Shorten stands by negative gearing proposal

by AB04 Mar 2016
Federal Opposition leader Bill Shorten has stood by the Labor party’s plan to alter negative gearing if they win power at this year’s election.

Since announcing a little over two weeks ago that under a Labor government negative gearing would be restricted to new housing only from 1 July 2017, the Labor party has been the subject of attack from numerous property and housing industry lobby groups.

Speaking to Sky News, Shorten has doubled down on the Labor proposal, claiming the changes will put investors and home buyers on equal footing.

“I think that what we will see is an opportunity where first homeowners are not competing with a long queue of property investors to be able to get that chance to be able to get that Australian dream,” Shorten said.

“No one has given any evidence that it'll decrease prices and our modelling shows that it won't,” he said.

The Real Estate Institute of New South Wales (REINSW) is the latest organisation to hit out at Labor’s proposals, claiming that restricting negative gearing to new housing only could have severe consequences for buyers.

“The potential of capital gain is less on new dwellings due to inflated new prices and the unregulated spruikers will have a field day enticing naïve investors into good returns and high depreciation in the first few years followed by years of disappointment after that,” REINSW president John Cunningham said.

“This leaves the door open to the savvy investor who is positively geared to have a field day and thereby robbing the average person of his or her opportunity to get ahead,” Cunningham said.

Cunningham said negative gearing is not a “huge tax saver for people” and any revenue the government would generate from the changes to the system would come at a cost.

“The abolition of negative gearing will push investment dollars out of property and into other areas of the economy that do not give the consequential social benefits that property provides. The removal of negative gearing would deny an allowable tax deduction that all other entities that are in the pursuit of taxable income receive. It is time for government to stop treating property unequally,” he said.

“People who invest in residential property do so as it is considered a safe haven but at the same time there is risk and as such a large assets class that risk is high. Negative gearing lessens that risk slightly. People are generally terrified of shares and don’t trust government with super, whereas property provides them with a sense of security as they can see and touch it.”

The attacks on Labor's plans may now intensify as well, with the Australian Financial Review reporting the Government has scrapped any plans to alter negative gearing. 

The AFR claims the Government is no longer considering any alteration to neagative gearing as part of its tax reform package, quoting a senior Liberal party figure as sying "we're not going to touch it."


  • by Brad 4/03/2016 11:02:57 AM

    B. Shorten, you are in idiot. How can you say you aren't pitting investors and first home buyers against each other, when they are both incentivised to purchase new property? I used to respect you... You just lost that.

  • by Will 4/03/2016 2:05:20 PM

    Upfront I’ve been labour man but I believe Turnball may be the better person in charge.
    Being in the real estate industry myself, and talking to other business owner in real estate, the general consciences we seem to be talking about is we have seen negative gearing been exploited over the years.

    Negative gearing was basically designed for the investment and delivering housing to the rental market and best for the “mum and dad investors”. It was never really designed for the people buying multimillion dollar investment potential - a 20 or 30 apartment complex - land banking it for ten years or so with a crappy old house on it receiving only $350 p/w. That’s one point were the system has been exploited.

    Personal I agree with some of the ideas of moving negative gearing
    • Making it only available to new housing stock is a good move.
    • As long as the first home owners grants was removed from the construction of new housing and redirected in full back to the existing and completed stock.
    • This is needed to create a balance in the market otherwise the changes will only work to the total benefits of the larger developer.
    • Having first home buyer, buying existing stock will encourage the D.I.Y industry and offset some of the negative impact to the D.I.Y industry that they may experience if negative gearing is removed from existing stock.
    • There should be a structure of price to return, capping benefits or offsets to be receive from tax benefits and or negative gearing.
    • We cannot continue with an housing and apartment been purchased for $1 or2 Mil and only receiving 750 p/w in rent. There needs to be some sort of balance and fairness in the structure.
    • Talking to existing investors and landlords, no one has expressed concern or wanting to dis-invest if all benefits remain for existing negative geared properties.

    As long as all existing investment properties receive all the current benefits until it is sold, (then any benefits cease at the point of the sale) no one would sell.??? Personal I agree with them and see no immediate alarm for them to sell it as the benefits would still follow through as is.