AARON PATRICK: Anthony Albanese’s $900 billion hit to aspiration

Dark news emerged for home owners today, in the form of a prediction from the National Australia Bank that homeowners are in for a $900 billion hit to their wealth from falling property prices this year.

Then an explanation of sorts came from someone who once inhabited the Albanese Government inner sanctum. Former prime ministerial economics adviser Alex Sanchez vented his frustrations with the big government and high taxing policies of his former boss over chicken and salmon lunch at a Sydney think tank.

Mr Sanchez revealed he tried to convince the Government to cut the top rate of income tax below 40 per cent, from 47 per cent, and main corporate rate to 25 per cent from 30 per cent.

“I wanted to flatten the tax scales desperately,” he told the Centre for Independent Studies, which advocates for free markets and smaller government.

“I had this sort of crazy Crocodile Dundee view of the world, which was, ‘That ain’t a knife. This is a knife’, and I was going to try and bring down the top rate of tax to put a three in front of it.

“There is that sort of view in Labor that the rich should pay more tax. I remain to this day unsatisfied by it.”

Mr Sanchez, who called himself a “true believer” in the Labor cause, admitted that he is a lonely figure on the left these days. The child of poor Spanish immigrants, his parents saw education and home ownership as the keys to family prosperity — just like millions of disappointed Australians today.

Which is why the government-induced correction in property prices in the two biggest cities is likely to be seen as an important moment in Australian economic history. The tax increases on property investing in this year’s Budget will compound the effect of interest rate rises to strip almost a trillion dollars from owners, if NAB’s forecasts prove correct.

While the goal of helping younger people buy homes is laudable, the blunt force trauma applied to the economy is dangerous.

Before the election, Anthony Albanese told Australians the tax system for property investing would not be changed. When it was, the Prime Minister and Treasurer Jim Chalmers said they would slow price rises, not trigger falls.

Home owners have been deceived. The government could have taken a tougher but more effective option and launched a national campaign to make building homes and apartments cheaper.

But that would have required taking on vested interest groups, including many of the prosperous voters who elected Labor-leaning teal independents in the inner cities.

Instead, they played with the tax system in a way that pandered to the view in Laborland that wealthy or financially aspirational people deserve to be taxed more. That view was not always dominant in the Labor Party, as Mr Sanchez described in his conversation about the legacies of the Hawke and Keating governments, which would be regarded as dangerous experiments in “neo-liberal” right-wing governance today by their party.

Asked how to persuade a Labor movement invested in philosophies once thought to have faded away last century, Mr Sanchez struggled to come up with a solution. Who can blame him, for Mr Albanese’s dominance of the Labor Party and broader politics is so complete that challenging his approach from inside would be professionally suicidal and from outside risk ridicule or opprobrium from the despatch box.