Every so often in Australia’s housing debate, an idea pops up that perfectly captures where our culture has gone astray. The latest is the so-called ‘bedroom tax’ – a proposal to make it more expensive to own more bedrooms than one supposedly ‘needs’. The argument goes that if older Australians were financially pressured to downsize out of their family homes, we’d free up larger dwellings for the next generation.
On the surface, it sounds neat and tidy. A clever tweak to the tax system that magically reallocates space. But scratch the surface and you quickly see it for what it is: a piece of policy theatre. It’s not about solving the housing crisis – it’s about being seen to be doing something, while avoiding the hard, messy, unglamorous work of enabling more homes to be built.
And that’s the real problem. The ‘bedroom tax’ is less about housing and more about the mindset that now dominates Australian policymaking. Faced with a structural challenge – whether it’s housing, energy, transport, or even productivity – the reflex is the same: don’t innovate, don’t reform, don’t roll up the sleeves and enable solutions. Just tax it.
This obsession with fiscal band-aids over genuine reform has become so absurd that everyday household realities are now framed as economic inefficiencies ripe for taxation. At this rate, it won’t be long before someone proposes taxing the empty chairs at the dinner table.
Under-Occupancy vs. Under-Utilisation
The central flaw in the ‘bedroom tax’ argument is its crude misunderstanding of how homes are actually lived in. Policymakers conflate two very different concepts: under-occupancy and under-utilisation.
Under-occupancy is a blunt, mathematical measure. It simply counts the number of bedrooms in a dwelling against the number of permanent residents. By this yardstick, the vast majority of older Australians’ homes are ‘too big.’
Under-utilisation, however, tells a different story. Bedrooms and space are not idle assets. They are used in ways that sustain health, wellbeing, and social connection. To treat them as ‘wasted’ is to misunderstand the reality of household life – particularly in later years.
The Myth of the ‘Spare’ Bedroom
The majority of older households have one or more ‘spare’ bedrooms. On paper, that is a housing economist’s dream opportunity for ‘efficiency gains’. In reality, these rooms are anything but wasted.
They are put into service constantly. Adult children move back in or stay over. Grandchildren come for weekends. Aged parents need support. Friends visit for a night or two. These so-called ‘spares’ become guest rooms, home offices, hobby rooms, or storage spaces. Some are needed for health reasons – couples who can’t share a bed for medical reasons, or carers who need somewhere to stay.
Ageing itself changes the picture. People spend more time at home, and more space becomes valuable for personal wellbeing. Visits from family can easily swell the household from two people to five or six. And beyond day-to-day uses, many households keep extra rooms for future flexibility: planning for care needs, lifestyle changes, or the chance to support family again.
In other words, the ‘spare bedroom’ is a myth. These homes are not monuments to waste – they are dynamic, adaptive spaces. To reduce them to idle square metres waiting to be taxed is the kind of abstraction only a think-tank intellectual or the tax office could dream up.
A Misguided Policy Reflex
But here’s the bigger issue. The problem isn’t just that the ‘bedroom tax’ is a bad idea. The problem is that it is seen as an idea worth taking seriously at all. That tells us something about how far we’ve slid into a tax-first mentality.
Instead of clearing the barriers that stop new homes being built, we reach for the same tired lever: extract more tax from those who already own one. Instead of enabling more supply – across one-bed apartments, townhouses, mid-scale housing, and adaptable homes for ageing in place – we flirt with punishing people for how they use the homes they already live in.
It’s easier to write a new tax bill than to tackle entrenched planning bottlenecks, fix infrastructure funding, or confront the political cost of rezoning. The state gets to look active, the headlines move on, and the real problem rolls forward unsolved.
This is how we mistake policy theatre for progress. And it’s a pattern becoming all too familiar.
The ‘bedroom tax’ is ridiculous. But its very existence as a policy idea is telling. It shows just how comfortable Australia has become with the fantasy that we can tax our way out of every problem. Housing affordability won’t be fixed by punishing people for their spare rooms any more than climate change will be solved by slapping another levy on electricity bills.
Real progress requires rediscovering our can-do spirit: building, delivering, enabling. It means getting serious about supply, not scapegoating households.
