Negative gearing: the debate that won't go away

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Jan 27, 2017

Negative gearing: the debate that won't go away

Housing affordability is becoming a "moral issue" that the government must tackle with a complete and apolitical debate that includes negative gearing, say growing numbers of the coalition.

Image: The Courier Mail.

MP John Alexander.

Should the government be incentivising investors to buy unlimited numbers of properties, while first-home buyers can't get a foothold in the market?

This is the debate that won't go away, as house prices on the east coast ratchet higher, and the percentage of first-home buyers in the market languishes at historic lows. Investor demand, on the other hand, is strong.

From the electorate's point of view, Labor's election pitch to slash negative gearing is the only serious government policy designed to combat housing affordability.

Malcolm Turnbull reiterated his election stance this morning on radio 3AW, saying the only way to improve housing affordability is to increase supply.

But new supply has been coming onstream in record numbers, and affordability has continued to deteriorate.

Sydney Liberal MP John Alexander, who chaired a government inquiry into home ownership, told The Australian there needs to be a debate on negative gearing to make sure the government is employing the best policies.

Alexander proposes that tax concessions could be adjusted, rather than eliminated altogether.

“It is not saying negative gearing is in or out, it is saying that it’s a very dynamic tool that could be very finely calibrated," Alexander told The Australian.

The member for Canning, Andrew Hastie, said housing affordability is a “moral issue” that is threatening the fabric of society. He said the government needs to examine the situation carefully, to understand exactly what the problems are. He told The Australian, "if that (the problem) includes negative gearing then we should make changes.”