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Australia’s housing market is fundamentally broken and failing to deliver accessible homeownership for ordinary working people, according to the nation’s Housing Minister Clare O’Neil, as the center-left Albanese Labor government pushes forward with high-stakes tax reforms targeting the sector, despite early polling that suggests the move could cost it support to the benefit of right-wing populist party One Nation.

In an interview with Sky News on Sunday, O’Neil delivered a blunt assessment of Australia’s decades-long housing affordability crisis, stating plainly: “This market is cooked. It’s not serving the Australian people anymore … We want people on normal incomes around our nation to have a fair shot at getting into housing.”

The federal government’s planned reforms, set to be formally introduced following the release of the 2026-27 May federal budget, roll back the 50% capital gains tax discount for existing properties and restrict negative gearing — a tax break for property investors that allows rental losses to be offset against other income — to only newly constructed housing and properties already held by investors (grandfathered assets). O’Neil emphasized that the changes will not resolve the nation’s housing shortage overnight, but framed them as a critical, balanced step toward redressing systemic housing inequality, paired with a suite of additional policies designed to increase overall housing supply.

Treasury modelling cited by O’Neil projects the reforms will help roughly 75,000 current renter households transition into first home ownership, by gently cooling the rapid pace of national house price growth. While prices will continue to rise under the policy framework, modelling predicts growth will moderate enough to deliver an average $20,000 reduction in the final purchase price for first-time buyers, striking a balance between inaction on affordability and overly drastic intervention that would disrupt market stability. “We’ve got the balance right,” O’Neil said, noting that demand for reform extends far beyond young aspiring buyers: “I am just as likely to get stopped in the street by a grandparent or a parent who is desperately concerned about their kids and their ability for their kids to set down roots, grow wealth, and raise a family in this country.”

The government’s priority on expanding first home ownership comes as it faces early political headwinds from the changes. The first major public polling released since the policy was unveiled, conducted by Roy Morgan, shows One Nation has pulled ahead of Labor on primary votes in a key contested area, representing a significant threat to Labor’s electoral standing. Dismissing the poll result, Treasurer Jim Chalmers told the ABC the government did not advance the reforms to earn short-term polling gains, but to deliver long-term progress for younger Australians locked out of homeownership by decades of policy failure.

Chalmers also defended the government’s decision to apply the capital gains tax changes to shares as well as property, noting that 90% of Australians under 25 hold no equities. He argued the current tax system is distorted, overfavoring investment in existing housing while underinvesting in new supply and other asset classes. The reforms will create a far fairer, more neutral capital gains tax regime, he said, correcting a broken status quo that has locked millions out of the market. “Some people will pretend that the current arrangements in the housing market and the tax system are working just fine. We don’t agree. We think the status quo is broken and that’s why we’re fixing it,” Chalmers said.

To pass the Senate, the government will need support from either the center-right opposition Coalition or the left-wing Greens, neither of which have signaled they will back the changes. Opposition Leader Angus Taylor has already announced the Coalition would scrap most of Labor’s core housing policies if elected, and has proposed a new policy that would peg annual net overseas migration levels directly to the number of new housing completions each year. Taylor criticized Labor for setting migration targets without accounting for existing housing supply, public services, and infrastructure, telling Sky News: “This must change, and what we’re proposing here is each year the housing minister would say we’ve built this many houses and so the immigration number, the net overseas migration number, can be X.”

Australia’s federal opposition leader, Angus Taylor, has sparked fierce political debate by announcing a hardline new immigration policy that would bar permanent residents who do not pursue Australian citizenship from accessing the National Disability Insurance Scheme (NDIS) and 17 other key social welfare programs. Under the plan, Taylor confirms, there is a tangible consequence for permanent residents who choose not to take up citizenship.

The proposal formed a core plank of Taylor’s budget reply speech delivered to Parliament Thursday, where the Liberal-National Coalition also outlined two other flagship policies: linking annual net overseas migration levels directly to national housing construction completion rates, and indexing Australia’s two lowest income tax brackets to inflation to offset bracket creep. If the Coalition wins the upcoming federal election, the citizenship-linked benefit restrictions will go into effect.

Appearing on SkyNews Sunday, Taylor pushed back against criticism that the policy would coerce long-term permanent residents – some of whom have lived in Australia for decades – into naturalizing. He framed the change as a matter of personal choice, not coercion. “It is their choice to become an Australian citizen,” Taylor said. “But if you don’t want to become a citizen, there is a price you pay for that. Australian citizenship has to matter. We live in one of the greatest countries in the world, and those who come here and decline citizenship still reap enormous benefits from being part of this nation.”

The policy has drawn particular concern from Chinese Australian and Indian Australian communities, whose home countries do not recognize dual citizenship. For permanent residents from these nations, taking up Australian citizenship would require them to renounce their original citizenship, a step many are unwilling to take. Taylor rejected claims the policy targets any specific national group, noting that Australia itself permits dual citizenship, and restrictions on dual nationality are choices made by other governments that Canberra cannot control.

“Other countries make choices about that, we don’t control that. That is up to them. But we must attach privileges to Australian citizenship. That’s what we’re proposing here,” Taylor said. He added that while Australia will continue to recognize dual citizenship for those who are eligible, some permanent residents from non-dual citizenship countries will ultimately have to decide whether they want to access full social benefits and commit to Australia.

Taylor also dismissed suggestions the policy shift was a response to surging support for the right-wing One Nation party, arguing the Coalition’s agenda is driven by anger at the incumbent Labor government’s policy failures, not a panic over competing right-wing parties. “We are upset and deeply, deeply concerned by the failures of this Labor government. That’s the real issue,” he said.

Beyond the citizenship policy, key details of the Coalition’s immigration and fiscal plans remain undisclosed. Taylor has yet to confirm a specific numerical target for net migration, nor has he released full costings for the proposed social benefit changes. He did confirm the policy changes would generate “many billions of dollars” in savings, and pledged to release full costings before the election in line with standard political convention, per Australia’s pre-election transparency norms.

On migration levels, which the Coalition will tie directly to how many new homes are completed each year, Taylor said the plan would cut net migration by at least 70 percent from the peak levels recorded under the Labor government, pushing annual numbers well below 200,000. Responding to concerns that lower overall migration would worsen existing skilled labor shortages in the trades sector, Taylor argued the Coalition’s policy would focus not just on cutting total numbers but also on raising quality standards to ensure migrants bring the skills Australia actually needs.

In a move that avoids immediate parliamentary conflict, Taylor confirmed the Coalition will not oppose Labor’s proposed $250 Working Australians Tax Offset in the Senate, guaranteeing the legislation will pass through both houses of parliament and become law.

Treasurer Jim Chalmers, the incumbent Labor government’s top finance minister, has lambasted Taylor’s budget reply as the “least responsible” he has ever witnessed in Australian politics. Chalmers argued that indexing the lower tax brackets to inflation, the Coalition’s signature fiscal proposal, would add a quarter of a trillion dollars in cumulative national debt over a 10-year period. He criticized the plan for injecting massive new stimulus into the Australian economy at a time when inflation remains elevated, warning it would drive up cost of living pressures further.

Chalmers countered that the Labor government is already committed to addressing bracket creep – the phenomenon where inflation pushes workers into higher tax brackets even as their real wage growth stalls – noting the recent federal budget created fiscal space to deliver relief in the future in a responsible and economically sustainable way.

Queensland’s political landscape has been left reeling after a tight and high-stakes by-election in the northern Brisbane seat of Stafford, where the state opposition Labor party has claimed a narrow victory despite a substantial swing toward the incumbent Liberal National Party (LNP) government.

The contest, triggered by the sudden passing of former member Jimmy Sullivan in April 2024, was widely framed as an early test of leadership for new Labor opposition leader Steven Miles, coming just months after Labor suffered a bruising defeat at the 2024 Queensland state election. Sullivan, a 44-year-old who had been sitting on the crossbench after expulsion from Labor’s caucus over personal scrutiny, died of non-suspicious causes at his Brisbane home earlier this year, vacating the seat that Labor has held almost continuously since 2015.

Latest official data from the Queensland Electoral Commission shows Labor candidate Luke Richmond holds a slim two-party-preferred lead of 51.2 per cent over LNP challenger Fiona Hammond, a former Brisbane City Councillor, who trails on 48.8 per cent. After all preferences are distributed, just over 700 votes separate the two front-running candidates. While the result still leaves Richmond ahead, the LNP secured a 4.1 per cent swing away from Labor in the historically safe Labor seat, which only fell to the LNP once before, during the party’s 2012 state landslide victory.

Despite the narrow margin, LNP Premier David Crisafulli publicly conceded defeat to a gathering of party supporters in Brisbane’s Fortitude Valley on Saturday night. Acknowledging the result would leave the government “agonisingly short”, Crisafulli nonetheless celebrated the swing his party achieved, noting the outcome exceeded internal party expectations. “If you had said to me at the start of this that we will be here with a result like this, I think it is probably beyond all of our dreams,” he told attendees.

For Labor, however, the narrow win is being framed as a sign of growing momentum ahead of the 2028 state election. In a victory statement Saturday night, Miles drew clear battle lines for the next statewide poll, pointing to the massive grassroots campaign Labor ran to hold the seat. “We have seen that momentum right here on the ground in Stafford, and tonight has drawn the battle lines for the 2028 election,” Miles said. He went on to note that the campaign marked the largest grassroots organising effort in Queensland Labor history, with volunteers knocking on more than 34,000 doors and making more than 27,000 direct voter calls.

Miles also highlighted unusual context that benefited the LNP in the by-election, noting the party gained its modest swing after the government spent hundreds of thousands of dollars in taxpayer funds on political advertising, and struck a deal with One Nation that saw the right-wing party avoid running a candidate and openly endorse Hammond. Miles also praised Hammond for running what he called a respectful campaign.

The seat of Stafford covers Brisbane’s inner-northern suburbs including Stafford, Chermside and Kedron, and has been held by Labor continuously since Anthony Lynham reclaimed it for the party in the 2015 state election. Sullivan succeeded Lynham as the member in 2020, before his expulsion from the Labor caucus and subsequent death earlier this year. While official formal declaration of the result is still pending, both major parties have already positioned the razor-thin outcome as a sign of shifting political tides in Queensland ahead of the next state poll.