Prominent investor Peter Morgan has labelled negative gearing a “Ponzi scheme” and said it posed a risk to the financial system…
“At some stage negative gearing has got to go, not necessarily for the tax reasons, but for the leverage it’s putting into the property market, which is dangerous to the whole [financial] system,” said Mr Morgan, who for years was one of Australia’s best-performing fund managers at Perpetual.
The AFR lines up executives for and against negative gearing reform today:
“It’s got to be done carefully. You will get a run on the market if it’s not. With low rates, low unemployment you can’t have people buying three to four properties and not think about the sensitivity when things change.”
There’s the truth. Now the rentier view:
Mark Bouris, who co-founded financial services group Yellow Brick Road, said removing negative gearing “will kill the investment market”.
“I think it’s a terrible idea. Any change would rip the guts out of the economy and growth.” He warned that grandfathering negative gearing would create an “us versus them” divide in the community. “Some will have the right to claim the tax break, others won’t.”
Lining up with truth-tellers are former RBA board members Jillian Broadbent, Warwick McKibbin (welcome back Professor) and another anonymous RBA alumnus.
Lining up with the rentiers is Roger Corbett and Don Argus, both of whom have histories managing property exposed businesses in Fairfax and NAB.
It’s a clear victory for common sense. It’s time.
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