The conga-line of rent-seekers opposing negative gearing reform just got longer, with Mortgage Choice CEO, John Flavell, claiming that Labor’s proposed changes would restrict the supply of rental properties and reduce housing affordability. From The AFR:
The housing market is “a very finely balanced and actually pressured system at the moment”, he said and warned both sides of politics not to make changes to the tax incentives provided to property investors. “Any changes you are going to make could have some very deep and significant impacts, and I would be surprised if anybody would be bold enough to do anything”…
“I do not see how you can be talking about affordability on one hand and talking about effecting changes in relation to negative gearing on the other,” he said. “Anything that could increase pressure on the volume of new stock coming into the market is going to create increased pressure on affordability. With the sort of changes being talked about, that will create some of that pressure – and will make a problem we have in front of us even more acute.”
Seriously, could the rent-seekers’ arguments against negative gearing get any more absurd? Mr Flavell speaks like the current negative gearing arrangements are delivering lots of new housing supply, which would be placed at risk, when the reality is the opposite:
That’s right, nearly 19 out of 20 property investors are purchasing existing homes. Therefore, they are placing upward pressure on house prices and reducing housing affordability, whilst doing absolutely nothing to expand the rental stock.
Flavell also conveniently fails to mention that Labor’s plan would actually boost dwelling supply because it targets negative gearing at newly constructed dwellings. In turn, it would lower rents at the same time as it reduces speculative demand in the established market, thus providing a big win for renters and would-be buyers alike, not to mention saving the Budget significant revenue.
The only losers from Labor’s policy would be rent-seekers in the finance and real estate industries, like Mortgage Choice, which will have to cope with less household debt accumulation and lower capital growth. As pointedly noted by Rob Burgess earlier this week:
For rent-seekers [negative gearing] must be held in place along with the capital gains tax concession – not for all those three-grand tax refunds, but to continue pumping up credit growth in the banking system…
What is at stake is not $3 billion in tax refunds. It’s the continued growth of a complex web of industries that turn people into interest-streams, and take large salaries and shareholder returns along the way.
They are the rent-seekers and their interests are at odds with those of the majority of taxpayers and the new generation of would-be home-owners who can’t afford to get into the market.
Australians must not be hoodwinked into supporting a system that benefits the parasitic property industry at the expense of everyone else.
