CAAN’s observation too … that the PROGRESSIVE Policies … are not what a large number of Voters particularly Migrants are concerned about … they are ‘conservative people’ ….
AND many Australian Voters remain concerned about … the rising inequality and the shrinking Middle Class …
-a Whole Cohort in their 40s, 30s, 20s renting with no prospect of owning a home in their own country
IT may well take another term of more of the same from the COALITION … for these VOTERS to fully appreciate what Labor’s policies meant … but as recommended in this article that Labor should abandon *negative gearing and franking credit reform, and instead pledge to halve immigration to boost wages, take the pressure off house prices and decongest cities.
*Such policies unfortunately too hard for some to grasp!
-with competing misinformation circulated by Limited News etc
–the Coalition before the next Election will have to address the cost of $16Bn p.a. for Franking Credits
Class warriors smash Albanese’s “progressive” Labor
A senior Labor official has warned the party will continue to lose votes to minor parties like One Nation, unless it starts talking to more people than just “university-educated, city dwellers”.
ABC analysis of voting trends and census data revealed Pauline Hanson’s One Nation and Clive Palmer’s United Australia Party polled strongly in electorates with a high percentage of migrants, despite an outspoken stance on immigration.
That’s proved a major concern for Kosmos Samara, the outgoing deputy campaign director of the Victorian branch of Labor.
“In Melbourne, we saw significant swings against the Labor party in what one would term traditional Labor heartland — outer western suburbs of Melbourne, north-western suburbs of Melbourne — where you do see quite a lot of ethnic diversity presence,” he said.
“The vast majority of those swings were as a result of Palmer United Party collecting a swag of votes in those suburbs.”
Labor polled relatively well in Melbourne, holding all of its seats in the Federal Parliament.
Migrants voting for One Nation
But the gradual erosion of Labor’s primary vote is of concern to Mr Samaras.
“Unless the centre-left in this country, and I would actually take an extra step in defining it as the broad left in this country, faces the reality that it needs to talk to more people than just urban, tertiary-educated constituencies, it would continue to see the rise of the One Nation vote, or what I would call the alt-right vote in this country.”
Mr Samaras said what was happening in Australia mirrored the voting patterns in other countries.
“Centre-left political parties are losing ground,” he said.
“They are increasing votes among what I would call the professional class — people with a tertiary education, who are progressive — but they are losing votes to the poorer constituency who once upon a time used to be the rock bed of the Labor party.
Egyptian-Australian Labor MP Peter Khalil, who represents an inner-north Melbourne electorate, told the ABC his partycould not take the vote of multicultural communities for granted.
He’s part of a new caucus committee set up by Labor to examine a range of issues, including how to better connect with diverse voters.
“We need to work hard constantly to engage, to interact, to understand,” he said.
“Not just taking for granted that just because you’re a migrant — you’re going to vote Labor, it doesn’t work that way.
“We have to do better for migrant communities.”
Experts warning Labor is facing a problem
Emeritus professor of sociology at the University of Technology Sydney Andrew Jakubowicz said the last election saw an alliance formed between conservative migrants of different faiths.
“Whether they are Muslim, Christian, conservative Jewish, Hindus, Sikhs — there is no difference in the morality espoused by these groups,” he said.
“When there is a salient issue,they may very easily lock in together — not for long, and not continuously — but for enough time for people to amass a vote that might bring about change.”
Professor Jakubowicz said Labor’s support of the same-sex marriage vote triggered concern among conservative migrants who were already uneasy about the party’s increasingly progressive policies.
“It really scared many people, they were not expecting the world to change in quite that way,” he said.
“All of that has worked its way through really to the current situation.”
Labor’s wide-ranging post-mortem of its shock election loss is due within weeks, and is expected to examine the party’s efforts to connect with the multicultural communities.
Labor feeling the pain more than Liberals
Professor Jakubowicz said the anger among conservative migrantsmainly affected Labor because it was moving them to the right of the political spectrum.
*But the ABC’s chief elections analyst Antony Green said the Liberal Party was unlikely to pick up those votes, as people typically don’t change support from one major party to another.
*“People might say ‘One Nation is not a centrist party, they’re off to the right’, that’s what a lot of people who follow politics think,” he said.
*“But if you actually look at what the voters think, the Australian Election Study has shown most voters view One Nation is a party between Labor and the Coalition.
Professor Jakubowicz said the issue could affect the Liberal Party in the future.
That’s a prospect NSW Liberal senator Concetta Fierravanti-Wells said her party needed to be conscious of.
“They cannot be dismissed. these are voters that have a view, and for whom this particular issue is of importance,” she said.
“Any local member of Parliament doing his or her job properly has to be cognoscente of issues that are of concern to constituents.”
The ONLY thing that mattered in the last election was the demolition of Labor in QLD. Labor holds just six of 30 seats in Queensland versus 63 seats around the rest of the country versus the Coalition’s 53.
Labor must win back QLD, which was lost to nationalist parties like One Nation and Palmer United, or it is toast. More at The Australian:
Opposition leader Anthony Albanese at the Norton Street Italian Festa in Leichhardt, Sydney, on Sunday. Picture: AAP
Queensland Labor veteran Robert Schwarten has launched an assault on ALP election strategists and senior MPs, accusing them of losing touch with voters and leaving “working-class” candidates exposed in seats the party should have won.
*Mr Schwarten, a former Queensland minister and leader of the house, said the Labor election review would be another “sanitised, workshopped” document ignoring the realities facing regional communities and failed tactics that damaged “working-class candidates”.
The Queensland party stalwart, who represented Rockhampton for two decades and supported the ALP campaign in the key federal marginal seat of Capricornia, said he knew Labor was in trouble when lifetime supporters were asking him why they were “robbing older people and closing coalmines”.
Mr Schwarten’s intervention came after Nick Dyrenfurth, executive director of the John Curtin Research Centre, called for a working-class quota system to weed out staffers, union officials and apparatchiks from ALP parliamentary teams.
*It’s extraordinarily easy to do. Abandon negative gearing and franking credit reform and instead pledge to halve immigration to boost wages, take the pressure off house prices and decongest cities.
*Climate change can still be pursued but it must take into account the losers in QLD with extensive offsetting investment.
*Labor returns to its working class roots and wins. *
Scott Morrison isn’t the only one celebrating his campaigning success this week.
Adrian Kelly, the president of the Real Estate Institute of Australia, might not be as well known as the Prime Minister, but he’s the man behind the effective campaign that shredded Labor’s negative gearing policies.
“I have no doubt that it made a difference,” he told The New Daily.
The Grattan Institute labelled it a “breach of trust”, tenants’ advocates slammed it for being “dirty”, but the REIA claims their campaign on Labor’s negative gearing policy helped hand the Coalition government.
“We ended up reaching 11 million Australians – I have no doubt that it had an effect on the election,” he said.
“I suspect that before the campaign started, not too many Australians knew what negative gearing and capital gains tax were.
“They definitely did by the end, which I think goes to show what can be achieved by collaboration.”
While Labor tried to woo voters with an agenda designed to make housing more affordable for first homeowners …
… the REIA and Property Investors Professionals of Australia (PIPA)teamed up with real estate agents across the country to target investors and tenants.
Their key message was simple and easy to understand: Labor’s plans to wind back negative gearing and reduce the capital gains tax discount would reduce property values and raise rents.
Grattan Institute’s budget policy and institutional reform program director Danielle Wood said while they can’t be sure about the exact impact, she “fears it was effective”.
“It was abuse of a position of trust, it was a campaign in their own self-interest and I think a lot of the claims weren’t substantiated,” she told The New Daily.
“When you’re getting that message from real estate agents, you might not be sure of the impacts and think, why take the risk.
“Anyone that didn’t have a direct self-interest in the outcome of the policy had different numbers.”
While it’s hard to quantify how much the campaign helped hand Mr Morrison a second term, the ads would have had an impact, says Dr Andrew Hughes from ANU.
“Labor left the door open for misinformation campaigns, had they come out and been clear it would have closed the door on the negative campaign,” he told The New Daily.
“Instead the door was left open for the REIA to come in and go this is what it means. And people went, ‘This is easy to understand’. It may not have been the most accurate information, but that doesn’t matter because people could digest it.”
The onus though is on Labor, says Dr Hughes.
“For REIA to say it was them, as much as they might want to take credit, that’s not the case at all. It was Labor’s campaign to lose and they did.”
While the material never specifically mentioned Labor, it warned that a change in government would be detrimental.
Mr Kelly said they tried to reach out to the Labor Party several times, but had the door closed in their faces.
“We tried to run a clean campaign, we tried to make the messaging consistent and data-based. But you know politics is a filthy world sometimes, especially in those last few days,” he said.
“It’s a shame we had to run the campaign that we did, it got pretty nasty and that was unfortunate.”
Tenants Union of NSW senior policy adviser Leo Patterson Ross said while the campaign was “dirty”, it wouldn’t have had much impact with renters.
“Certainly it unsettled people, but whether it changed the outcome of the election, I don’t think there’s evidence for that.
“It was very dirty and really playing on people’s insecurities around rent increases and instability of housing. There wasn’t really a correlation around renters voting for them … I think most renters saw through it.”
Throughout the election campaign, a lot of the modelling on the impact of Labor’s policy was contradictory.
A controversial report from SQM said Labor’s policy would push prices down a further 8 per cent, while the NSW Treasury predicted prices would barely move.
Chief economist at Ernst and Young, Jo Masters, says the policy would have no doubt impacted house prices – as that’s what it was designed to do – but by how much, is anyone’s guess.
“The answer is we just don’t know. The modelling is varied, some said it knocks a few percentage points off to 20 per cent, the honest answer is we just don’t know. But we know that it was designed to bring prices down so it would have weighed on the market.”
JUST CAME ACROSS THIS! Published on 10 May 2019 in the lead-up to the 18 May 2019 Election!
CONTRARY to the Real Estate Institute of Australia, the REIA negative campaign about Labor’s proposal for Negative Gearing and Capital Gains .. this is what the PIA told their ‘investor clients’!! The Truth!
-new properties would still be eligible to receive negative gearing tax benefits
-and existing properties will be fully grandfathered
SADLY … THE PIA is not as big as the REIA which issued its Scare Campaign to frighten Tenants as seen in the photo below!
Don’t believe Australia has ever seen such a nasty … dirty Election Campaign as the Scummo Campaign!
What do smart investors know?
PIA Marketing Published on 10/05/19
Regardless of which party forms the next Government come May 18th, there are plenty of options when it comes to smart property investing.
If negative gearing policy changes do come into effect, new properties would still be eligible to receive negative gearing tax benefits and existing properties will be fully grandfathered.
What does this mean?
If you own a property prior to 1st Jan 2020, you will be able to negatively gear it after that date
Off-plan purchases will still be entitled to negative gearing benefits
Newly completed properties will still be entitled to negative gearing benefits
NSW Government Stamp Duty reforms, indexing Stamp Duty to inflation will offer some relief to FHB’s and Investors (proposed for purchases after 1st July)
As a leading Australian Property investment and Real Estate platform with more than 15 years’ experience, PIA can show you how to build real wealth from Real Estate.
Find out what smart investors already know…
Their financial goals are clear. Whether it be financial freedom, a passive income stream, early retirement or helping the kids – they put plans in place to achieve their goals
Property is a mid-long term investment strategy to build wealth. They understand the risks and they look at the long term trends – Property prices are 18% higher today than 5 years ago!
They know how to leverage property and market cycles to their advantage
They know that Sydney continues to dominate as one of the most desirable places to live, work and play
They understand the value of renters to their portfolio (more than 40% of Sydney siders rent by choice)
They look to broader market fundamentals, employment, infrastructure investment, amenity and attractions – NSW is a strong economy with a long, strong history of economic growth and sustained property value growth1
Let PIA assist you in developing your Smart Investment Plan to achieve your financial goals. We have thousands of off-plan and newly completed properties across Sydney NSW to suit all budgets and goals.
*Late last week Raine & Horne principal Graham Cockerillwrote to tenants saying Labor’s changes would be “devastating” and included material from the Real Estate Institute of Australia warning of what might happen if “the planned changes to negative gearing do go ahead”.
“The fall in property prices will decrease the value of 18 million Australians’ retirement nest eggs,” and “rents will rise” the material warns.
“Further, government savings will be less than estimated, unemployment will rise and our whole economy will be in jeopardy.”
*Other renters have received official-looking material apparently sent by the Liberal Party reading “Final Notice: Rent Increase“.
*It’s a jumped-up scare campaign. But some renters may give it more credibility than it’s worth because some of it comes from the people who normally notify you when your rent is going up.
*If there is reduced demand from investors, house prices will fall. The fall will be modest — we at Grattan Institute calculate it will bein the range of 1 per cent to 2 per cent. The Commonwealth and NSW Treasuries estimate similar modest price falls.
So what about the headlines you might have seen about 10 per cent or 20 per cent price falls?
*All those estimates were prepared by — or paid for by — the property industry. If you detect a pattern you are right.
Well-resourced property groups that stand to lose from capital gains tax and negative gearing changes have been muddying the water for a long time now.
The current system supports the rich
From a friend in Dickson. This is genuinely really low. Stuff like this serves as a massive source of stress for low income families and the elderly. #DicksonVotes#auspol#AUSVote19
Investors write off their losses after interest costs in full against the taxes on their wages. But when they sell, they only pay tax on half their gain.
Given strong growth in property prices and low inflation, some wage earners end up paying less tax than if they had not invested at all, despite the profits on the investments.
And like most tax concessions, people with higher incomes benefit the most.
*That’s why the share of anaesthetists negatively gearing is almost triple that for nurses, and the average tax benefits they receive are around 11 times higher.
*The end result is that the Government has been subsidising investors to buy their second, third or tenth propertywhile at the same time crying crocodile tears about the fact that lots of young people trying to buy their first home are locked out of the market.
The industry claims of rising unemployment and putting the economy “in jeopardy” show a similar disregard for facts.
Any negative overall effects from the higher levels of tax will be imperceptibly small across a $1.8 trillion economy.
There is, however, one industry that might go backwards.
Real estate agents take healthy commissions from housing investors. Investors, particularly negatively geared ones, also turn over properties faster than homeowners. So real estate agents benefit when there are more properties in the hands of investors and fewer in the hands of homeowners.
Don’t be scared by the real estate agents’ campaign. Labor’s negative gearing policy won’t raise your rent. And if you’re trying to buy your first home, it just might boost your chances.
Danielle Wood is program director for budget policy and institutional reform at the Grattan Institute.This article originally appeared on The Conversation.
The Australian’sAdam Creighton has hosed the property lobby’s scare campaign over Labor’s negative gearing policy, arguing that voters have little to fear:
Negative gearing in the US ended in 1986 with Ronald Reagan’s big-bang tax reform, which cut tax rates and broadened bases. The US economy and housing market survived, and ours can, too.
If people are rational and the polls are useful, the bulk of the impact of Labor’s changes must already be factored in to current house prices. Labor has been consistently ahead in the main published opinion polls and proposed ending negative gearing before the 2016 election.
If the party follows through with its promises in government, the impact should be small.
The introduction of a 50 per cent capital gains tax discount in 1999 ultimately created the push to end negative gearing, a principle of the tax code since 1915.
*Since 2000, the number of negatively geared investors doubled and the value of deductions more than tripled, creating an obvious target of frustration as house prices soared.
Adrian Pisarski, executive officer of housing access body, National Shelter, adds further arguments at New Daily:
No distressed sales, no property crash: Busting the myths around Labor’s negative gearing changes. Photo: Getty
1. Negative impacts on mum and dad investors
The proposed changes protect all current investors using negative gearing and capital gains tax by ‘grandfathering existing investments’, so any existing investors are protected.
Negative gearing and CGT discounts will continue to be offered for investments in new supply, although the CGT discount will be halved.
All existing investors are protected from changes and the policy is careful to continue benefits to encourage new supply. Currently more than 90 per cent of investors invest in existing supply, so the current settings have done little to add to supply and certainly haven’t added affordable housing.
2. Economists oppose the changes
*Most economists have identified that the current capital gains tax and negative gearing settings distort investment in housing and create barriers to first-home owners.
Economists have consistently identified the need to change these taxes.
There might be a mini load’s worth, but all paid for by vested interests. All independent analysis, which is a truck load and includes the RBA, shows how it distorts investment, robs the budget of revenue and locks out first-home owners. It’s intergenerational theft by tax distortion.
3. Prices will plummet as investors sell
Treasury advice to the current government has stated that the tax policy changes proposed by the ALP would have little or only modest effects on house prices.
Any analysis needs to ask to whom houses would be sold if investors sell?
The only possible conclusion is to owner-occupiers.
This means more of our population in home ownership, which has massive latent demand. Current market corrections are occurring in Melbourne and Sydney precisely because these policies have pumped up demand and prices are now corrected via stricter regulatory controls on lending to investors.
It’s ridiculous of the industry to invoke house price falls when prices have been artificially inflated by investor demand for decades. A house price correction in Sydney and Melbourne is occurring with these policies in place now.
4. Rents will rise
The argument is based on a false and mythological analysis of rents when Paul Keating quarantined negative gearing. In fact, in most capitals, rents didn’t rise, which would be expected if there was a general effect from policy change, except to a degree in Sydney and Perth which was more to do with a shift of capital to share markets due to favourable conditions.
The industry would have us believe that investors will require more from renters because they can’t write down losses. However, if investors are selling to home owners, this will remove pressure from rental market demand, placing downward pressure on rents countering any pressure to raise rents to meet tax costs. Besides, all currently negatively geared properties will continue to be treated the same. Investments in new dwellings will also be eligible for negative gearing.
The REIA and Property Council want to have it every way. They have never accepted these settings inflate price, but argue their removal will collapse price.
Negative gearing hasn’t kept rents lower, because they have risen much faster than inflation.
5. The economy will suffer
This is the long bow drawn to argue that changes to negative gearing and capital gains tax will negatively impact the economy by producing a downturn in the property industry.
Treasury advice shows there is very little impact on property prices and the tax changes will rebalance the opportunities for first-home owners while maintaining tax concessions for investment in new builds. As most current investment is in existing property, the settings haven’t been what’s driving supply.
Investors will still be able to negatively gear new dwellings.Photo: Getty
Australia does poorly on housing supply despite some record-level years over the past three to five years. This is partly due to not keeping up with population growth, partly planning but largely the very high relative cost of housing in Australia – in part because of current tax settings.
It also ignores the ALP commitment to build 250,000 new affordable houses over the next 10 years, which is a major boost to housing supply.
It ignores the recent announcement to offer a 15 per cent withholding tax rate for Build to Rent, which equalises the tax treatment of investors in commercial property. This will be a fillip to the industry.
The property industry needs to look at all the policies on offer, not the selective bias they have against specific policies.
6. Unemployment will rise
An even longer bow drawn, based on the false assumptions about the economy. The opposite could be argued. Removing negative gearing for investment in existing property while allowing it for new supply could boost the supply of new builds. Building 250,000 new affordable dwellings over 10 years is a major supply boost.
Opposition Leader Bill Shorten announced a commitment to build 250,000 new affordable houses over the next 10 years. Photo: AAP
The concessions to Build to Rent are a major boost to the industry. There is a potential major upside to employment. The community sector alone will add thousands of new jobs to build and manage 250,000 properties.
The building industry is famous for arguing the multiplier effect of every dollar invested in housing, but have conveniently ignored it on this occasion by falsely criticising one policy and ignoring others.
Since 1999 when the Howard government changed the capital gains tax discount from an adjustment for inflation to a 50 per cent discount, investors have increasingly dominated our housing markets.
CGT discounts have driven investment for speculative capital gain, supported by increasing revenue exposure to negative gearing. The reforms are essential to raise revenue, rebalance the housing market, and to afford to build more targeted affordable housing.
Well said. The scare campaign against Labor’s negative gearing policy is based on pure self interest, rather than an objective examination of the facts.
While there are obviously also other issues at play, Australia’s overly generous tax laws have helped push Australian house prices and household debt levels to absurd heights, while also distorting the economy.
Removing these distortions is unambiguously sound policy.
Scott Morrison’s claim that renters face huge increases as a result of Labor’s negative gearing policy changes has been undermined by the author of the contentious report the Prime Minister cited as proof for his claim.
SQM research analyst Louis Christopher has told The New Daily that rents will rise across Australia, regardless of whether Labor’s negative gearing policy is introduced.
Mr Christopher said he believed the negative gearing changes would “aggravate” the situation. But he said he had never suggested his contentious predictions of rent hikes of up to 22 per cent were based purely on reforming negative gearing.
“Rents are going to be going up, even if we don’t have this negative gearing change,” Mr Christopher said.
“It was a forecast for three years.
From the Grattan Institute’s Danielle Wood … the Claims are ‘not credible’
The Grattan Institute’s Danielle Wood said she was shocked that Mr Morrison was making the claims based on SQM’s research.
She said it was difficult to understand how it had arrived at the figures in the report, when the most likely outcome was “no change” as a result of negative gearing reforms.
“It’s not credible and I am concerned if he is using property investor modelling to support his claims,” she said.
“In the short term, you would expect no change at all. The reason is that rents are determined by supply and demand in the market.
“It’s an abuse of trust on behalf of real estate agents. It’s a scare campaign.
“It’s misleading, because it is renters who are the people who stand to gain the most if one day they hope to own a home under Labor’s policies.
“What are interests of real estate agents in this? They make a lot of money from investors in property management fees.”
Labor slams lies
Deputy Labor leader Tanya Plibersek said the Liberal Party was peddling lies about negative gearing.
“I said some time ago that this is actually one of the dirtiest, probably the dirtiest campaign I’ve seen in my 20 years in Parliament,” she said.
“We’ve seen lie after lie after lie. We’ve seen lies about death taxes. We’ve seen lies about retiree taxes. We’ve seen lies saying that Labor wants to take your ute, your weekend and your Tim Tams.
“Just in the past 24 hours, we see another lie being distributed by Peter Dutton to households in Dickson saying that Labor policies will push up rent.
“It is unfair to frighten people in the way that Peter Dutton is trying to do.
It is a lie to say that our policies will push up rents. And it is wrong of Peter Dutton to frighten people in this way, and Scott Morrison should tell him he’s wrong to do it.”
WHAT * Harry has omitted to mention are the Chinese Government Capital Controls … too much Renminbi/Yuan was leaving their shores to be laundered in Australian Real Estate … that is what really brought about the reduced Chinese interest in our Real Estate … however as recently as October 2018 the SCOMO Govt exempted the Real Estate Gatekeepers from the Anti-Money Laundering Rules … hm …
ON Negative Gearing …
View these links to find the facts and/or search for more!
Photo: Wentworth Courier Only. Harry Triguboff in his office at Meriton. Picture: John Appleyard
Harry Triguboff: Wrong time for Labor’s negative gearing changes
Harry Triguboff, The Daily Telegraph
The property development industry is one of the largest employers in Australia. It employs around one in four people in NSW and provides substantial income for the government through stamp duty, land tax, GST and employment taxes that fund the services and infrastructure that we need.
At this point, I wouldn’t be surprised if many of those people involved in the business are concerned about job security, particularly in the residential development sector and in major capital cities where no residential projects of any substance are starting.
Only infrastructure projects are keeping us going, and those in turn are reliant on the money generated from the property business, meaning that they are in jeopardy, too.
These concerns are further heightened by the possible changes to negative gearing and capital gains tax proposed by the ALP.
This is not necessarily because they have developed a wrong policy, but because now, when the market is weak, is the wrong time to bring it in.
Implementing Labor’s proposed changes now means that the policy won’t achieve its intentions while still imposing negative consequences for everyone.
*The present downturn started in July 2017 with the introduction of significant foreign investor surcharges. These were followed by the banking royal commission, restrictions on access to finance, political uncertainty with a number of state elections and now the federal elections — and don’t get me started on the planning system. But these measures have now had their desired effect, and much more in my opinion, so now is time for certainty and stability.
CAAN: LOOK at the following …. and question!
View the links above for the facts on Labor’s changes to Negative Gearing.
The proposed policy of removing negative gearing is based on the need to reduce house values while at the same time generating more government income. It should definitely make homes cheaper if that’s what is needed, but won’t generate more money unless the market is strong.
Instead, what we will see is it will make a weak market even weaker, reducing supply and likely increasing property prices.
Labor’s policies, if implemented now, will be bad for everyone as it will exacerbate and prolong the downturn we are currently experiencing
The time to abolish negative gearing would be when prices are going up. But if we do it now, the construction of housing will fall even further, meaning that prices will probably go up as we will not build enough.
We already know that construction in Sydney is down at least 40 per cent from its peak and that a severe residential supply shortage is looming. Any policy changes should be supporting growth.
Fewer people will buy investment properties because negative gearing will not be allowed on old properties. Even if it helps with new properties, any gains will now be taxed more so they will have less incentive to purchase investment properties — whether old or new.
Even if someone buys new to get the negative gearing benefits, they will know full well that these benefits will not be available to the next person which reduces the attractiveness, not to mention additional capital gains tax.
This will also mean the many people who rely on the building industry will lose their jobs and businesses.
If the market is not strong, the assumption that more money for government will be generated will not occur. Treasury will lose the money to fund hospitals, schools, roads and rail they have promised the voters.
It is not only these statutory payments that are threatened. It is also the extras we have to give like affordable housing, extra payments, parks, roads and so on that councils and state governments want when we supply the additional housing that they need.
Our population continues to grow so it’s not like we don’t need the housing. A shortage as early as 2021 in Sydney has been identified. We need migrants because they are essential for our workforce.
If we need migrants and foreign workers, we need more housing. Abolishing negative gearing which assists investors will ensure that the economy will suffer because fewer housing units will be built.
There is, of course, talk about build to rent (BTR), but we are already blessed with our own BTR scheme where individual mums and dads can invest which provides the housing and helps them secure their future. This is facilitated by negative gearing.
Labor’s policies, if implemented now, will be bad for everyone as it will exacerbate and prolong the downturn we are currently experiencing, which would risk tens of thousands of jobs and substantial government revenue that comes from a productive property industry that pays for services and infrastructure we require.
We are seeing signs of recovery in the market and providing apartments is becoming more attractive.
Negative gearing benefits should be kept as is as they encourage investment in housing which will provide the housing, jobs and the money the government and the economy needs.
If we do anything to put the brakes on this recovery, any improvement will be short-lived.
Harry Triguboff AO is the founder and managing director of Meriton
Changing negative gearing: what it means for renters
And find out who has really been benefiting?
Despite all the talk about negatively geared nurses and property baron police officers, 90% of taxpayers do not use it.
The professions who do use it most are those at the top end of the income scale. This is reflected in the fact that half of the value of negative gearing concessionsgoes to the top 20% of income earners, while for the capital gains discount, 80% goes to the top 10%.
CHANGING NEGATIVE GEARING: WHAT IT MEANS FOR RENTERS
10 MAY 2019
Reforms to the negative gearing and capital gains tax rules will improve housing affordability for renters, says Professor Hal Pawson at UNSW Built Environment.
Distress for renters is likely to ease over time under the proposed changes. Image: Shutterstock
The federal election campaign has reignited a debate that began back at the 2016 election with Labor’s proposed reforms. T
Tax breaks on investment properties is a point of difference between the two major Australian political parties, so here we revisit the basics.
Belinda Henwood: What is negative gearing?
Hal Pawson: In Australia, revenue losses on rental property can be used as a tax shelter for other earned income, which means taxpayers can decrease or minimise their taxable incomes and therefore their tax liabilities.
It is this aspect of the existing rules that is controversial – partly because it means that higher income investors in higher tax bands inevitably reap greater benefits.
The current rules for rental investors are arguably much too generous compared with those for people investing in employment-generating enterprises that contribute more to economic productivity.
At least over the medium term, rental property acquisition is generally far less risky than is often the case for ‘true business investment’, and therefore less deserving of tax subsidy on this basis.
BH: What is Labor proposing?
HP: Labor is proposing to remove the scope for rental investor negative gearing for established dwellings acquired for rental use from 1 January 2020.
Landlords who already own investment properties will be exempt from the changes, as will those acquiring newly built homes for rentalfrom 1 January 2020.
Encouraging aspiring rental investors to choose new, instead of existing, housing is consistent with the idea that maximising new housing supply is an important part of any sensible strategy to ease housing unaffordability.
It’s also consistent with the longstanding rules on Australian residential property acquisition by foreign investors – a policy that’s accepted across the political spectrum and recently copied by New Zealand.
Labor also pledges to halve investors’ capital gains tax discount – from 50% to 25% – for all properties acquired for rental use after 1 January 2020.
BH: Who gains the most from the existing system?
*HP: The Grattan Institute’s Danielle Wood says: “Despite all the talk about negatively geared nurses and property baron police officers, 90% of taxpayers do not use it.”
*The professions who do use it most are those at the top end of the income scale. This is reflected in the fact that half of the value of negative gearing concessionsgoes to the top 20% of income earners, while for the capital gains discount, 80% goes to the top 10%.
These tax subsidies are regressive, because they disproportionately benefit higher income earners and fuel inequality – which is already a growing problem in Australia, and one that government policy should be seeking to moderate, not exacerbate.
BH: What will be the housing market and budgetary effects of Labor’s plan?
HP:Under Labor’s reformed tax rules, property values will run 1–2% below the level at which they would otherwise have sat, according to the Grattan Institute. This will be a situation where – in effect – investors lose some of the advantage they have enjoyed when bidding at auction against aspiring first home buyers for existing properties.
Negative gearing changes will affect us all, mostly for the better
Under the proposed changes, the federal government’s budget bottom line is expected to be increased by $32 billion over a decade (Parliamentary Budget Office), although only by relatively small amounts in the early years because of grandfathering for existing rental investors.
Apart from costing an estimated $11.7 billion per annum, current negative gearing and capital gains tax discount subsidies do nothing to encourage investment in rental properties that will help to ease housing unaffordability by having rents affordable to low income earners.
Over time, the proposed plan would enable the federal government to redirect support to genuine good-quality affordable rental housing through Labor’s plan to incentivise the construction of 250,000 discounted rent units by 2030 (at a cost of $6.6 billion over the period covered by the forward estimates).
Shorten places housing at the centre of the 2019 election