Premier Anthony Albanese has ruled out changes to negative gearing, saying changing the tax concession could hurt housing supply.
Real estate investors can negatively leverage properties to offset losses from other income, thereby reducing their overall tax bill.
The Treasury is reportedly modelling the impact of the policy changes, but Albanese took a more definitive stance on Thursday when asked whether Labor would include negative gearing reform in a fiscal package for Labor’s election bid.
“No, we are not,” he told ABC TV.
The reforms could range from limiting the number of properties that can have negative gearing to eliminating it altogether and keeping it in place, meaning those who currently have access to it will not see their agreements changed.
Supporters of the reform have also proposed limiting it to new construction, and their argument in favour of such a reduction is based on encouraging investment in new housing to increase the supply of housing and therefore put downward pressure on rents.
But Albanese said he could not see any positives from negative gearing changes, with experts warning they would undermine investment in the sector and fail to address supply, which remains the focus of his government.
“The problem is that all the analysis shows that a shift to negative leverage will not help supply,” he told Sky News.
Premier Anthony Albanese has ruled out changes to negative gearing, saying changing the tax concession could hurt housing supply.
The opposition has seemingly ruled out any change to negative gearing, with housing spokesman Michael Sukkar and shadow treasurer Angus Taylor downplaying the effectiveness of the reforms.
Mr Sukkar said housing was already taxed sufficiently and ruled out supporting a cap on the number of homes to which the concession applied.
Most people who bought negatively leveraged properties only had a single investment, he said.
“We support the current arrangements that Australian mums and dads rely on as a normal feature of the tax system,” he told Sky News.
‘If someone can invest negatively in their stock portfolio, a father or mother should not be denied the same opportunity to own an investment property.’
Mr Taylor added: “I don’t see how taxing mom-and-pop investors more is going to increase supply.”
The opposition has also criticised Albanese’s rhetoric on the issue, as he repeatedly used the phrase that there were “no plans” to touch the concession.
He used the phrase again on the morning television show on Thursday, before issuing his most concise edict on the public broadcaster.
He has been criticised for using the same words he and his ministers used before breaking their promise not to change a package of tax cuts.
Mr. Sukkar called it “verbal gymnastics.”
Mr Albanese defended the change in the tax package to favour low and middle-income earners, saying times had changed.
The Greens used this to argue that economic times had indeed changed and that a reform of negative leverage and capital gains was therefore necessary.
Tax breaks drive up rental prices by favoring wealthy landlords, which also increases the cost of housing and drives first-time buyers out of the market, says minority party housing spokesman Max Chandler-Mather.
The debate was reignited after it was reported that the Treasury was considering policy options for negative leverage.
Mr Albanese said he had not told them to do so and it was good the civil service was being “creative”, while Treasurer Jim Chalmers said his department “looks at all sorts of different policies from time to time”.
Real estate investors can negatively leverage properties to offset losses against other income, thereby reducing their overall tax bill. File image
“Treasury officials don’t need to be told what to do; they’re not like schoolchildren with teachers standing in front of the classroom telling them what to do,” Albanese said.
Opposition leader Peter Dutton said blaming the public service “simply does not pass the pub test” as it carries out tasks it is instructed to investigate.
It has already prepared a scare campaign about cutting tax incentives after the coalition criticised former Labor leader Bill Shorten for trying to introduce the policy into the 2019 election.
The days of speculation, already spreading on social media, have provided fodder for a favourite coalition slogan: “When Labour runs out of money, they’re coming for yours.”