Opposition leader Bill Shorten delivered his National Press Club address yesterday, which delivered the following with regards to Labor’s negative gearing and capital gains tax (CGT) policy:
On superannuation, negative gearing and capital gains, Labor has been prepared to give honest answers to the hard questions:
•Are these subsidies working as intended?
•Are they helping the right people?
•And can Australian taxpayers afford them?Our fully-funded plan to tighten unsustainably generous superannuation loopholes, which disproportionately benefit very high income earners already comfortable in retirement, will return $14 billion to the Budget bottom line – and it has been public since last April.
NEGATIVE GEARING
This year, we took on a structural flaw in our tax system that governments and oppositions have been too scared to confront for thirty years.
Labor’s plan for housing affordability will reduce the upward pressure on housing prices, and this is a good thing.
We have become a society that cannot house its own children.
But we cannot be a society that refuses to help our children.
That’s why we have we have to break the dismal cycle – and break it now.
Nothing will help first-home buyers more than levelling the playing field against property investors and speculators who currently have their interest costs subsidised by the taxpayer.
Our measures will:
– lift investment in new housing
– help increase supply
– and help boost jobs in construction.
Over the last five years, every State and Territory Government – Liberal and Labor – have abolished First Homeowner Grants for buyers of established dwellings and redirected them for buyers of new dwellings.
Likewise, Australia’s foreign investment regime encourages buyers into new housing for the same reason – to boost supply and create jobs.
All of this is designed to reduce upward pressure on prices of established dwellings and increase supply.
And none of this has had the dire consequences foreshadowed by the Liberals’ fact-free scare campaign.
Where was Mr Morrison and Mr Turnbull when his own party was redirecting resources from established dwellings into new housing?
Where were their warnings about a stock market collapse and the collapse of the value of all houses?
They were silent, because they knew then, as they actually know now, that Labor’s campaign will not have the consequences that Mr Turnbull says, it’s actually good for the economy.
Our plan will also deliver Budget repair that is fair, returning $32.1 billion to the bottom line over the next ten years – and $7.3 billion a year by the end of this decade.
Our reforms are prospective, not retrospective.
No-one who has invested under the current arrangements will lose any deductibility, no-one will be left high and dry.
But currently, 93 cents in every dollar of investment goes to the purchase of existing housing stock.
This doesn’t create jobs, boost supply or help with housing affordability.
These subsidies are not working as intended.
And let’s be clear – neither negative gearing, nor the CGT discount are equity measures.
They are certainly not tax benefits for battlers.
Someone in top tax bracket is two-and-a half times more likely to be a negatively geared landlord than someone who is not in the top tax bracket.
The wealthiest 20 per cent of Australian households own 72 per cent of investment property – and 51 per cent of investment property debt.
The current system also enables aggressive tax minimisation for a fortunate few.
Last year, 64,000 Australians used negatively geared property to reduce their taxable income to zero.
It’s just plain wrong.
This year, negative gearing and the CGT discount will cost the Budget over $10 billion.
More than this government spends on higher education, or childcare.
It is not right that an investor looking to acquire their seventh or their tenth house receives more taxpayer assistance than an Australian seeking to buy their first home.
Our policy is about balance, fairness and giving working and middle class people to fulfil the great Australian dream of home ownership.
Well said. It’s great to see Shorten highlight the Coalition’s gross hypocrisy in opposing Labor’s ‘new homes only’ negative gearing policy, whilst supporting its own policy of targeting foreign investors to new homes.
Again, here’s the chair of the foreign investment inquiry, Liberal MP Kelly O’Dwyer, explaining the benefits of this ‘new homes only’ policy for foreign investors:
“Currently the framework seeks to channel foreign investment in residential real estate into new dwellings in order to increase the housing stock for Australians to build, buy or rent. Foreign investment is encouraged in new dwellings whether they be apartments, units or homes because in addition to creating more supply, it also creates more jobs for the building and construction sector – all of which helps to grow our economy”.
I will also remind readers once more of Malcolm Turnbull’s comments in his 2005 tax policy paper, where he 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 helped cause a “property bubble”. Turnbull 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”.
Let’s also not forget that only a few weeks back, Treasurer Scott Morrison, despite having deep ties to the Property Council of Australia, admitted on Sunrise that there are “excesses” in negative gearing:
Over to you messrs Malcolm Turnbull and Scott Morrison. Rather than running a despicable scare campaign of lies, show Australia your policy.
