I’ve seen some illogical political ads in my time. But the above one from Master Builders Australia (MBA) against Labor’s negative gearing reforms takes the cake. Here’s what the ad says:
“Housing is even less affordable in Australia. So let’s be serious about the real cause. And it’s not negative gearing.
The real problem? There are not enough new houses to meet demand. This drives-up prices.
The next government must do more to meet demand for new homes by increasing land releases and cutting red and green tape.
Australia needs to stimulate the supply of housing to bring down prices. So let’s keep negative gearing”.
While I obviously agree with the MBA’s position on the need for more affordable and flexible land/housing supply (see yesterday’s post), its latest video does once again highlight the ridiculousness of its staunch opposition to Labor’s property tax reforms.
The data clearly shows that over 90% of property investors purchase existing dwellings, not new construction:
And that investors are crowding-out first home buyers:
So clearly by encouraging investment into existing dwellings, current tax settings (i.e. negative gearing and the CGT discount) are part of the problem, not the solution.
Here we have Labor proposing to restrict negative gearing to new homes only, thus channeling investment into the exact thing that the MBA is lobbying for – new supply – and boosting jobs for its construction members. And yet, the MBA is staunchly opposed to Labor’s reforms?
Let’s also not forget that Labor’s policy on negative gearing is practically the same as the Coalition’s policy restricting foreign investment to newly constructed dwellings only in a bid to boost dwelling supply, economic activity and jobs. Here’s the chair of the foreign investment inquiry, Liberal MP Kelly O’Dwyer, explaining the benefits of this ‘new homes only’ policy:
“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 can only speculate that the MBA cares more about protecting the value of its developer member land banks, rather than actually boosting dwelling construction. Otherwise, why would it go to such great lengths to oppose Labor’s ‘negative gearing for new homes’ policy?
