Farewell specufesters

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.

Comments

  1. Note for Chris Bowen:
    “I read today that the Property Lobby is threatening to undermine the Democratic process by targeting members of the Parliament who support the necessary changes that will be part of Australia’s future. To them I say ” The Financial Transactions Reporting Act’ and personal and company responsibility for any breaches of it, also await you. Along with taxation reforms that we intend to implement, we will also enact long due ethical standard that are part of other businesses in our country”

    • Sounds like the same tactic employed by the Church of Scientology when they were trying to get tax exemptions from the IRS. LOL…Make the connections as you will..

    • Yeah, sort of good, but I’m pretty furious the policies that will fix the problem are being run by Shorten Labor, which immediately makes it almost certain they are viewed by the electorate with suspicion, will get poorly sold and will die a horrible death post-election.

      Meanwhile the Libs counter-policies will do just enough to look like something but will not address the fundamental problems. And the opportunity will be lost.

  2. St JacquesMEMBER

    Well done MB for leading the charge. Such a pity they didn’t listen years ago when the vast GFC China stimulus handed Oz a get out of jail card for free, that would have been the time for a whole raft of reforms for minimal pain. Alas the pain for our collective greed and stupidity is now going to be great, as reality blows away our arrogant exceptionalism. Anyway, like clone says, one vampire squid at a time.

      • Canberra Sunday 14 Feb 2016
        Emergency Meeting of the Property Lobby
        Present: Mr REIA (Chairman), Mr PCA, Mr HIA, Mr MBA
        Mr REIA: Gentlemen, I think you all know the reason I have called this emergency meeting. It is on. Shorten and Bowen have gone rogue. Prepare for battle. We need to know that everyone is clear on the script and knows their lines. I have provided a copy to everyone just in case. Of course my boys are rock solid.
        Mr PCA: Yeah we’re good as gold. My Landbankers are shitting themselves. I’ve checked with ScoMo this morning and he is schooled up.
        Mr HIA: lol yeah ready to roll. I can’t believe my members keep allowing me to sprout this rubbish but we are locked in now.
        ……silence…….
        Mr REIA: Bob??? are the Masters Builders in?
        Mr MBA: Jeez guys, this is getting difficult. You are asking me to get on national tv and advocate against encouraging investment in my members product and saving thousands of threatened constructions jobs. What do I tell my members?
        Mr REIA: FFS just stick to the script Bob. What ever you do not mention “NG for new builds only” or that crap about boosting investment or saving construction jobs. We have to stick together on this. Disunity is death…..and it won’t be mine Bob.
        Mr MBA: ok I guess I’m in. Fuck I’m missing golf for this.

    • The MBAV member told me he makes most of his money fixing up home-renovated bathrooms, however that been said, another tradie told me he makes most of his money fixing problems in houses that are less than 2 years old.

    • They’ll realise the error of their ways, surely. Or is it that builders make most of their money holding their profits in negatively geared properties built many years ago while they wait for rezoning. In many areas, the developers buy propperties with their ears back the moment the local council announces (very quietly and without any discussion of the possible impacts on the value properties in the affected area) a cnosideration of increased densities. Is all the money made in the holding stage where they have brought existing properties which are financed on a negative gearing basis? There is a lot of evidence that developers hold at negative cash flow. Much of the land banking seems to be done at negative cash flow. Maybe it’s the second or third order effects that the builders are thinking about and they are not obvious to us mere mortals. I can see how there could be substantial adverse timing impacts on interst tax deductions for developers.

  3. Never underestimate the Australian voters penchant for voting against their own best interests…..

  4. “Investing in new private rental housing is not evil,”

    It’s like they still don’t understand (or purposefully obfuscate)… NEW private rentals aren’t the target of the policy, in fact they will benefit.

      • Don’t agree that reducing ones taxable income by claiming the legitimate cost of holding an investment property is ‘subsidization by the average tax payer’.

        Negative gearing should be removed for established homes to reduce the speculative investment demand which has resulted in reduced affordability and % of population which are home owners.

      • “Don’t agree that reducing ones taxable income by claiming the legitimate cost of holding an investment property is ‘subsidization by the average tax payer’.”

        I do when you have no plan to return to a profit other than waiting for rents to rise or interest rates to drop. Try running a perpetual loss-making business for tax reasons and see how long it takes for the ATO to get in touch.

  5. Extraordinary stuff guys – just getting a policy platform acknowledgement of this is a significant win. MB has been almost a sole source of factual analysis in a sea of vested interests and lies.

    I’m starting to wonder if ScoMo has mad a big mistake linking this to the mining tax, many people I’ve spoken to feel they were conned by the mining lobby.

  6. proofreadersMEMBER

    HnH – I think that you are too forgiving of Dear Leader PMT. Who needs “enemies”, when he has so many friends such as ScoMo and Mathias peddling confected spin? That’s not to say that Treasury, the RBA and APRA haven’t played absolute shockers for so many years now.

  7. Will Parliamentarians that have big Negative Gearing benefits in personal and related party tax structures now be forced to declare this conflict of interest?

    Will quarantining the past remove this need?

  8. TailorTrashMEMBER

    This is good news indeed ………….now let’s see the existing law being enforced with illegal foreign purchasers of our children’s homes being forced to sell
    and the considerable fines that are now in the legislation contributing to the governments revenue …………if the NAB statistics are to be taken seriously there is a lot of dollars waiting to be collected …..lets get on with it Scomo and Malcolm …..!!

  9. But will this have an immediate impact on prices??

    greed and fear are strong emotions..i would imagine that this might strongly dissuade speculators in a savagely overvalued market

  10. Brett EdgertonMEMBER

    At a Community Cabinet meeting in 2007 I “shirt-fronted” the recently installed Prime Minister Kevin Rudd about housing affordability

    http://www.brisbanetimes.com.au/news/national/rudd-grilled-on-housing-health/2008/03/02/1204402264032.html

    In his response I caught the first glimpse of his now infamous temper… for, while my question received strong applause from the audience, it was clear in his response that it was an issue that he was not serious about confronting…

    Worse still, when I approached Wayne Swann for a one-on-one meeting, in declining he said that I was crazy if I thought negative gearing would ever be abolished… (To be completely honest, it took all the restraint I could muster to stop my 110 kg frame from landing one on that outsized mandible! – I am still angered now when I think of his smug face as he said it)…

    Congrats to the ALP for moving on it now…Thanks especially to the Greens for keeping up the good fight… And thanks to MB and especially Leith for keeping on plugging away… Lets hope that polling shows that this is potentially an election winning issue, thus forcing the conservatives to genuinely match measures to clamp down on this massively distorting and socially disruptive policy… The wider MB community can continue to help that to happen by continuing to speak up on mainstream media sites and directly to politicians…

    • I can’t think of a treasurer I haven’t wanted to punch in the jaw at some point or other….ScoMo is no exception. Imagine Joe ‘wobbles’ Hockey’s face after a quick left jab to the double chin.

      • proofreadersMEMBER

        +1 Good on you. Be even better if you did while he was chomping on one of his big fat cigars!

      • Brett EdgertonMEMBER

        Yes, but being taunted within arm’s length of him, that’s something altogether different…

    • It doesn’t really matter – the pressure is now on the LNP to come up with some form of actual tax reform. There’s been so much speculation about limiting total deductions that I’d be surprised if it’s not being leaked in order to test the market.

  11. Today's Empire Tomorrow's Ashes

    Radio National/Fran Kelly this morning with PCAs Glen Byers – absolute lies and misinformation as a vanguard of the defence.

    Jaw dropping. Fran tried but she needs some backgrounding from MB.

    • Mining BoganMEMBER

      Fran Kelly will follow the line that St Mal and ScoMo give her. Her interests are more in line of a future political career, not what is good for the country.

    • The inability of senior journalists to frame useful questions on this topic is astounding. It’s not rocket science.

  12. Just curious – what do you guys think about the potential Lib policy of just putting s limit on the total of all deductions (assuming it applies to everyone from Day 1, and not “grandfathered” in any way)?

    • Without including “NG for new builds only”, the immediate Morrison cap, on its own, will smash investment in new housing supply and threaten construction jobs.

      • It will be worse than that – remember the new deal signed with China allowing them to bring in their own workers for local projects???? This is the dragon that everyone is forgetting in this debate.

  13. What will stuff the residential housing market is not the lack of capital gains tax concessions or negative gearing. It’s the lack of tenants because of a huge oversupply of units, houses and granny flats. A tax driven investment will never stand on it’s own feet (i.e.plantation forests). They’re are talking about further need to increase housing supply. We need more houses like all the other markets that collapsed, both here and overseas!!!

    • Australia’s population has almost over night leapt from 22 million to 24 million. We shot right by 23 million without noticing.Population boom game on.

      • Yea, all the other collapsed markets, Spain, Florida, Nevada, Dubai, Gold Coast, Ireland, etc., etc., etc., had “growing populations”, didn’t they? Show me an estate agent on the planet, who is not operating in a “low inventory” environment.

  14. Its truly unbelievable the house builders will be against this policy. The ALP should just run advertisements of Hockey’s farewell speech agreeing with the policy.
    One thing I have no doubt on it would crash the housing market quickly. Auctions would just be attended by people who really want to live in the bloody place which would remove a significant amount of buyers. As prices are set at the margin. Down it goes.

  15. What I love about specufestors is that when it comes to tenants and rents, they always claim they are not charities and must put up rent, but then want to be treated like a charity from the Governments and get all their tax perks and right offs.

  16. “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”

    This is an absurd statement!

    You can only make a dumb investment decision (i.e. loss making, i.e. Negatively geared) on new housing, so therefore, in wacko world this makes it harder to buy new housing as an investment??? WTF

    They cannot beat this policy without easily debunked lies. I hope the public aren’t as stupid as I think they are.

    Only 5-10% of the population benefit from NG. The rest of the home owners genuinely believe the price of their home is fundamental. They will not put 2 and 2 together. Soooo the only hope that the LNP have is to come clean that this is a PONZI scheme and tell the other 60% other homeowners that this will destroy their house ‘value’

    Either way……the LNP are going to lose big time!

    THIS IS AN ELECTION WINNING POLICY – PEOPLE WILL NOT VOTE AGAINST THEIR CHILDREN.

    • Mining BoganMEMBER

      Eh?

      ” PEOPLE WILL NOT VOTE AGAINST THEIR CHILDREN.”

      This is Australia. It’s been proven time and time again that they can and they will.

  17. Congratulations to MB.
    One more idea:
    Change the Tax Act to allow Interest-Only loans to be applicable only against new property and then only for the value of the structure, not the land upon which it sits, unless the land too is new release.
    Watch the parasites implode 🙂