Labor has partnered with the Greens to end a self-managed superannuation loophole, but the deal has exposed the limits of both parties’ housing agendas as Australians continue to face soaring rents, declining affordability and a shrinking path to home ownership.
The Albanese government’s changes to negative gearing and capital gains tax are now set to pass parliament after Labor secured Greens support in the Senate.
In return, Labor agreed to stop self-managed superannuation funds, or SMSFs, from borrowing money to buy residential property. The government also agreed to delay its controversial NDIS overhaul by extending a Senate inquiry until August 14.
The SMSF change means Australians will still be able to buy property through their self-managed super fund, but they will no longer be able to borrow money to do it.
The measure will apply only to future arrangements. Existing borrowing will be protected, and contracts already in train will be given a 45-day window after the amendments become law.
That means the so-called loophole is being closed slowly and cautiously, with current users shielded from the immediate impact.
Treasurer Jim Chalmers sought to minimise the significance of the reform, saying SMSFs account for less than 1 per cent of total residential property borrowing and less than half a per cent of new residential borrowing each year.
That admission raises an obvious question: if the loophole is so small, why is it being sold as a meaningful housing reform?
Labor is presenting the package as a serious attempt to rebalance the tax system, but the deal leaves much of the property investment structure intact. Negative gearing and capital gains tax concessions will continue in modified form, and the government has already watered down parts of its original proposal after pressure from business groups and investors.
The Greens, meanwhile, are claiming credit for forcing Labor to act on SMSF borrowing, while also admitting the changes fall well short of what they say is needed.
Greens leader Larissa Waters said that ending, rather than grandfathering, tax breaks would have done more to help renters buy homes. Greens economic justice spokesman Nick McKim called the deal a “small step in the right direction”.
That is the problem. Australians facing impossible rents and house prices are being offered another “small step” from a parliament that has spent years avoiding the scale of the housing crisis.
The Coalition is opposing the bill, but it too faces questions over its record on housing affordability, tax concessions and investor-friendly policy settings.
The result is a familiar pattern in Canberra: Labor declares reform, the Greens declare pressure, the Coalition declares opposition, and young Australians remain locked out of the market.
The political trade-off also extends to the NDIS.
Labor had hoped to pass its proposed NDIS overhaul before parliament rises for the winter break, but the Greens used the tax negotiations to secure an eight-week extension to the Senate inquiry.
The NDIS bill will now be delayed until at least mid-August, with Health Minister Mark Butler acknowledging the delay will cost the budget “a few hundred million” dollars.
Labor and the Greens have agreed to amendments limiting ministerial powers over participant support budgets, increasing transparency around automated decision-making, and adding protections around restrictive practices.
But the Greens say they will still fight the broader NDIS changes, which the government argues are needed to control scheme costs.
That leaves Labor in the politically awkward position of relying on Greens support to pass its tax package while continuing to clash with them over disability reform.
For the Greens, the deal delivers a political win but also exposes the limits of protest-party leverage once it becomes part of the legislative bargain. They have helped pass Labor’s tax changes while describing them as inadequate.
For Labor, the package is being framed as generational reform, but it looks more like controlled damage management: enough change to claim action, enough carve-outs to avoid a full backlash, and enough delay to keep difficult fights moving beyond the next political deadline.
The SMSF loophole may be ending, but the deeper housing crisis remains untouched by the scale of reform required.
For renters and first-home buyers, the message from Canberra is clear: relief is still being negotiated.
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