NSW Premier ignored warnings negative gearing was inflating Sydney home values

By Leith van Onselen

In late 2016, the Coalition erupted into civil war when NSW Planning Minister, Rob Stokes, threw a hand grenade at the Turnbull Government’s housing policy, arguing that changes to negative gearing are necessary to make housing more affordable:

“We should not be content to live in a society where it’s easy for one person to reduce their taxable contribution to schools, hospitals and other critical government ­services — through generous federal tax exemptions and the ownership of multiple properties — while a generation of working Australians find it increasingly difficult to buy one property to call home”…

Then NSW Premier, Mike Baird, seemingly backed his planning minister’s comments, telling the National Press Club that negative gearing ought to be considered as part of plans to deal with housing affordability:

“Yes, it should be considered,” Mr Baird said.

“Have I got a position yet on it? No I don’t”…

“I haven’t seen the modelling, Mr Baird said when he was asked about the issue on Tuesday…

“But if there is modelling or an approach that suggests there is an impact, a positive impact on affordability, well of course that’s something we should consider.

Gladys Berejiklian took over from Mike Baird as Premier of NSW in January last year, replaced Rob Stokes as Planning Minister, and the protestations within the State Government over negative gearing ceased. This came despite Treasury officials explicitly warning Premier Berejiklian that negative gearing was pushing-up Sydney home values and making housing less affordable. From The SMH:

A cabinet briefing reveals that top Treasury officials advised NSW to advocate a review of negative gearing tax concessions because they were pushing up house prices, but just weeks after that advice was given, the then new Premier declined to challenge the federal Coalition’s support for the policy.

Ms Berejiklian declared housing affordability her top priority upon becoming Premier last year and said she was “open minded” on the issue.

But she soon apparently shut down the possibility of picking a fight with Prime Minister Malcolm Turnbull over negative gearing policy despite just weeks earlier being being briefed by treasury officials that NSW should advocate the multi-billion dollar investor tax breaks be reviewed…

“I don’t feel at this stage that is something I would necessarily touch,” the Premier said last January. “If there is overwhelming advice one way or another … [then] of course I’ll raise that”…

But a leaked cabinet-in-confidence then-Treasurer Berejiklian’s department said studies showed that negative gearing and capital gains tax breaks, independently estimated to cost up to $12 billion a year, were causing “substantial distortions” in the property market and pushing up prices and should be reviewed.

NSW Labor’s shadow treasurer, Ryan Park, said the document proved both Liberal governments were hiding information from home buyers…

“[They] have been completely misleading the community,” he said. “When it comes to addressing this crisis the NSW Government have simply done too little too late”.

Liars, the lot of them.

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Comments

  1. I think we’re missing a very important aspect of negative gearing, being it’s ability to allow people to feel like they’re playing the Game of Mates on a level playing field with the real James’, politicians and vested interests.

    This tax minimisation tool normalises the more widespread grey corruption that is rife within Australia, despite the damage it is doing to the economy as a whole. By letting it be, State and Federal governments allow the Game to go on behind this myth of “Mums and Dads getting ahead”.

    • Difficult to believe the NSW government has any interest at all making housing affordable. One of their key performance criteria for new infrastructure is that it raises property prices, they recently let developers land bank undeveloped sites for 10 years (from 5 previously), they object to setting targets for developers to deliver affordable units, etc etc.

      • Difficult to believe the NSW government has any interest at all making housing affordable.

        3 words. Stamp, duty, and revenue.

  2. Christ alive, the year’s only 11 days old and already these LNP fcktards have committed what would once have been a years worth of fckups!

  3. “We should not be content to live in a society where it’s easy for one person to reduce their taxable contribution to schools, hospitals and other critical government ­services — through generous federal tax exemptions and the ownership of multiple properties — while a generation of working Australians find it increasingly difficult to buy one property to call home”…

    So…It is immoral to claim any deduction whatsoever incurred to run a business!!!! One more damned time….Negative gearing is NOT the problem. An expense to earn income should be allowed. The REAL problem is Negative RAT interest rates and tax benefits specifically aimed at benefitting those who own Real estate.

    You can’t fix a massive distortion by adding more distortion.

    • You’ll still be able to deduct. Just not engineer it to be a negative amount so that you pay less income tax on your salary than everyone else and simultaneously prevent them from buying a home for their family. This is how it works in nearly every other country in the World. You know, the ones where the government hasn’t been captured by property developers.

      • SoMPLSBoyMEMBER

        Yep. Property is just the matrix to ensure that the loan books keep expanding where that credit can keep bidding prices upwards. All but two countries ( AUS & NZ) have determined that the inevitable wreckage from overly indebted people, lost and needed tax revenue and other aspects of the economy that compete with the mortgage dollar is just not worth greasing the rails for the benefit of the bwankers.

        We have a lot of growing up to do and perhaps after the inevitable crisis that accompanies all Ponzi schemes, we’ll move to reign in the tax plays that surround property investing like a mine field which inhibits the at large economy dreadfully.

        Currently, the lending network enjoys immense prestige and consequent impunity from our complicit and shameful pollies and these ‘representatives’ (not ours) occasionally venture forth with ‘suggestions’ to abate price rises. As these hollow men and women recognize where the power lies, and their careers can be made or broken, they’ll fulfil their negligible duty to their constituents (us) with a quivering voice and trembling hands that hold their hats in front of their paunches, they will bow and curtsy their “if it pleases your excellency” requests but both sides will agree that it’s just part of the ‘show’.

    • KeenEyeKenMEMBER

      I’m (mostly) with Flawse on this one. Negative gearing is not nearly the problem that people make it out to be – it’s definitely the CGT discount that distorts behaviours and entices people to over leverage.

      Get rid of that CGT discount and the perceived NG-problems disappear

    • As far as I know there are no plans to change the way deductions are applied. The Labor proposal is to limit future negative gearing to new home start only (not retrospective), which creates more supply which is supposed to be the whole idea from a government perspective.
      However as Andrew said, it’s may be time to remove the deduction of investment property losses against other income tax, like wages income.Losses can still be offset against future investment profits including any capital gains.

      However flawse i agree with you, that negative gearing is not the REAL problem.
      Imho, the root cause is the massive immigration intake. Negative gearing,capital gain ceases to be a concern without the massive demand from immigration that pushes up prices for capital gains and provides an never ending supply of people for those investment rental properties

  4. “Liars, the lot of them.”

    That’s a fact!!! Treacherous bast..ds to boot!!!! They don’t actually give a rats about hosing affordability for young people – just whether they can all hold on to their positions.

    • …they also care whether they can get profitable directorships or lobbying positions after leaving politics, to supplement their meager pensions. Poor pollies!

      • This is what you get from lawyer politicians. The guys who really did not have any talents or interests when they were kids. The kids who bullies the others. The scum who always wanted to live on other people’s hard working money. They are really the scum of the earth.

  5. The Horrible Scott Morrison MP

    Housing affordability means finding ways to help young people borrow more money, not reducing house prices. Everyone who understands Scottenomics agrees.

    • This is true. This post also just confirms what we all knew already. Nobody cares about housing affordability. Especially not Gladys Bear a Jerk Me Hoff..

  6. Shock!! Politician makes vague comments about reform and then does nothing. State politicians, and Premier Gladys is a good example, will do nothing to amend the status quo: industry lobbyists threaten them and their party’s donations. When an economy is a ponzi, there is no reform.

    • Even when property developers are banned from giving money to New South Wales politicians! And even when NSW has an anti-corruption commission!

  7. Her reaction is to be expected. Women don’t have a head for money issues. She should let a man deal with it.

  8. One of the first things she said when made premier was she was going to address house prices. Just vote for Hanson.

  9. Fake money = fake politicians

    Our politicians are not working for us. Get rid of Central Banks.

  10. proofreadersMEMBER

    “Yes, it should be considered,” Mr Baird said.
    “Have I got a position yet on it? No I don’t”…

    Presumably, now that Baird has a banker’s hat on again, he knows the correct position? Channel ScoMo?

  11. proofreadersMEMBER

    Didn’t Gladys have Captain Glenn (a worthy contributor to housing inaffordability by severely cutting interest rates when captaining the RBA and simultaneously screwing savers) give the government advice on housing affordability? And that was ….? Pray more often?

  12. “Gladys Berejiklian took over from Mike Baird as Premier of NSW in January last year, replaced Rob Stokes as Planning Minister, and the protestations within the State Government over negative gearing ceased.”

    When do we stop looking to politicians for solutions when it’s obvious they have ulterior motives?