It seems Australia’s biggest mortgage lender – the CBA – does not agree with Treasurer Scott Morrison that Labor’s negative gearing policy is “crap”, urging reform while accusing the federal government of artificially pumping housing demand. From The ABC:
CBA senior economist Michael Workman said… housing affordability is set to continue deteriorating even if house price growth slows…”The amount required (as a proportion of annual average household disposable income) for a 20 per cent deposit on a dwelling purchase continues to move well beyond the reach of most households,” Mr Workman noted…
While state governments and local councils are largely responsible for housing supply, the CBA economist said the Federal Government had to shoulder most of the blame for policies that boost demand and lift home prices.
In particular, Mr Workman fingered negative gearing and the capital gains tax discount as key factors stoking investor demand.
Investors will continue to be a significant influence on housing prices in 2017 and onwards until federal tax laws favouring leveraged housing investment are reformed,” he argued…
“The Federal Government controls some of the significant demand factors for housing markets, namely population growth via migration and the spectrum of tax and foreign investment policies that significantly inflate demand for existing and new housing.
“Housing affordability can be improved, via stabilising growth in house prices and rents, by gradual reforms to both supply and demand issues.”
Shadow Treasurer Chris Bowen has jumped on the CBA’s comments, issuing a media release shaming the Coalition and spruiking Labor’s negative gearing reforms:
The Commonwealth Bank’s Senior Economist, Michael Workman, has today made a simple and logical statement that housing affordability in Australia will continue to suffer until the Federal Government reforms tax policies that favour investors over first home buyers…
This statement follows repeated calls last week from Federal Liberal MPs, John Alexander and Andrew Hastie, for the Coalition Government to at least examine reforms to negative gearing. That follows similar calls from former NSW Liberal Premier Mike Baird and his Planning Minister, Rob Stokes.
Instead of attacking individuals who call for reform, Scott Morrison needs to get the message that it’s time to drop the ideological opposition to reforming negative gearing and to work on a housing affordability plan to address both supply and demand concerns.
Last year, Scott Morrison boldly told the nation there were “excesses” in negative gearing.
Then the Prime Minister and Treasurer were rolled by their own Cabinet on plans to reform negative gearing.
Now apparently it’s okay for the taxpayer to underwrite multiple investment property purchases as young first home buyers are shut out of the property market, all at a time when Australia’s triple-A credit rating is under threat.
A year after Labor announced its reforms to negative gearing and the capital gains tax discount, the Prime Minister has begun to talk about housing affordability.
The fact of the matter is that a housing affordability plan without reforms to negative gearing and the capital gains tax discount is a housing affordability sham not a plan.
Malcolm Turnbull and Scott Morrison are becoming increasingly isolated on their pronouncement that housing affordability can only be improved by supply side measures.
It’s time for Mr Turnbull and Mr Morrison to listen and act by reforming negative gearing.
The Turnbull Government’s credibility continues to crumble…
