• Where do Australia’s political parties stand on changing negative gearing?

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    Where Do Australia's Federal Political Parties Stand On Negative Gearing?|What About WA?

    One of the biggest talking points of the upcoming federal election is the issue of housing taxes.

    The Australian Labor Party (ALP) has made their intentions clear. If elected, they will limit negative gearing to new housing from 1 January 2020. This means only those who purchase new-build investment properties will be able to utilise this tax arrangement to off-set their losses. They also intend to increase capital gains tax (CGT).

    The current Coalition Government are opposed to changing negative gearing and plan to leave housing taxes alone if re-elected.

    But this issue extends beyond the two major parties. REIWA has been very vocal in advocating for no changes to national property taxes, specifically negative gearing and CGT, and a clear line in the sand has been drawn between those political parties who want to meddle with housing taxes and those that don’t.

    Who wants to change negative gearing?

    ALP
    When quizzed about his party’s plans to change negative gearing on ABC’s Q&A program recently, Opposition Leader Bill Shorten said this would remove unfair subsidies that were no longer needed.

    "In other words, you can still keep claiming a loss and claiming credits for the loss you make on your property investment if that's what you currently do. What we're saying is on January 1 in 2020, new purchases of existing housing won't be able to claim a Government subsidy,” Mr Shorten said.

    The Greens
    As part of their Affordable Housing plan, The Greens have committed to “dismantling the rigged system that unfairly privileges investors and landlords.”

    The Greens claim that “unfair investment rules for wealthy people” have locked generations of Australians out of a place to call home.

    Who has committed to leaving property taxes alone?

    Liberal National Party
    The Morrison Government has pledged to stop Labor’s housing tax, if re-elected.

    “Labor’s negative gearing changes and higher capital gains tax will hurt mum and dad investors. With property values already declining, Labor’s changes will lower values for all home owners.”

    Nationals Party of Australia
    The Nationals Party has committed to leaving property taxes alone.

    In a letter to REIWA President Damian Collins supporting the Institute’s ‘What about WA?’ campaign, Nationals WA Senator Nick Fardell said he would continue his party’s fight for the people of WA on a national scale if elected to federal parliament.

    “I will campaign for no changes to negative gearing which would have a devastating impact on WA’s real estate market if introduced under Labor,” Mr Fardell said.

    United Australia Party
    Party Leader Clive Palmer told the Australian Financial Review he “flatly ruled out” supporting any changes to negative gearing and CGT if he or any members of his party succeed in winning Senate seats.

    “There are a lot of people who have worked hard all their lives and are now self-funded retirees. They won't be self-funded retirees after this,” Mr Palmer said about the ALP’s proposed changes.

    Western Australia Party
    Party leader Julie Matheson came out in strong opposition against the proposed changes to negative gearing, stating they would cause rent to rise and put further stress on the housing market.

    “Without this incentive, there will be a reduction in investors interested in owning rental properties and as such, a reduction in available properties. People rent for many reasons. Many don’t want to buy. If there is a reduction in rental housing stock, the government will either have to step in and provide the rental accommodation themselves or reverse the decision to attract back the private landlords.

    “The Western Australia Party supports negative gearing in its current form and recommends the government look to other tax reform like abolishing stamp duty to make homes more affordable in Western Australia and other states,” Ms Matheson said.

    Liberal Democrats
    The Liberal Democrats have ruled out supporting any changes to negative gearing.

    As part of their ‘Make Housing Affordable Again’ plan, the party have stated that the “removal of negative gearing and rent controls do nothing to increase the overall supply of housing.”

    “If the major parties cared about housing affordability, they'd start by no longer taxing housing.”


    Why Messing With Negative Gearing Is Reckless!What About WA?

    Why messing with negative gearing is reckless

    Meddling with one component of a broad, complicated tax-system is reckless and a huge concern for the WA property market, and indeed wider country.

    When negative gearing was removed in the 1980s, the fall-out was so great that it was re-introduced just two years after it was removed.

    Those who favour changing negative gearing and CGT believe this will make housing more affordable. They purport the myth that Australian investors are wealthy mogul types, using this tax to prop up their already very comfortable financial position. This couldn’t be further from the truth.

    Research shows that the majority of investors in WA are ‘mum and dad’ types, who own an average of 1.4 investment properties. They’re using property investment as a means to secure their future and negative gearing allows them to offset the expenses incurred from owning the rental.

    Changing negative gearing is not going to make housing more affordable, it’s simply going to make property investment less affordable, deterring investors from the market.

    With less investors in the market there will be less available rental stock. Property investors play a vital role in helping keep the rental market affordable and accessible. Less rental stock means rent prices will rise (as they did in the 80s) making housing less affordable – which is in direct opposition to the ALP and Greens’ reasons for implementing this change.

    For more information about REIWA’s federal election campaign or to have your say on this issue, visit whataboutwa.com.au.

    Authorised by N. Pozzi. Real Estate Institute of Western Australia, Perth.