‘Best not to overreact’ to property price falls: Treasurer Jim Chalmers

“The Treasury assumes that prices will continue to grow, but a bit more slowly, and we see no reason at this point to change those assumptions.”

The context: The government has pushed through its changes to negative gearing and capital gains taxes with the support of the Greens. Fresh property price data due out on Wednesday is expected to indicate significant property price falls in Sydney and Melbourne, with slowing in other once-booming capitals following higher interest rates and broader economic concerns.

While the government said it had legislated its tax changes quickly for certainty, there will be some changes in the coming months.

Chalmers said amendments would be made to tackle the so-called “widow tax” effect of the government’s tax reforms, where a partner of someone who has died may not be able to access the same tax arrangements over the property due to changes to capital gains and negative gearing. He said: “We’re going to address it.”

“It’s not unusual for the core elements of big tax reforms to be legislated first and then for there to be subsequent consultation and other pieces of legislation. That’s what we’ve seen in those other episodes of tax reform in this country and what’s what we’re seeing now,” he said.

Pressed on what the changes to combat the “widow tax” would look like, he did not go into detail instead saying it will “be made clear in the legislation”.

“We’ve made it really clear we’re going to address that concern that people have raised with us,” he said.

“I think we’re making it incredibly clear that we understand that this is an issue that has been raised with us.”

Asked about the inflation outlook, he said the data had in some cases been better than expected but some of it dependent on the outcome in US-Iran negotiations.

“We desperately need the ceasefire to stick, we can’t have another false dawn when it comes to the Middle East and particularly the Strait of Hormuz. There have been some really welcome developments on this front and we’ve seen the oil price come down quite substantially,” he said.

He noted that market expectations for interest rate hikes have come down and on both underlying and headline inflation “we’re ahead of schedule”.

“Treasury would be seeing what the private banks are seeing, which is that progress on inflation across the board [is] going a bit better than was anticipated,” he said.

What they said: ”Our objective here was to provide certainty for investors and others about the core elements of this tax package and whenever tax reform is undertaken in this country, it’s hotly contested, it’s contentious,” Chalmers said.

There are all kinds of predictions that the sky will fall in ... which turn out to be wrong. We expect that to be the case again, but we’ve legislated the core elements quickly because we want to provide that level of certainty.”