ABC’s 7.30 Report aired a segment on Friday, claiming that there is a push underway within the Australian Labor Party (ALP) to debate negative gearing at its national conference in July.
DAVID MARK: Now, there are fresh calls for change. The Sydney City Councillor, a member of Labor’s left faction, Linda Scott, wants to debate the ALP’s policy on negative gearing at the party’s National Conference in July.
LINDA SCOTT: There’s broad support within the rank and file of Labor, the union movement and caucus to have a look at the question of negative gearing and I’m trying to lead push, along with many other members of Labor, to see a decision at National Conference that over time removes negative gearing…
Given the pressures on the federal budget, I think Australians understand that it’s unfair that the taxpayer should be subsidising investors’ losses on their mortgages.
Coming out in support of reform were Saul Eslake and Louis Christopher:
SAUL ESLAKE, ECONOMIST: I certainly think it’s an economic issue and produces bad economic outcomes. I think it also does social harm by exacerbating the difficulties faced by younger generations in aspiring to home ownership in the same way that their parents and grandparents would have done…
It doesn’t achieve the results it’s meant to in terms of housing, but actually exacerbates the difficulties faced by would-be home purchasers…
So the overall effect of geared investment in property is disproportionately to push up the price of established property and very little to encourage the supply of new housing for rent…
LOUIS CHRISTOPHER: We hear all the talk about the fact we’ve got a budget deficit, we’re racking up public debt and the Government’s scratching around trying to find ways to save money. Well, here’s an obvious one for them to actually have a go at and yet they will not touch it. Why?
As usual, the Real Estate Institute argued against reform, arguing that there would be dire consequences for the economy and renters from negative gearing’s removal:
MALCOLM GUNNING, REAL ESTATE INSTITUTE OF NSW: That’s a figure that’s been put up, say, by some of the economists, but what would be the knock-on effect with jobs? And what would be the knock-on effect far as tenants are concerned if there wasn’t supply of property?..
I think it’s a lot do with underpinning the economy here in NSW. The construction industry is one of the biggest employers in the state. Also too, it’s one of the biggest taxpayers, both federally and state. Local council, State Government, Federal Government, all clip the ticket.
Of course, the claims about rental shortages and rent increases are false, and have been debunked many times before, whereas supply (jobs) concerns could be easily fixed by relaxing planning constraints that prevent affordable housing from being supplied to the market.
Regardless, it is good to see that negative gearing is still on the agenda within the ALP, meaning that reform is still possible in the event that it gains office.
