A controversial tax reform package will correct a "huge mistake" that locked a generation of people out of home ownership, Labor says.
Reserve Bank research has found the proportion of Baby Boomer property investors has surged since the capital gains discount was introduced.
As changes to negative gearing and the capital gains tax were introduced to parliament on Thursday, Housing Minister Clare O'Neil told the National Press Club the Howard government created a "perfect storm" in Australia's housing market.
By introducing the 50 per cent capital gains discount in 1999, investors piled into the market when declining building productivity was already weakening supply.
"The result? You can find it in any economics textbook in the world," Ms O'Neil said.
"House prices sharply detached from incomes. Rents surged. And homelessness rose in a country where we should never accept this as inevitable."
