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Government told 'outright lies' on negative gearing

Labor’s negative gearing changes would not have had as big an impact as the government has appeared to suggest
Labor’s negative gearing changes would not have had as big an impact as the government has appeared to suggest

FEDERAL Labor has seized on the release of Treasury documents stating its policy to tighten tax breaks for property investors would have a small impact on house prices.

The documents, obtained by the ABC, contradict the Turnbull government's claim the negative gearing changes would be a "sledgehammer" to Australia's economy.

Shadow Treasurer Chris Bowen said the document exposed the government's attack on Labor's housing affordability policies "as little more than outright lies".

The policy was a hot-button issue during the 2016 election campaign.

Labor's proposed policy would have restricted negative gearing to new dwellings, and also involved slashing capital gains tax from 50 per cent to 25 per cent.

Labor suggested its policy would boost new housing supply, drive down current prices and level the playing field for first home buyers.

But the government said the policy would make it harder for first home buyers to buy a newly constructed home because it would pit them more directly against investors who would be operating in more narrow market.

It ruled out changes to negative gearing and said boosting housing supply through its Smart Cities Plan was the answer.

"The likes of Malcolm Turnbull, Scott Morrison and Peter Dutton still chose to dial up the political rhetoric in a poor attempt at a scare campaign," Mr Bowen said.

The documents say Labor's policies could introduce some downward pressure on property prices in the short term, particularly if the commencement of the plan coincides with a weaker housing market.

"Overall, price changes are likely to be small, though the composition of ownership may shift away from domestic investors," Treasury officials wrote.

Asked if the Turnbull government had lied about the impact of Labor's policy, Liberal frontbencher Simon Birmingham said: "Absolutely not."

"It's two-year-old analysis. It shows, indeed, there would be downward pressure, which is exactly what the government has been saying all along," Senator Birmingham told ABC Radio.

Property ownership may move away from domestic investors, says the Treasury documents. Picture: Damian Shaw/AAP
Property ownership may move away from domestic investors, says the Treasury documents. Picture: Damian Shaw/AAP

Topics:  business editors picks finance general-seniors-news negative gearing


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