It’s that time of an election year where Australia’s major political parties begin to show the policy cards they are holding in their hands.
Over the weekend we found out that one of these cards, at least for the Australian Labor Party, contains changes to negative gearing.
Speaking at the New South Wales ALP conference, federal opposition leader Bill Shorten said Labor’s proposed changes to negative gearing will “put the great Australian dream back within reach for the middle and working class”.
If elected, Shorten said the Labor Party will moved to restrict negative gearing to newly-constructed homes only, according to the ABC.
The change would come into effect from July 2017, but would not apply to investment properties that were purchased before that time.
The policy is estimated to save $32.1 billion from the budget bottom line over 10 years, according to costings from the Parliamentary Budget Office.
Shorten said Labor would also reduce capital gains discounts from 50% to 25%.
He argued the changes would improve both the efficiency and fairness of the Australian tax system.
“Labor will help level the playing field for first home buyers competing with investors and we will put the great Australian dream back within the reach of the working and middle-class Australians who have been priced out of the housing market for too long,” he said.
While the government has rejected Labor’s proposal, claiming to would make it harder for mum and dad investors to buy new homes or units off the plan, Treasurer Scott Morrison said in parliament last week the Coalition will target those who use negative gearing excessively.
According to Fairfax, the government’s policy could target property investors by either putting a cap on the number of properties that can be geared or restricting annual tax deductions.
Labor’s plan has already come under fire by some in the property industry, including the Property Council of Australia, which has called the policy a “risky intervention” that could affect housing supply and construction, rents and prices.
According to the council, two million Australians currently own an investment property and of those, 1.2 million negatively gear.
And not doubt many of those people live in marginal electorates, which will play an important role in deciding which party wins the next election.