Rebecca Gredley and Daniel McCulloch
(Australian Associated Press)
Treasurer Josh Frydenberg has come out all guns blazing against the federal opposition’s plan to abolish negative gearing.
The government on Wednesday released a study comparing tax data from 2015/16 against federal electorates, claiming Labor’s policy would hurt its supporters.
Some 1.3 million Australians negatively gear investment properties, with 640,000 living in coalition electorates and 570,000 in Labor-held seats.
Mr Frydenberg says house prices have come down over the past year across capital cities and banks are tightening their loans.
“Labor’s policy will make sure people who own their home will see the value of their home be less and if they rent their home, their rent will go up as a result,” he told 2GB radio on Wednesday.
“It’s exactly the worst time to smash the housing market.”
However, shadow treasurer Chris Bowen said the findings overlooked a critical fact about Labor’s negative gearing policy – it would not apply to existing investors, but to new builds.
“Those currently negative gearing properties across Australia will still be able to under Labor’s housing affordability reforms,” Mr Bowen said.
“Using this electorate data is nothing more than a hollow attempt to suggest these people will lose access to current tax concessions for those properties under Labor.”
Modelling released by the Australia Institute on Wednesday says high income earners in Liberal electorates were pocketing the majority of benefits from negative gearing.
“Younger Australians are the big losers from negative gearing,” the Australia Institute’s senior economist Matt Grudnoff said.
“It’s a double hit for the young with many being priced out of home ownership in part because of the very tax concessions they are mostly missing out on.”
Various economists have argued with the property market cooling, now is the best time to introduce Labor’s housing reforms, because its effect would be more muted.
The treasurer disagrees.
“It’s designed to smash house prices, that’s their policy,” Mr Frydenberg told Sky News.