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Labor says Treasury document shows negative gearing claims ‘outright lies’ Labor says Treasury document shows negative gearing claims ‘outright lies’
(about 2 hours later)
Labor has released a Treasury document that states its negative gearing policies could cut house prices in the short term but, over time, the impact will be “relatively modest”.Labor has released a Treasury document that states its negative gearing policies could cut house prices in the short term but, over time, the impact will be “relatively modest”.
The opposition has seized on the advice to government, released under freedom of information, as proof the Coalition exaggerated claims that changing the tax treatment of property would be a “sledgehammer” to the economy.The opposition has seized on the advice to government, released under freedom of information, as proof the Coalition exaggerated claims that changing the tax treatment of property would be a “sledgehammer” to the economy.
Before the 2016 election Labor promised to restrict negative gearing to new homes and reduce the capital gains concessions from 50% to 25%.Before the 2016 election Labor promised to restrict negative gearing to new homes and reduce the capital gains concessions from 50% to 25%.
The Treasury analysis from 2016 contains a table showing the expected impact of Labor’s policy on various asset types. It concludes that, for residential investment properties and owner-occupied housing, the policy “could introduce some downward pressure on property prices in the short term”.The Treasury analysis from 2016 contains a table showing the expected impact of Labor’s policy on various asset types. It concludes that, for residential investment properties and owner-occupied housing, the policy “could introduce some downward pressure on property prices in the short term”.
“In the long term, increases in taxation on rental property could have a relatively modest downward impact on property prices,” it said.“In the long term, increases in taxation on rental property could have a relatively modest downward impact on property prices,” it said.
The document notes that “returns for Australian investors will fall under the policy” but owner-occupiers would be unaffected, limiting the impact on property prices.The document notes that “returns for Australian investors will fall under the policy” but owner-occupiers would be unaffected, limiting the impact on property prices.
It said that changes to negative gearing from 1985 to 1987 and the introduction of the CGT discount in 1999 “had little discernible impact on the market”.It said that changes to negative gearing from 1985 to 1987 and the introduction of the CGT discount in 1999 “had little discernible impact on the market”.
“Overall, price changes are likely to be small, though the composition of ownership may shift away from domestic investors.”“Overall, price changes are likely to be small, though the composition of ownership may shift away from domestic investors.”
The document, which is heavily redacted, states the table was created after a “request for information” and includes talking points to describe the impact of Labor’s policy on a police officer earning $90,000.The document, which is heavily redacted, states the table was created after a “request for information” and includes talking points to describe the impact of Labor’s policy on a police officer earning $90,000.
The document also confirms distributional modelling of Labor’s policies stating that more than 50% of the benefits of negative gearing go to the top 20% of income earners, while the top 10% of income earners receive nearly 75% of the benefit of the capital gains tax discount.The document also confirms distributional modelling of Labor’s policies stating that more than 50% of the benefits of negative gearing go to the top 20% of income earners, while the top 10% of income earners receive nearly 75% of the benefit of the capital gains tax discount.
The treasurer, Scott Morrison, responded to Labor’s policies with claims the package would “crash” confidence in the economy, while Malcolm Turnbull said it amounted to taking a “sledgehammer” to the property market.The treasurer, Scott Morrison, responded to Labor’s policies with claims the package would “crash” confidence in the economy, while Malcolm Turnbull said it amounted to taking a “sledgehammer” to the property market.
The shadow treasurer, Chris Bowen, said the document, which the Australian information commissioner ordered be released, “directly refutes” the Liberals’ “overblown attack on Labor’s housing affordability policies”.The shadow treasurer, Chris Bowen, said the document, which the Australian information commissioner ordered be released, “directly refutes” the Liberals’ “overblown attack on Labor’s housing affordability policies”.
He said it was clear the criticisms were “little more than outright lies”.He said it was clear the criticisms were “little more than outright lies”.
“Scott Morrison loves to selectively leak Treasury advice when it suits him and yet this critical advice was withheld for almost two years.”“Scott Morrison loves to selectively leak Treasury advice when it suits him and yet this critical advice was withheld for almost two years.”
Bowen noted that cabinet had considered changes to rein in the “excesses” of negative gearing but Turnbull ruled them out after Labor released its policy, a commitment he renewed in 2017.Bowen noted that cabinet had considered changes to rein in the “excesses” of negative gearing but Turnbull ruled them out after Labor released its policy, a commitment he renewed in 2017.
“Labor is the only major party with a set of housing affordability policies which will help level the playing field between first home buyers and property investors,” Bowen said.“Labor is the only major party with a set of housing affordability policies which will help level the playing field between first home buyers and property investors,” Bowen said.
The acting treasurer, Kelly O’Dwyer, told ABC’s AM the document “confirms what we have been saying all along: [Labor’s policy] would have a disastrous impact when combined with a weaker housing market”.
She cited a passage in the document that uncertainty around the policy “could compound upon a cyclical downturn that may be under way”.
O’Dwyer maintained Labor’s policy would have a “significant impact” on the housing market, citing “broader advice” to government on the issue but refused to give a specific source for the claim.