Industry leaders respond to Labor’s negative gearing pledge

Australian Labor Party (ALP) leader Anthony Albanese has this week pledged his party will not restrict negative gearing or increase capital gains tax if they win the next election, which could boost home ownership across the country.

Real Estate Institute of Australia (REIA), Property Council of Australia, the Housing Industry Association (HIA) and Master Builders Australia have commended the Federal Opposition Leader on the promise not to restrict negative gearing or increase capital gains tax.

The industry leaders explained the ALP’s decision to drop its previous approach to negative gearing and capital gains tax is a welcome recognition that these policies would have hurt the economy, cost construction jobs and had little impact on housing affordability.

Most noted ATO data that indicated 71 per cent of investors own just one investment property, 19 per cent own just two, and just 47 per cent of investors are women.

Real Estate Institute of Australia’s response

REIA President Adrian Kelly said households and small businesses need certainty, as 12 million Australians remain in lockdown.

“Many mum-and-dad investors have borne the brunt of the rental eviction moratoriums and stepped up to provide social and affordable housing through this period,” Mr Kelly said.

“The vast majority of property investors are everyday Australians looking to provide for their own retirements who are also instrumental in providing the rental accommodation that is needed by the 27 per cent of Australians who rent their home. 

“Continuing to support successful tax settings that encourage investment and has assisted investors throughout the COVID-19 pandemic is most welcome in a time of great uncertainty.”

Mr Kelly went on to explain REIA did not want CGT to become overly punitive, which would discourage households from ‘rightsizing’, especially as the Australian population ages.

“We thank the Opposition for taking on board the advice of the real estate industry as practitioners working at the coalface of property markets and welcome the commitment to keep negative gearing as it is; and not increase capital gains tax,” he said.

In 2019, REIA ran a major campaign about negative gearing and CGT that reached over 10 million property customers. Mr Kelly said REIA was renewing their commitment to axe taxes that impact on housing affordability. 

“It is time for State and Federal Governments to get rid of punitive stamp duty once and for all; and this will be our centrepiece to the Government’s recently announced parliamentary inquiry into housing supply led by Jason Falinski MP.” 

In addition to welcoming the pledge not to increase negative gearing, Mr Kelly also lauded the Opposition’s commitment to provide bi-partisan support of legislated tax cuts which put more money back into hip-pockets of everyday Australians and the economy.

Property Council of Australia’s response

Welcoming the ALP’s new position on negative gearing, the property Council noted Labor’s previous policy on would have reduced GDP by $15 billion, according to modelling from Deloitte Access Economics from 2019.

Property Council of Australia chief executive Ken Morrison suggested the former policy would also shrink the construction sector by $766 million, and fail to meet its stated objectives of improving housing affordability and increasing housing supply.

“The Opposition’s previous position on negative gearing and capital gains tax was always the wrong policy, at the wrong time, and voters at two elections knew it,” Mr Morrison said.

“Deloitte Access Economics’ comprehensive analysis showed that the policies would have failed the policy tests set out for it.

“We congratulate Opposition Leader Anthony Albanese, his Shadow Treasurer Jim Chalmers and Shadow Housing Minister Jason Clare for seeing sense and providing this certainty well in advance of an election.

“The vast majority of property investors are not rich property barons – they are everyday Australians looking to get ahead and providing the rental accommodation that is needed by the one-third of households who rent.

“This decision means that policy makers can focus on measures that will make a material difference to the pressing challenge of housing affordability and the Property Council looks forward to contributing to that focus,” Mr Morrison said.

Housing Institute of Australia’s response

HIA managing director Graham Wolfe agreed the move would provide certainty for the housing industry, as well as for all Australians interested in investing or renting.

“Private rental housing plays a critical role in Australia’s housing supply continuum. Without a reliable pool of residential investors across Australia, hundreds and thousands of households would find it harder to put a roof over their heads,” Mr Wolfe said.

“Australians need to have the ability to access affordable housing, whether as a renter or as an owner occupier.

“HIA looks forward to working with all political parties in the lead up to the next federal election to develop national policies that will promote housing supply, support home ownership and ensure those most in need of housing assistance are supported by government.”

Master Builders Australia response

Master Builders Australia CEO Denita Wawn said the announcement showed the Opposition’s recognition that new home building and increased home ownership was a vital component to economic recovery.

“With a federal election looming, the Opposition’s acknowledgement that restricting negative gearing and increasing capital gains tax would undermine housing supply, jobs and sabotage economic recovery is timely,” Ms Wawn said.

“We appreciate the efforts of the Shadow Minister for Housing and Homelessness, Jason Clare MP, to discuss this issue with Master Builders since the last federal election.

“Master Builders looks forward to continuing working with him to advance other policies that promote the accessibility of home ownership to all Australians and increase the supply of an appropriate mix of housing options, including social and affordable housing.”