‘No plan to review’ negative gearing: Malcolm Turnbull

Mar 06, 2017
The Turnbull government has slammed the door on a push by the NSW Liberal government to place curbs on negative gearing by telling it to focus on its responsibility to free up land.

In a major shake-up ahead of a meeting next Friday of state and federal treasurers on housing affordability, NSW Planning Minister Rob Stokes has urged the federal government to rethink its opposition to curbing negative gearing and capital gains tax deductions for investors.

This brings NSW into line with the Labor states who issued the same call a month ago after Treasurer Scott Morrison called on the states to boost housing supply by freeing up more land for housing.

The federal government now faces a united push from all the mainland states as well as federal Labor

In a speech to be delivered today, Mr Stokes will argue the boosting housing supply alone will not make Sydney homes more affordable and the federal government should reconsider its opposition to negative gearing.

“It’s time for a real debate about the policies, outside of supply, that governments at all levels can do to help provide greater opportunity for people to buy homes,” he will say.

NSW was prepared to discuss tax reform, but the federal government’s opposition to Labor’s push for reforms to negative gearing and capital gains tax deductions on investment property sales meant it didn’t happen, he said in the speech.

“Disappointingly our leadership on this issue fell victim to the Canberra culture that promotes opposition over consensus.”

‘No plan to review the policy’

Prime Minister Malcolm Turnbull told Melbourne radio 3AW “we haven’t got any plan to review the policy we took to the election”.

He insisted housing affordability was “overwhelmingly a question of supply” and that was the area in which the Commonwealth wanted to work with the states.

Finance Minster Mathias Cormann one of several minsters to hit the airwaves to push back at NSW, told Mr Stokes to stick to his day job which was about boosting supply.

“Rob Stokes should focus on his job as planning minister,” Senator Cormann told Sky News.

“The NSW government is in the driver’s seat.”

Senator Cormann said the government had promised before the election not to touch either tax and it would not be breaking that promise.

Treasurer Scott Morrison said demand was a problem but the APRA changes introduced two years ago to limit borrowing for investors had seen the practice more than halved.

“This was a significant change that got the result it was looking for and really did address the issue of overheated investor demand in the housing market. So, housing is a complicated issue,” he said.

Mr Morrison said Mr Stokes was focussed on the Sydney market but Mr Morrison had to be focussed n the whole nation.

“As federal Treasurer, I need to look at policies and how they impact right across the country. So what might help in Pittwater may not help in Tasmania,’ he said.

“In fact, it could actually have a negative impact because there is no one single housing market.”

‘Why doesn’t he join Labor’

Mr Stokes received a tongue lashing from former Liberal minster Peter Reith who called him a lone voice and said if he felt so strongly about negative gearing, “why doesn’t he join the Labor Party”.

Only recently, however, Mr Reith had argued that Labor had not been punished for taking negative gearing and CGT to the election and the Turnbull government should rethink ts policy.

Initially, Mr Morrison was keen to curb the excesses of negative gearing but lost the internal policy debate.

Federal Labor has leapt on Mr Stokes’ speech as vindication of its policies which would limit negative gearing to new homes only for new investors, and halve the 50 per cent CGT deduction for investors.

Mr Stokes said private and institutional investment should be encouraged in affordable rental housing.

“Why should you get a tax deduction on the ownership of a multimillion-dollar holiday home that does nothing to improve supply where it’s needed?” he said.

“We should promote investment in the type of housing that is needed to by the burgeoning populations in cities like Sydney.”

Last month, Mr Morrison put housing affordability on the agenda at next week’s meeting and he flagged incentives in return for addressing such issues as complex land planning and development regulation; insufficient land release; the planning, cost and availability of infrastructure provision; transaction and betterment taxes; public attitudes towards urban infill; and, for Sydney in particular, physical geographic constraints.

He told reporters that the incentives would be incorporated into the Hilmer-style competition payments he wants to reinstitute for states that adopt reforms recommended by the Harper review into competition.

Source: AFR

Want to find out how we can help?

Understand your options, schedule an appraisal today.

Schedule Now