- Labor party says it will not change negative gearing or cpaital gains if elected
- Proposed changes to negative gearing contributed to Labor's loss during 2019
- MBA and UDIA has welcomed the news
The Labor Party has announced a raft of changes to its policies, most notably backing down from changing negative gearing and capital gains tax deductions for investors in light of the next election.
Proposed changes to negative gearing were deemed a major factor in the Bill Shorten-led Labor loss in 2019.
Additionally, if elected, the Labor has also agreed to leave stage three income tax cuts alone, which have already been legislated by the government.
“Labor is providing certainty and clarity to Australian working families after a difficult two years for our country and the world,” said leader Anthony Albanese and shadow treasurer Jim Chalmers in a statement.
“The Opposition Leader’s pledge that Labor will not restrict negative gearing or increase capital gains tax should they win government at the next federal election is good news for the building industry, the economy and the community,” Denita Wawn, CEO of Master Builders Australia said.
“This announcement shows the Opposition’s recognition that new home building and increasing home ownership is vital to economic recovery and people’s financial security.
Denita Wawn, Masters Buidlers Australia
“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 added that she appreciated the effort of Jason Clare MP, the Shadow Minister for Housing and Homelessness, who discussed the tax issue since the last election.
“Master Builders looks forward to continuing working with him to advance other policies that promote the accessibility of homeownership to all Australians and increase the supply of an appropriate mix of housing options, including social and affordable housing,” she added.
UDIA welcomes commitment; calls for increased supply
The Urban Development Institute of Australia (UDIA) has also welcomed Labor’s commitment to leave the arrangement untouched.
“The economy needs stimulus and certainty right now, so Labor’s decision to ditch its prior plans for negative gearing and capital gains tax discounts is correct,” said UDIA National President, Simon Basheer.
“Full credit to the Opposition for being willing to adjust its policies and recognise that investors have a crucial role to play in sustaining the vast bulk of the nation’s rental market.
“The policy stability now on offer will be a boost to the housing and construction sector, which has been so crucial to sustaining Australian jobs and wages through the economic downturn from COVID-19.”
Mr Basheer added that negative gearing “was always a straw man in the debate about housing affordability” due to no serious modelling supporting the argument that’s its abolition would significantly decrease drop house prices.
“It has been part of the tax system for over 100 years, so the idea it is responsible for any recent jump in house prices was well wide of the mark.
Simon Basheer, UDIA
He added that now a consensus had been reached concerning negative gearing and the capital gains tax discount, attention should be focused on other housing affordability woes.
“Poor strategic planning, deficient land supply, inefficient planning systems and excessive state and local property taxes should be prioritised for reform,” he said.
“Ultimately, until we get a better balance between supply and demand and act to reduce the cost of new housing, the dream of home ownership will remain challenged.”