Right now, two versions of the great Australian dream are being debated.
I believe the great Australian dream is families having the chance to own a home.
Mr Turnbull’s Liberals seem to think it means owning your sixth or seventh investment property.
Anyone who's been to an auction recently knows how tough it is. Australians looking to buy their first home are competing with dozens of property speculators, including cashed-up investors from overseas.
Labor wants to level the playing field for families looking to buy their first home.
The Prime Minister promised ‘new economic leadership’ and ‘a new respect the intelligence of the Australian people,’ but the Turnbull-Morrison scare campaign against Labor’s plan for housing affordability has been loud, long and full of misinformation.
The Liberals have said a lot of different things about Labor’s policy in the last week but almost none of it has been accurate.
Labor is always happy to talk about our plans for fair budget repair, for funding health and education, for making sure our tax system works for all Australians.
We are proud of our plan to put home ownership back in reach of working and middle class families who have been priced out of the market for too long.
So let’s have an honest economic debate based on facts, not fearmongering.
It’s time to tackle the three big scares the government has been peddling for three weeks – and put some facts on the table.
Scare Number One:
“Two-thirds of those who engage in negative gearing have a taxable income of $80,000 or less.”
- Scott Morrison
Firstly, Labor’s changes do not come in until July 2017 and they are not retrospective, no-one will be caught high and dry. The Liberals have repeatedly refused to rule out making retrospective changes to negative gearing.
Under our plan, any Mum and Dad investor who already owns a property that is negatively geared will not be affected.
Secondly, negative gearing and the capital gains tax discount are not equity measures, or tax benefits for battlers.
The key words in the quote from Scott Morrison are ‘taxable income’.
64,000 Australians have used negatively geared property to eliminate their taxable income to zero.
These Australians with property portfolios are not earning zero dollars, they are just not paying any income tax.
64,000 Australians who can afford investment properties currently pay less income tax than three million low paid Australians in the lowest tax bracket.
Don’t let anyone tell you the benefits of this tax subsidy are fairly shared.
More than half of the benefit of the capital gains discount and negative gearing goes to the top 10 per cent of income earners, people earning over $110,000 per year.
Scare Number Two:
“Vote Labor and see your house price go down”.
- Malcolm Turnbull
The Prime Minister has kept dialling up the volume on this one, but he doesn’t have any evidence to back it up.
Professor Richard Holden from the University of New South Wales has said our policy was unlikely to have “a material impact on house prices.”
ANU Associate Professor Ben Phillips, who undertook independent modelling of Labor’s policy, has said: “we would expect house price growth”.
Scare Number Three:
“From 1 July 2017, no investor could safely buy residential property in Australia if the Labor Government introduces its policy…
…It drives all investors out of the market”
- Malcolm Turnbull
This is embarrassing hyperbole from the Prime Minister, he has got his basic facts wrong.
Not every investor is negatively gearing their investments, in fact one third of investors are earning more in rent than they pay in expenses.
And, as experts from the Treasury have said:
“investor behaviour is not driven by tax treatment…investors make decisions based on a whole range of factors”
So let’s not have any more baseless scares about the end of real estate investment.
Labor’s reforms to negative gearing and capital gains tax are overdue, sensible and fair.
Over time, they will make a substantial contribution to getting the budget back in the black and help level the playing field for working and middle class families looking for their first home.
It is time for Australia to close loopholes that give taxpayer subsidies to speculators who don’t need extra assistance.
This is the right thing to do, for our budget, for first-home buyers, for renters and for the future of health and education in this country.
Forget the scare campaign, remember the facts.
Let’s keep the Australian dream alive.
This opinion piece was first published in the Daily Telegraph on Thursday, 3 March 2016