Bank’s warning on house sales after unpopular Budget changes on CGT and negative gearing

The widespread backlash to Anthony Albanese’s Budget of broken promises was barely even mentioned in a 90-minute meeting of every elected Labor member on Tuesday.

The Nightly understands the Ebola outbreak, spread of diphtheria and the Prime Minister’s visit to the Northern Territory last week were among the prominent discussions at the Labor caucus, with contentious reforms such as changes to capital gains tax and negative gearing hardly brought up.

It comes after an overwhelmingly negative response to this month’s Budget, which was voted the worst in four decades and was so unpopular that even Labor colleagues spoke out about it.

The Opposition and minor parties have also taken aim at Treasurer Jim Chalmers over reforms within his “ambitious” Budget, while Mr Albanese has become the brunt of trending online memes by frustrated small business owners and potential first-homebuyers.

The Budget limited negative gearing to newly built homes and swapped the 50 per cent discount on capital gains tax for one based on inflation, with a 30 per cent minimum rate payable on the taxable portion.

But sources within the ALP told The Nightly just one member asked a question of Dr Chalmers when he put the legislation to the caucus meeting on Tuesday morning, querying what the consultation process with small business entailed.

It is also understood nobody expressed any sort of opposition to the party’s proposals, instead focusing mainly on the recent outbreaks of Ebola and diphtheria across the nation, as well as Mr Albanese visiting the family of Kumanjayi Little Baby in Alice Springs after the five-year-old was killed earlier this month.

But sources say there are still major grumblings over the poor selling of the tax changes in the Budget to their respective electorates, with one likening the roll-out to “a lead balloon”.

NSW Premier Chris Minns was among three of Mr Albanese’s Labor colleagues to publicly speak out about the reforms, saying last week households were working half their week to pay the Commonwealth, which he called on to “urgently” address bracket creep.

The Labor leader on Tuesday downplayed any hard feelings between himself and the Prime Minister, but admitted the pair’s relationship was “uncomfortable” at times.

“I have to sometimes put on the boxing gloves and make sure that we get our fair share, and sometimes that’s, you know, uncomfortable in terms of the relationship,” he said.

But he later told reporters he had worked “incredibly closely” with Mr Albanese on a number issues where he had been “excellent”.

“I have to say, on a personal level, because he’s been around in politics and in public life longer than me, he’s been excellent at that level too,” he said.

While Mr Minns backtracked on his comments, Opposition Leader Angus Taylor continued to take aim at the Prime Minister at Question Time, asking which small businesses would be carved out from the capital gains tax increases.

The Government is working on exemptions for low-capital, high-growth businesses but these won’t be included in the legislation presented this week, instead, being included in a second tranche of bills later in the year.

“Three times I have asked the Prime Minister which small businesses will be spared from his broken promises and higher taxes. Three times the Prime Minister has refused to be honest. Prime Minister, what happened to my word is my bond?”, Mr Taylor said.

Mr Albanese protested that the Budget included $3.5 billion in support for small businesses, including making a $20,000 instant asset write-off permanent.

But he could only say that consultation was taking place, not who would be exempted.

“What we are doing is replacing one discount with another discount,” he said.

Westbank’s economist also weighed into the reforms on Tuesday, predicting house sales would plummet as investors digest changes to capital gains tax discounts and negative gearing.

A briefing note from experts stated a housing market turnover was now expected to drop by 20 per cent in the near term. They forecast a 34 per cent drop-off in new investor activity, prices stalling across major capital cities, and new builds making up double the share of housing bought by investors, which is in line with the Government’s aims.

Government sources said a far greater number of questions about Budget reforms had been previously raised during a smaller committee meeting on Monday, where MPs offered constructive criticism and made it clear they wanted the fixes to be legislated as soon as possible.

One MP did on Tuesday ask a lengthy series of questions about Israel to Richard Marles during the caucus meeting in Penny Wong’s absence, raising the country’s treatment of a recent aid flotilla, the killing of aid worker Zomi Frankcom, deaths in Lebanon and Australian-made parts for the F35 fighter jets.

That discussion happened at the same time as some 75 pro-Palestine protesters in Parliament House’s lobby caused public areas of the building to be placed in lockdown.