Congratulations to the MB community. It is you that are being rewarded today with an election being fought over negative gearing reform. It is you that held aloft this torch of reason through the dark years of property rent-seeking. It is you that deserves a mighty pat on the back for slaying the great parasite eating the heart of the Australian economy: the specufester.
The weekend ALP announcement that it will repeal negative gearing and the Costello 50% capital gains cut will be put to the nation. It may or may not win the election, though will certainly give it a better chance. More to the point, it has triggered an immediate hardening in the Coalition position of taking its own negative gearing reform to the election. Via Domainfax, which has wasted no time in taking sides:
The Turnbull government has rejected Labor’s policy to restrict negative gearing to new properties and will move ahead with its own plans to target high-end investors by either capping the number of properties that can be geared or limiting the annual tax deductions of which can be claimed.
…Treasurer Scott Morrison told The Australian Financial Review on Sunday that Labor’s policy would focus all investors into the new housing market, making it harder for so-called “everyday mum and dad investors” to buy new houses or units off the plan.
And The Australian:
Scott Morrison remains committed to tackling “inadequacies’’ in negative gearing, even as he moves to make Bill Shorten’s pledge to limit tax concessions on investment properties to new homes and cut capital gains tax discounts an election battlefront.
The Treasurer warned yesterday that Labor’s plan to restrict negative gearing to new houses from July next year would “close off’’ wealth-building opportunities for middle-income earners.
But Mr Morrison reaffirmed his comments last week that “if there are inadequacies in the current system, areas where it is being abused or excesses, the government would look at those things’’.
The Treasurer of the Property Council is now firmly wedged. Finally, one way or another, the tax distortions that are devouring the Australian economy are going to change for the better, either a lot or somewhat, and either way it is a victory given it tolls the bell for one particular property parasite: the specufester.
The specufester is that creature that accumulates vast numbers of properties, mostly existing for the capital gain, and rewards itself with “passive income”. Unlimited negative gearing is its lifeblood given it provides the tax shelter that dramatically accelerates the strategy. Either way its days are now over, and the MB community has struck a mighty blow.
Most assuredly the battle is not over. The property parasite lobby will swarm, also from Domainfax:
“There’s no doubt our eye is very firmly on what the federal government intends. We’ve seen that they’ve converted tax reform into a cupcake process. The big reform is off the table. Clearly they’re looking at options,” Property Council chief executive Ken Morrison said on Sunday.
Master Builders of Australia chief executive Wilhelm Harnisch indicated his organisation would fight change. He took aim at Labor’s policy.
“Our concern is that Labor’s policy is a populist response to those who demonise housing and negative gearing as primary cause of our fiscal and social problems. Investing in new private rental housing is not evil,” he said.
…The Housing Industry Association railed against the reduction in the CGT discount, saying it would do nothing to improve housing affordability. Labor says the CGT deduction is a tax break introduced in the Howard years that is no longer warranted in the current budgetary circumstances.
But the victory is ours today. Savour it.