The Opposition’s changes to negative gearing and increases to capital gains tax featured strongly in the last federal election campaign.
Oddly, those issues don’t feature quite as strongly in the recently-released review of Labor’s election campaign performance. Anthony Albanese says there is more to come on future policy directions, but there are three key lessons from the election that the Opposition is in danger of getting completely wrong when it comes to negative gearing and property.
The first is about the policy. Labor’s policy wouldn’t have delivered on their stated objectives of supporting housing affordability or boosting new supply, and would have hurt the economy. Economic modelling we commissioned from Deloitte Access Economics showed the policy would have reduced GDP by $1.5 billion and cost 7,800 construction jobs – an untenable proposition at a time when some of the best economic minds in the country are calling for more economic stimulus to sustain growth.
The second lesson is the misconception that owning an investment property is the preserve of the super-wealthy. The reality is that the overwhelming majority of investors who use negative gearing are on modest incomes (60 per cent have taxable incomes of $80,000 or less) and own just a single investment property (73 per cent). These are hardly rich property barons.
The third lesson Labor is at risk of overlooking is that negative gearing was an influential issue for many voters. Our post-election survey of non-Labor voters in 16 marginal seats found six per cent said they would have voted for Labor if it wasn’t for this policy, while a further 22 per cent said they would have considered voting for Labor. That’s an election-defining issue.
That’s abundant evidence that this was the wrong policy at the wrong time. Yet the issue remains in Labor’s policy twilight zone, with the Opposition yet to rule it in or out. Time to make the right call.