Treasurer a “keen defender” of negative gearing
A flood of new data reaffirms the importance of negative gearing to the Australian economy, while Treasurer Scott Morrison promises not to do anything “crazy” with housing investment taxes.
Treasurer Scott Morrison has again hosed down speculation that the Turnbull Government will make wholesale changes to negative gearing rules.
Labelling himself a “keen defender” of negative gearing, Morrison told Macquarie Radio on Monday that he was “being very careful”.
Meanwhile, new official data debunks the myth that investors are crowding out housing markets.
The Australian Prudential Regulation Authority’s quarterly data on loan approvals, released last week, shows a continued rise in the value and share of loan approvals to owner-occupiers for the quarter to December 2015.
The share of new investor lending has dropped from 43 per cent to 29 per cent in the past six months. Total new lending to owner-occupiers rose from $55 billion to $69 billion over the same period.
“The official data illustrates that housing markets are balancing out – and claims that investors are swamping owner-occupiers are a furphy,” said the Property Council’s Chief of Policy and Housing Glenn Byres.
Byres also points to the surge in residential construction, with data released by the Australian Bureau of Statistics last week revealing the value of residential construction work increased 11.7 per cent in the past 12 months – climbing to $62.3 billion.
Byres says the data reiterates the “crucial role” housing construction plays in the Australian economy.
“It also underlines that we can’t afford risky interventions in housing markets through changes to negative gearing, which helps 1.2 million Australians invest in property and build prosperity.”
Speaking in Parliament last week, Prime Minister Malcolm Turnbull argued against the Opposition’s policy.
” (the) proposed changes to negative gearing, and indeed to capital gains tax, are absolutely calculated to undermine the value of every Australian family’s single most important asset. They are absolutely calculated to discourage investment in innovation, in technology, in businesses large and small. They would give Australia the highest capital gains tax of any comparable country, with the possible exception”further research has revealed”of Denmark,” he said.
“Apart from that, 37 per cent, in effect, capital gains tax is the highest of any comparable country, and this at a time when we want people to invest, we want them to take risks, we want them to have a go.”
A recent poll from LJ Hooker has found negative gearing will hurt Australians on modest incomes. A recent poll of 1700 investors with properties managed by the real estate agency has found more than a third (37 per cent) earned a combined household income under $100,000, while two thirds (67 per cent) had a household income of $1,000 or less.
LJ Hooker’s poll also found 31 per cent of investors would sell some or all of their portfolio if negative gearing was abolished or restricted.
LJ Hooker’s chief executive officer, Grant Harrod, says it’s “important to remember investors play an important role in the evolution and shaping of the Australian property market; they boost stock and provide much needed rental accommodation, with a reasonable portion of stock addressing social housing needs.
“Changes to negative gearing arrangements could see a significant demand on both state and federal governments to fund increased public housing requirements,” Harrod warns.
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