Where the bloody hell are ya?

Why the Australian Government is making the same mistakes that Ardern Government made around landlords

There’s something oddly familiar about the recent Budget announcement in Australia by the Albanese-led Labor Government. The plan? Reshape the housing market by pulling back tax incentives for property investors. Across the ditch here in New Zealand, many will feel a sense of déjà vu.

New Zealand did it in 2021 under the Labour Government of Ardern. The Australian Albanese Government has just followed suit in its 2026 Federal Budget. Yes, there are distinct differences in their policies, but the aim is the same. Tax investors to increase housing supply for first home buyers. That’s the theory. However, the consequences are about as unforeseen as rain in Auckland. Higher costs, tighter supply, rents climbing well above inflation — and before long, a chorus of voices demanding rent controls. They would be wise to listen to the words of renowned Swedish economist, Assar Lindbeck "In many cases, rent control appears to be the most efficient technique presently known to destroy a city — except for bombing."

Let’s play out the scenario of the Australian Budget implementation.

In May 2026, the Australian Government unveiled its budget with housing at the centre — and a clear intent to wind back tax incentives for investors in existing dwellings. Two big levers: negative gearing and capital gains tax, both reshaped to push money toward new builds rather than existing stock.

Negative gearing occurs when the costs of owning a property exceed the rental income, allowing investors to offset those losses against their taxable income. Under the proposed changes, this benefit will largely be limited to newly built properties.

From July 2027, negative gearing will only apply to new builds. The idea is to steer money toward new builds, free up second-hand stock, and get more homes into the hands of first-time buyers.

There is also an overhaul of Capital Gains Tax (CGT). Currently you pay CGT on 50% of the gain. This is going to be replaced with an inflation indexed system and a minimum 30% tax rate on gains. New Zealand does not have a CGT. It operates a Bright Line Tax system. Under the current rules, if you buy and sell a residential property within a 2-year lookback period, any financial profit you make from the sale is treated as ordinary income and taxed at your personal marginal tax rate. The National Coalition Government recently reduced the period from 10 years which was effectively a CGT.

New Zealand has been there done that and changed its mind

Let’s rewind to 2021. Jacinda Ardern’s Government decided landlords were having far too good a time and introduced the now infamous interest deductibility removal — meaning you could no longer claim mortgage interest as a business expense. The impact was real and immediate. Investor costs shot up, and while rents climbed sharply over the following period, that happened against a backdrop of rising interest rates, strong population growth, and an already-stretched housing supply. Grant Robinson, the then Finance Minister, called landlords property speculators who had found a tax loophole. Controversial — not least because it came completely out of the blue. And funnily enough, new builds were exempt, to push investment into new housing and free up second-hand stock. Sound familiar?

Rents kept climbing well above historical norms as landlords tried to claw back costs — already squeezed by rising interest rates and hammered by the interest deductibility changes. To be fair, other forces were at play too: strong migration, a supply pipeline that couldn’t keep up. Investor activity pulled back, which only added to the pressure and deepened the crisis.

Our Aussie friends, it seems, weren’t watching. 

The Universal Law of Economics

Both policies—New Zealand 2021 and Australia 2026—run into the same inconvenient truth.

You can tax landlords, but you can’t tax away supply constraints. If you reduce supply and increase costs, expect prices to rise. Take the crisis in the Middle East as an example. Supply chains are disrupted, fuel prices go up. 

Enter Nicola Willis, New Zealand’s Finance Minister, cheekily borrowing from Australia’s own tourism playbook:

 “Where the bloody hell are ya? Come over… Come and invest in New Zealand.”

Her pitch: 

●     No capital gains tax

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●     Lower inflation

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●     Come over here. Invest your talent, time and money and it will not be raided in extra taxes.

Cheeky, but clever.

The Big Takeaway

When Governments try to control the housing market through tax policy, they usually stuff it up and make things worse. Policy gets made to please the base, not to reflect how the world actually works. The smarter play is always to remove barriers, cut red tape, and let development happen faster. I know it’s not a popular thing to say in some circles, but private landlords provide a vital service — in New Zealand and in Australia. The state simply cannot house everyone, and it knows it. Landlords aren’t the villain. They’re ordinary people with mortgages who — reasonably enough — would prefer not to lose money. Most own one or two properties, building a little cushion for retirement so they’re not entirely dependent on the taxpayer. When policy says “You’ll just absorb the tax hit.” reality says, “We’ll adjust”, usually through rent.

As Australia grapples with its bold new housing experiment, perhaps Nicola Willis’ cheeky invitation isn’t just political theatre. It might be a warning. Because if there’s one thing history suggests about taxing landlords…

They don’t disappear. They just send the bill somewhere else. You cannot tax your way to prosperity. 

Sincerely your friend,

Percival M. Crane

P.S. Marmite still wins.