The property industry campaign to stop the major parties changing negative gearing has started.
With Opposition leader Bill Shorten unveiling a policy of restricting negative gearing to new properties acquired from July 1, 2017 onwards and Treasurer Scott Morrison signalling he is looking at capping the number of homes which can be geared or the size of annual deductions, the campaign is spelling out exactly what’s at stake.
Housing gurus Mark Bouris and John Symond yesterday slammed the changes.
“It will kill the investment market. I think it’s a terrible idea,” Mr Bouris, the chairman of financial services group Yellow Brick Road, told the Australian Financial Review.
“The fabric of Australian portfolio has been investment property. Any change would rip the guts out of the economy and growth.”
“Politicians talk about the amount of money we lose from people claiming negative gearing tax breaks, but I would love to see the impact on the other side, when the investor market dies off.
“There will be less money spent on concrete, bricks, furniture, televisions, plumbing etc.”
Aussie Home Loans founder John Symond said changes to negative gearing would hit ordinary investors.
“Many property investors who are negatively geared are PAYG taxpayers and their nest eggs will be hit for six in any change,” Mr Symond told the AFR.
The Master Builders Australia lobby group says the Opposition’s plans would bring only 5000 new homes, hardly enough to solve the supply problem.
Property Council chief executive Ken Morrison warned both sides of politics not to touch negative gearing.
“We have seen it in the past where governments at the state and federal level have made significant tax changes, claimed it’s targeted, claimed it well modelled and in fact it has had major impact,” he told Sky News.
As with the GST, speculation about the future of negative gearing has triggered concerns from some Coalition MPs. Some believe attacking Labor’s policy will be a vote winner.
Meanwhile, Prime Minister Malcolm Turnbull turned coy about changing negative gearing, warning that any change had to add up economically before it was adopted.
Campaigning in Queensland yesterday, Mr Turnbull told reporters the government would approach negative gearing in the same way it had tackled GST, in effect leaving the door open to it keeping negative gearing in place untouched as it had done with the GST.
“We will look at these issues, as we did with the GST, very carefully and thoroughly,” he said.
For that matter, Mr Turnbull also killed off debate over an increase in the GST.
“I can assure you that the government will not be taking a proposal to increase the GST to the election,” he said.
Mr Turnbull has attacked the Opposition’s negative gearing policy, saying it would distort the housing market.