Coalition confirms negative gearing certainty for investors

The Turnbull Government has ruled out any changes to negative gearing tax concessions in the May Budget, with Treasurer Scott Morrison arguing that negative gearing was vital to ensuring investment in housing.

Speaking at a press conference over the weekend, Prime Minister Malcolm Turnbull gave an iron clad commitment not to change negative gearing in the Budget.

Mr Turnbull said that negative gearing was a vital tool in encouraging investment in housing. “The key to improving housing affordability is more dwellings, houses and apartments.”

The Prime Minister also reiterated the Government’s commitment to restore the Australian Building and Construction Commission to watch over the construction industry. “Restoring the Australian Building and Construction Commission will mean that we will see the rule of law once again applying to the building industry because that lawlessness on building sites has been another very big brake on construction. It has added, according to the construction sector, 30 per cent and more to the cost of construction.

The Treasurer Scott Morrison highlighted the importance of ‘mum and dad investors’ to the property industry and warned against changing negative gearing.

“The overwhelming majority – some two thirds of people who are engaged in the sort of investments that we see here – are people on incomes of less than $80,000 per year. It’s nurses, it’s teachers, it’s police officers, it is certainly plumbers, and these are the people who engage in investing in property for their own future.

“What we have to do is ensure that there continues to be mum and dad investors who are out there willing to invest, ensuring there are rental properties that people can rent,” said Mr Morrison.

Property Council chief executive Ken Morrison has welcomed the Turnbull Government’s announcement, which he says is “doing the right thing by the 1.2 million Australians who negative gear”, including more than 770,000 Australians who have taxable incomes of less than $80,000 a year.

On Monday, the Grattan Institute launched a more aggressive attack on negative gearing and capital gains tax. The Institute’s new report, Hot property, recommends slashing the capital gains tax discount from to 25 per cent, and that negatively geared investors should no longer be allowed to deduct losses on their investments from labour income.

The report recommends phasing in the reforms to “prevent a rush of investors selling property”, but would include no grandfathering clause.

The Prime Minister has criticised the paper for being “littered with factually incorrect statements” and an economic analysis that “leaves a lot to be desired”, while Ken Morrison says the Grattan Institute’s proposal would represent a retrospective hit on property investors.

Meanwhile, the Australian Bureau of Statistics released new data that shows that property taxes have risen by 10 per cent in a year to $45 billion.

“The Grattan recipe will result in less investment in housing, higher rents and less jobs in the property industry. Tens of billions in new taxes is the wrong recipe for an economy in transition,” Ken Morrison concludes.