“Time for an explanation” – property leader calls on Federal Government to state its contribution to inflation

Angus Raine, Executive Chairman, Raine & Horne Group, is calling on Treasurer Jim Chalmers to tell the Australian people, including long-suffering property-owners and keen first homebuyers, how much government spending is fanning the flames of inflation and higher mortgage interest rates.

Highlights

• Angus Raine says excessive Federal Government spending is fuelling inflation and higher interest rates, leaving Australian households to pay the price for a problem they did not create.

• Mr Raine warns that sky-high infrastructure spending is driving up home construction costs, while changes to negative gearing and capital gains tax are discouraging property investors and threatening Australia's rental housing supply.

• Mr Raine says first homebuyer incentives have failed dismally to improve housing affordability, fuelling competition and higher property prices while successive interest rate hikes are crushing buyers' borrowing power.

Sydney (3 November 2026): Angus Raine, Executive Chairman, Raine & Horne Group, is calling on the Federal Government to give the Australian people a clear picture of how government spending and infrastructure commitments are contributing to inflation and construction costs, and putting pressure on the Reserve Bank of Australia (RBA) to raise interest rates.

Mr Raine said excessive infrastructure spending was driving up construction costs, while uncertainty over property investment taxes was threatening rental supply, and first homebuyer incentives were stimulating demand without delivering enough new homes.

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“Australians are being financially squeezed for a problem they did not create,” said Mr Raine.

“We know that conflict in the Middle East is raising fuel and fertiliser costs. But this pales in comparison to the extraordinary level of demand being generated by Federal Government spending,” said Mr Raine.

As a guide, the 2025-26 Federal Budget saw the Federal Government allocate over $17 billion to infrastructure projects[[i]](#_edn1). The 2026-27 Federal Budget included a rolling pipeline of $120 billion for national infrastructure[[ii]](#_edn2).

“Households are constantly having to revise their spending budgets and scale back where they can in the face of soaring interest rates,” said Mr Raine.

“Meanwhile, in Canberra, Jim Chalmers and the Federal Labor Party are spending like drunken sailors.”

Home construction targets move further out of reach

Mr Raine warned that government infrastructure commitments were competing directly with residential construction for skilled workers and building materials.

Master Builders Australia forecasts fewer than 920,000 new home commencements over the five years to 2030–31, an 8.4% downgrade from its March 2026 projections.[[iii]](#_edn3)

Meanwhile, $331 billion in non-residential building work and $688 billion in engineering construction are projected over the same period.

“Sky-high infrastructure spending is drawing materials and skilled tradies away from residential housing construction,” Mr Raine said. “This is doing nothing to alleviate our national shortfall of homes. Instead, it is adding to new home construction costs, which rose 3.2% over the 12 months to September.”[[iv]](#_edn4)

Investor uncertainty threatens rental supply and adds to inflation pressures

Mr Raine warned that the changes to negative gearing and the capital gains tax discount announced in the May Federal Budget were causing some property investors to put purchases on hold, potentially worsening Australia's rental housing shortage.

“The investment property market has effectively frozen thanks to the changes to negative gearing and capital gains tax, and as a consequence rents in some parts of Australia are going through the roof, despite assurances from the government this wouldn’t happen,” said Mr Raine.

The latest Cotality Quarterly Rental Review shows national gross rental yields reached 3.85% in September, up from 3.61% a year earlier and their highest level since August 2019[[v]](#_edn5).

“You cannot solve a housing shortage by discouraging the people who help finance and provide rental properties,” Mr Raine said.

First homebuyer incentives fail dismally as borrowing power is crushed

Mr Raine said government incentives for first homebuyers had failed dismally to address the fundamental problem of housing affordability.

Cotality research found that property prices within the Federal Government's expanded 5% Deposit Scheme limits increased 6.7% in the six months following its introduction, compared with 3.6% for more expensive properties.[[vi]](#_edn6)

“For over 25 years, since the introduction of the $7,000 First Home Owners Grant, I have consistently questioned government intervention in the property market from both sides of politics,” said Mr Raine.

“Property is a natural market, just like shares. When market conditions are favourable, private investment and developers will look to drive housing supply and support growth. But when governments introduce incentives, they artificially stimulate buyer demand and force prices up.

“Helping first homebuyers into the market is important, but what good are government incentives if they simply fuel demand and push property prices further out of reach for younger Australians?” said Mr Raine.

-ENDS-

For further media information, contact:

James Caskey, Communications & Content Manager

James.caskey@corp.rh.com.au

0489 196 222

[[i]](#_ednref1) https://www.infrastructure.gov.au/department/media/news/2025-26-federal-budget-released

[[ii]](#_ednref2) https://infrastructure.org.au/policy-research/major-reports/australian-infrastructure-budget-monitor-2026-27/

[[iii]](#_ednref3) https://masterbuilders.com.au/construction-forecasts-slashed-as-policy-and-economic-shocks-take-toll/

[[iv]](#_ednref4) https://www.cotality.com/au/resources/cordell-construction-cost-index-ccci

[[v]](#_ednref5) https://discover.cotality.com/hubfs/441896203/Gated-Content/Cotality%20quarterly%20rental%20review%20-%20Q3%202026%20FINAL.pdf

[[vi]](#_ednref6) https://www.cotality.com/au/insights/articles/first-home-buyer-scheme-fuels-competitive-tensions-at-the-lower-priced-end-of-housing-market