Let’s take a walk down memory lane.
It’s 2013 and “Aussie” John Symond is sitting on the Q&A panel when the following question is asked by an audience member:
“I’m a single parent struggling to make ends meet but looking forward to the day that I might be able to once again own my own home. Property prices and rents continue to rise forcing my dream even more out of my grasp. When I think about the tax break negative gearing and am astonished at this subsidisation of investing in property at the expense of low and middle-income families. Do you think negative gearing should be abolished or at the very least quarantined – only available for new dwellings – thus giving low income earners an opportunity to get into the property market?”
To which Aussie John replied (my emphasis):
“Negative gearing wasn’t designed for people who can afford to go and buy $1 million, $2 million, $3 million houses or apartments for negative gearing to offset the bulk of their interest payment off their tax. So negative gearing does need to be looked at in the tax system because I don’t think it is fair at the moment. I think it leans very heavily to the high income earners and that needs to be brought into line, as is hundreds of other aspects of the tax system”.
Now let’s move forward to 2014 when “Aussie” John Symond lamented that negative gearing is killing the first home buyer market:
“Negative gearing is a great tax break, but it needs a total overhaul to make it fairer. First home buyers have no hope of getting into home ownership these days unless they’re helped by their families,” Mr Symond said”…
Yesterday, Aussie John was caught out on negative gearing with Fairfax pointing-out that his recent comments against reform are at odds with his earlier statements, shown above:
The Turnbull government’s chosen cheerleader against changes to negative gearing, “Aussie John” Symond, said in 2013 that the current system is “unfair” because it favours high income earners buying multi-million dollar properties.
In the past month, Mr Symond, the founder and chairman of Aussie Home Loans, has warned of plummeting house prices and a possible economic recession in Australia if Labor’s proposed changes to negative gearing are implemented…
Prime Minister Malcolm Turnbull raised Mr Symond’s comments during Friday’s live leader’s debate to attack Opposition Leader Bill Shorten’s proposal, which he said would force up rents and reduce the supply of rental properties…
Mr Symond told 2GB last week that real estate prices could fall by up to 20 per cent if Labor got into power.
On Sunday, he went further and raised the prospect of recession.“It is frightening and it will frighten others . . . and it creates this stampede. And that’s my concern that there could be a glut of properties come on the market, force the prices down, and then all of a sudden it could be Armageddon with the housing industry that’s propped up the Australian economy the last four years,” he told Seven’s Sunrise program.
Today, Fairfax’s Peter Martin has gone a step further and completely debunked Symond’s main arguments against reform:
“Aussie John” has got it wrong.
Here’s John Symond on Sunday’s Sunrise, asked about Labor’s negative gearing policy:
“Well, what I’m concerned about is bringing out a sledgehammer and overnight hitting negative gearing on all established housing across Australia.”
The Aussie Home Loans founder ought to know that Labor isn’t planning to hit negative gearing on all established housing overnight.
On implementation, in July 2017, established housing would be exempted. Existing negative gearing arrangements would be “grandfathered”… If anything, the grandfathering would lock them in, slowing the impact of the change…
Martin also takes Symonds to the wool shed on other parts of his argument. Here’s more Aussie John gruel:
“I don’t know whether prices will drop 10 per cent, 20 per cent or more. [But] I am prepared to bet on it will definitely drop the value of homes”.
To which Martin responds:
“The government’s economic modeller of choice on negative gearing, BIS Shrapnel, finds that after 10 years of a policy similar to Labor’s, Sydney home unit prices would be 15 per cent higher. Without a Labor’s policy, they would be 22 per cent higher. The main impact of Labor’s policy would be to slow price rises, something an honest broker trying to get people into houses ought to want”.
Martin could also have added the McKell Institute’s survey of 51 economists which found that the overwhelming majority of them believing that property prices would continue to rise under Labor’s plan, but presumably more slowly.
Martin also debunks Aussie John’s false claim that negative gearing is used mostly by ordinary middle-income earning ‘mums an dads’ and that Labor’s changes would could lead to “mass unemployment”, which you can read for yourself.
Much like Malcolm Turnbull, who in 2005 claimed that Australia’s “very generous” negative gearing and the capital gains tax discounts were a “sheltering tax haven” and “tax avoidance” that had contributed to Australian housing being a “bubble”, and is “skewing national investment away from wealth-creating pursuits, towards housing”. Aussie John Symonds has curiously performed a 180 degree turn and changed his tune.
It’s yet another example of rentier economics, which sadly dominates Coalition policy making these days.
