He promised informed economic debate.
But today, Prime Minister Malcolm Turnbull’s credibility in delivering much needed economic debate evaporated, as he launched a massive scare campaign claiming Labor’s negative gearing policy would result in house prices being “smashed”.
After some debate over the past month, Turnbull has backed away from increasing the GST to 15 per cent claiming it would contribute very little to economic growth, “After you take into account all of the compensation that you would need to ensure the change was equitable, it simply is not justified in economic terms.”
But he had left other reforms on the table including changes to negative gearing. It was understood, Treasury was preparing modeling on various changes to the sacred cow.
But with no clear policies from Turnbull, Labor seized the moment last Sunday, announcing bold changes to negative gearing and the fifty percent capital gains discount, throwing Australia’s severe housing affordability at the forefront of the next election.
If labor wins the next election, it will quarantine negative gearing to new homes only, from July 2017. Additionally, it would cut the capital gains discount from 50 percent to 25 per cent.
» Independent modelling backs Labor’s negative gearing policy – The Sydney Morning Herald, 19th February 2016.
» Labor’s negative gearing reform proposal is economically responsible and fair – The Guardian, 19th February 2016.
Smart move by Shorten. Can’t believe it, but he’s speaking more sense than the conservatives ATM.
First on not raising GST.
Now on saying that the tax laws have over stimulated investment in the housing sector, Australia needs investment in BUSINESS that will create/add jobs…. Unbelievable, best thing I’ve heard from a pollie in quite some time.
Turnbull’s smugness may get another test while leader. Last time it cost him his job….Time will tell.
I know Matty. Hard to believe Liberals are crumbling around us, only a month ago I would have been sure Malcolm would have provided stable government for years to come.
Now tonight, Liberals are expecting to lose 10 seats and are seriously talking of a snap election.
I think highly geared property investors would be sh*tting themselves. We could actually see negative gearing go next year.
Turn of the bull is mini me at the moment. I wonder, if or when Shorten is given the relay baton, he will reside in Kiribili House or point of the piper.
To be fair to Malcolm and ScoMo lets wait and see if they actually offer an alternative strategy to reduce the destructive effects of Negative Gearing.
However if he and ScoMo offer no significant changes and simply run a scare campaign then they are nothing but morally bankrupt lying bastards and not fit to hold office.
Turnbull is admitting that negative gearing makes houses more expensive.
Even without changes to negative gearing we could still see house prices ‘smashed’ as the economy slows and economic mismanagement (no management more like) comes home to roost.
I still can’t trust Shorten for the shenanigans he pulled when Labor were last in Government and I think the Liberals are dickheads so I might vote Greens as they too have a negative gearing policy and were first to talk about it.
Of course, crap radio stations like 3AW have jumped on the “Rents will soar” bandwagon of spurious future predictions as they try to convince themselves that “renters” are the enemy within and all renters should support the greed and avarice of the investors otherwise they will be punished severely.
I’m so over the industry, media and the government in this country always resorting to scare tactics over job loss to cost of living. Absolute neanderthals running everything.
Negative gearing is the cause of the bubble, pollies are heavily invested in property themselves they should all be disbanded and investigated like Auburn City Council.
Shorten has probably realised that there is a younger generation of new voters who are looking at renting all their lives from greedy fools who falsely claim success in the name of Capitalist greed whilst the whole time they are nothing but middle-class welfare recipients no better than dole-bludgers with a false sense of entitlement. The new generations will just vote out those who are keeping the ponzi scheme going.
@Bubby
That’s a brilliant way of expressing it.
I am still trying to imagine how many negatively geared ‘investors’ will vote for the party that removes NG.
I think that if they wait until next year, the house price implosion may have already started.
It’s hard to pinpoint what it will be that starts the downturn but there are so many factors at play and none of them look good:
Employment levels
Wage-to-price ratio
Foreign buyers
NG
Foreign funding for credit
Bank stability
Commodities price
Recession
Mortgage insurer stability
(Feel free to add any I’ve missed).
And the biggest anchor on everything will always be the debt. I think it constitutes the single biggest risk and source of adverse impact in the scenario.
What can you expect from the Bankers’ Choice PM whose first law change was to shield large private corporations from tax disclosures. (It avoids embarrassment when they pay little or no taxes)
As the financial wellbeing of the banks and his high net worth buddies depends on continued inflation of real estate prices he will never encourage any changes which may endanger this. Follow the money trail to predict what the Turnbull Government will do next.
I have a feeling this one policy will decide the election. People will either be strongly for or against this as this single issue impacts everyone the most.
Everyone on property chat is bitching about it, hahah.
I’m surprised and quite happy that its no longer the elephant in the room. For years neither side would go near the subject for fear of backlash and I believe that for the most part they all wanted lots of support for property. Scott Morrison is now whinging that all his friends use it as well as lots of backbenchers.
Back when Rudd was around all he wanted to do was put the housing market on steroids with huge stimulus. Then when Gillard was in nobody would even talk about it. Debating gay marriage was more important apparently. So she only touched on the subject saying that removing it would cause a distortion so it was off the cards.
I believe there is a correction due anyway regardless of negative gearing. They are all 100% banking on price increases, but what percentage of people actually profit from property investment these days? I know there are plenty of stories from where people have done it an lost money. But not a single person going into it is of the belief there is any chance of losing money or they wouldn’t be doing it, they think its a safe bet like a term deposit or something. Its all this speculation which has caused a price movement, its also a positive feedback loop feeding on itself, until the cracks start to appear.
Most people on property chat are bitching about the 60 minutes trailer talking about the housing bubble. None of them believe a drop in prices is possible. I guess those are the people who will be swimming naked when the tide goes out. When a correction occurs they hold on to their properties for longer (believing that big losses are not possible) then it ends up being too late. And 70% of them are negatively geared so they will be holding a loss making asset as well as a depreciating asset.
Like what happened to the girl in Moranbah, she claims it happened to fast. But of course she never would have predicted it to drop, like most people, including the banks, mortgage brokers, everyone who supported the system that allowed people to purchase crap quality houses for $1m in the middle of nowhere.
Well suddenly we have come a long way I feel. This time last year, and years before it, it appeared NG property investing was indeed the sacred cow, and I would get despondent. I feel (and hope I am right), Turnbull will make some changes, and although may not be as much as I would like (I would love Shortens policy to go thru, but feel it wont have the legs), will demonstrate NG property investing is not the sacred cow people will argue. One step at a time. And slightly off topic, how do I get these property spruiking seminars recently turning up in my FaceBook newsfeed ! I have never visited these sights, in fact I visit the FB page of this forum, and DBN. Probably FB’s loopy algorithm at work I suspect. Anyway great news NG is now making front page news for more than one day like we have had to endure in the past !
And this is the way it should be stated – not that it (to paraphrase) “makes renting more affordable”. If negative gearing wasn’t allowed then investors wouldn’t bid prices up.
Most investors are not interested in giving their tenants the best deal. They’re not doing it out of the kindness of their heart. The rent is what they think people can afford and not a dollar less. They know that if the rent is too high then the renters will adjust – fit more people into a single dwelling, move back in with the parents or couch surf. Negative Gearing just allows them to out-bid home buyers.
It’s the faux “won’t someone think about the children” ploy that conservatives use whenever they’ve lost the argument.
It is obvious that NG has resulted in property prices being bid up to more than what can be afforded by the tenant (the rent to cover the costs of the investment) and the competing home buyer (the loan repayments). It forces people who would like to buy their own home to rent. Rent seekers need a captive market not a free market.
It is funny how on the comments on Negative Gearing articles the pro NG specufestors are crying foul and how unfair it is when they are providing housing to the nations renters. Did they ever stop and think how other nations such as Germany and the USA having healthy functioning rental markets without Negative Gearing??
I’ve never come across such selfish, narrow-minded, self-serving, uneducated muttonheads as I have among Australian politicians and the fools who elect these clowns. My rent is going up, yet again – and yet again the interests of the parasitical rent-seekers is seen as more valid than hard-working taxpayers who would love nothing more than to own their own home. This country is so up its own rectum, it’s no wonder anyone with any brains leaves to go overseas!
I have no sympathy for anyone who is over exposed to the property market.
They gambled and it looks like they will lose.
It’s not even taking away their current arrangements.
I’m sick of these ïnvestors” thinking they are being altruistic, when in reality they couldn’t afford a property without negative gearing or renters.
I don’t mind a taxpayer having 2 properties – anymore and it’s a business.
I feel sorry for those who have 1 homes (ppor) who “got in now before it was too late”.
I wonder how much properties will devalue in the coming 3 years?
How it will happen (from the political playbook): The bottom will drop out of the market and the LNP will blame Labour for ‘startling the horses’. While they shout at each other, the banks will walk off with a sack of cash from the taxpayers. With the deficits being massive, we will have no choice but to sell out power companies (like in WA), ports, airports, trains… anything at all, and with guarantees competition will be stifled.
Then we’ll go off and fight a war somewhere, or at least those who aren’t politicians will.
Turnbull has really let the cat out of the bag hasn’t he with “the possibility of house prices getting smashed” and with the “housing market being vulnerable”. i thought that the housing market was meant to be strong?????