With the Australian Labor Party’s (ALP) national conference approaching in July, pressure is building from within the party to reform Australia’s negative gearing laws.
The push is being led by Labor’s left factions and the union movement, who want negative gearing to be put on the agenda for debate at the conference, with these members favouring a phased reduction of the tax lurk.
New South Wales secretary of the left-aligned Australian Manufacturing Workers Union, Tim Ayres, wrote a spirited op-ed piece in Fairfax explaining why negative gearing must go:
Australian Labor can’t afford to be a small target on fiscal policy…
There are elements of our current tax system that are inadequate and inequitable…
Labor shouldn’t miss the opportunity to recraft Labor’s approach to that great Australian tax shibboleth: negative gearing…
Tony Abbott talks of intergenerational theft in banal budget sloganeering, but continues to back a scheme that will shut out an entire generation of people from being able to own their home.
Households who currently have negatively geared properties should be insulated from overdue reforms to negative gearing. Working class and middle income families who have saved and invested in properties to build a better life and who have taken advantage of the generous tax treatment of income-bearing properties must not have those arrangements disturbed and future scaling back of negative gearing should be introduced carefully and gradually…
A smart phase-out of negative gearing is a long term positive for the budget position, protects current investors and reduces structural inequity in the housing market. It is a good idea whose time has come.
Ayres has been backed by Linda Scott, a Sydney City Councillor and also a member of Labor’s left faction, who is also publicly calling for negative gearing reform:
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.
The obvious policy solution is to announce that negative gearing would be made unavailable to new investors, should the ALP win office, thus grandfathering current arrangements for existing investors.
This way, political resistance would be minimised from Australia’s circa 1.2 million existing negatively geared investors, whilst reducing its cost on the Budget over time, along with alleviating pressures on house prices.
Let’s hope the reform push gathers steam at the ALP’s national conference, delivering a clear point of difference between the ALP and the do-nothing Abbott Government.
unconventionaleconomist@hotmail.com
