Shadow Treasurer, Chris Bowen, released a press release last night attempting to debunk Prime Minister, Malcolm Turnbott’s, claims about Labor’s negative gearing policy:
Malcolm Turnbull needs to slow down, it’s getting hard to keep up with his gaffes, chaos and contradictions.
Today, Mr Turnbull either wilfully misrepresented Labor’s policy or simply doesn’t get it.
In Parliament today the Prime Minister said in relation to Labor’s negative gearing changes:
“They are proposing to remove from the market for established dwellings one-third of demand.”
“Because the Labor Party propose to eliminate the deduction of any net rental losses”
“Other than those who are prepared to take the risk that a loss on the property cannot be offset against their other income”
These statements are untrue.
Net rental losses will continue to have value under Labor’s policy as they can be offset against other investment income and/or carried forward to offset the final capital gain.
The only thing Labor is removing is the ability to offset net rental losses against wage and salary income, except for investments in new houses which will continue to receive existing taxation concessions.
This statement goes to the character and incompetence of the current Prime Minister.
The Prime Minister’s repeated claims that one third or more of demand will exit the property market is also untrue.
Property investment will remain an attractive proposition and so investors will continue to buy existing property. More owner-occupiers and first home buyers will also add demand to the property market.
Other countries with limited or no negative gearing have seen house prices grow strongly over recent years.
Negative gearing is more limited in Canada where house prices have increased by 21 per cent over the last four years.
The Prime Minister needs to quit lying about Labor’s policy and start coming up with his own.
Clearly there’s some politics being played by both sides, with Turnbott trying to scare people into believing that Labor’s reforms would “crash” housing values and Bowen countering by arguing that its effect would be moderate.
In all of this we should not forget that in his 2005 tax policy paper, Turnbott described negative gearing and the CGT discount as a “sheltering tax haven” that is “skewing national investment away from wealth-creating pursuits, towards housing”, and has caused a “property bubble”. Turnbott also acknowledged that “Australia’s rules on negative gearing are very generous compared to many other countries” and that “the normal deductibility principles do not apply to negatively geared real estate such that the taxpayer is not obliged to demonstrate that the negatively geared property will generate positive cash flow at some point in the distant future”.
If the Prime Minister had any integrity and backbone, he would back Labor’s reforms to negative gearing and the CGT discount, or come up with a policy of his own, instead of running an Abbott-styled scare campaign in a cheap appeal to property owners’ selfishness.
