Govt lied about neg gearing
Advice that didn’t suit was withheld
CLAIMS by Malcolm Turnbull and Scott Morrison that Labor’s negative gearing policies would “smash” the housing market have been contradicted by official documents kept secret for almost two years.
Labor has accused the Prime Minister, the Treasurer and other senior ministers of lying when they claimed the party’s policies would take a “sledgehammer” to the housing market or bring it to a “shuddering halt”.
It comes after documents obtained by the ABC under Freedom of Information revealed Treasury officials had provided advice to Treasurer Morrison that Labor’s plan would have a “relatively modest downward impact” on housing prices, rather than causing prices to plummet.
The department had refused to provide the information since June 2016, but was ordered to release it last month by the Australian Information Commissioner.
In the documents, Treasury officials advised that changes to negative gearing in the 1980s and the introduction of the capital gains tax discount in the 1990s had “little discernible impact on the market”.
Further changes would have a “small” impact on house prices but might shift the composition of ownership away from domestic investors.
Labor’s policy was to limit negative gearing to new housing from July 2017 and halve the capital gains discount for all assets bought after that date.
It argued negative gearing and the capital gains discount had not achieved their aim of boosting housing supply and had become “unaffordable” for the budget while chiefly benefiting the wealthy.
The ABC reports Treasury provided advice to government in early 2016 that the biggest impact on housing prices would come from “uncertainty arising from the policy change itself” and any downturn under way at the time would make the impact worse.
Officials also said Labor’s plan to raise taxes on other assets could lead to Australians increasing their investment in owneroccupied housing, which would “tend to counter any downward pressure on prices arising out of the rental market”.
Shadow treasurer Chris Bowen said Mr Turnbull and Mr Morrison must explain why they spent almost two years trying to stop the documents’ release.
He said the Treasury advice showed the Coalition’s “overblown attack” on Labor’s housing policies were “little more than outright lies”.
In early 2016, Mr Turnbull said Labor’s policy would be a “big sledgehammer” to the property market.
But there are fresh warnings about the Opposition’s housing affordability policies.
In a statement after the release of the Treasury advice, Property Council chief Ken Morrison warned rents would rise as a result of Labor’s proposed negative gearing overhaul.
“We believe lower returns from investment properties would mean less investment, a tighter market and therefore upwards pressure on rental prices,” he said.
“Domestic investors could also seek to recoup losses in tax benefits through higher rents.”
Revenue and Financial Services Minister Kelly O’Dwyer told the ABC the Treasury advice “confirms what we have been saying all along, that if you increase capital gains tax by 50 per cent, if you remove negative gearing, it would have a disastrous impact when combined with weakness in the housing market”.