everybody’s screaming blue........

© The Sydney Morning Herald