Scare campaign being run by the negative gearing lobby
The campaigns arguments (for continuing huge rorting by the well-off)....
1. Property is vital to jobs
Not only is property Australia’s biggest industry, it’s one of the few sectors of the economy in a growth phase. It makes up one ninth of Australia’s GDP and employs 1.1 million workers.
Putting a brake on the property industry right now is slightly south of crazy. The construction of a typical house uses up to 40 tradies and subbies. That’s a lot of jobs that depend on investment in housing.
Yes, housing construction does create jobs - and that's the point, negative gearing of housing
is almost exclusively claimed for pre-existing
housing, not new builds. Recycling the same house back and forth many times while claiming a fat tax deduction does not require 4 tradies, let alone 40. This argument obfuscates the point.
2. Our population just hit 24 million
Australia is growing – and faster than we thought. We’ve already got a housing supply crisis. Do we really want to make it worse by taking away the incentives to invest in housing? Just over one quarter of new dwelling construction is financed by investors each year. Fooling around with negative gearing could see investment grind to a halt.
We don't really have a housing supply crisis, we have affordability issues - in part created by negative gearing. The above paragraph attempts to blur the issues at hand by conflating investors who do build with the NG claims which are made almost entirely on pre-existing. The article doesn't say exactly which investors it's talking about - foreign investors who cannot legally claim NG have become yet another issue in Sydney and Melbourne. Buying existing livable houses/units, knocking them down and then re-building on the same site may create some building work but does nothing for supply. In fact, some apartment complexes owned by well-heeled foreigners appear to be kept empty, recording no water or electricity usage. Knocking down an existing dwelling, re-building on the same site and then not renting them out so they remain in "pristine" condition and retain maximum resale value does not merely not add to supply - it actually takes some away. The FIRB finally appears to have done something about this (can't find the link at present). But none of this has anything to do with NG - this argument merely obfuscates the point.
It even further attempts to obfuscate the point by trying to misdirect attention away from the fact that Labor's proposal is that NG still be claimable on new builds. This makes sense - if the policy as it currently stands is costing enormous sums of money but having little to no positive effect on supply, then adjust the way the policy is applied so that it does. The policy then becomes beneficial to the country at large rather than the simple tax shelter for the rich that it currently is. Sounds like a good proposal to me. But the NG lobby appears to be suggesting that it will be scrapped altogether, which is garbage. Pure scare tactics.
3. It’s been around 100 years
That’s right – 100 years we’ve had negative gearing. Politicians from all parties are floating changes to negative gearing. They can’t resist the temptation to tinker with something that is working well.
Playing with negative gearing means changing how, why, where and when people invest. When our politicians make changes, things invariably get more complex and more expensive.
Yes it has been around for a long time. But the effect it has will depend upon what is happening in the present and how it interacts with present-day policies and situations, which are always changing and evolving. It wasn't so long ago that most landlords turned a profit and the majority built their investment homes - todays situation has stood that on it's head. So it is indeed working well - as a tax dodge for those at the top with harmful side-effects for those lower down. So the reply to "It's been around for 100 years" is: yes - but so what? This argument obfuscates the point.
4. Over two million renters don’t know what will happen
Australia has 2.3 million renters. Take away negative gearing and landlords may need to make up their losses through higher rents.
Not only that, if you take away negative gearing, the impact on the rental property market could be profound. Supply might be hit in different ways from city to city, or it could be nation-wide.
The fact is those people tinkering with it simply don’t know what will happen.
Now this one is really blatant - there has been no proposal to remove existing arrangement and the property lobby knows this. Insinuating that millions of renters will be slugged with rental hikes is a simple, outright lie. This argument does not merely obfuscate the point, it is pure bullshit. It then goes on to speculate on the possibility some dark consequences which it does not identify but sound scary nonetheless.
5. We need more people funding their own retirement, not less
Consider this : 840 000 Australians on less than $80 000 are planning their future using negative gearing. That includes 53,800 teachers, 35,900 nurses, 22,600 hospitality workers and 10,400 police and emergency services workers. That’s an awful lot of mums and dads. Knocking over the plans of these people is no small thing.
These folk are just like you – not rich, but trying to do the right thing and build an investment for a rainy day.
Isn’t it better to have more self-funded people in retirement not less?
This argument is simple horse shit - the vast majority of those who claim negative gearing are NOT ordinary income earners. BIL and family have recently been forced to move back here from the Sunshine coast since their tenents vacated their house in Calliope with the end of the construction boom. They say they cannot afford to live down there and pay the mortgage on an empty house here. He works in the mines and so is on good money. She is a mortgage broker and would know all the lurks and perks but they cannot afford the upfront losses of waiting to make a NG claim. So if these people can't afford it - exactly who is it who is claiming these vast sums? Here is the very crux of the NG issue itself - people with average to very small taxable incomes are shown by the tax office stats to be claiming NG, often on property portfolios worth millions. People who even the dodgiest of lenders would never lend that much to and law-abiding lenders would not lend to at all. The keyword here is TAXABLE income - these people are generally high-income earners who have used NG to reduce their taxable income, sometimes to almost nothing.
That is an absolute rort of the system, one with harmful side-effects for the next generation in particular. The NG lobby's whole argument is simply about blurring this fact as much as possible so the rich can keep their massive tax dodge. Fuck 'em! It's time for it to go!