Federal election 2019: ALP’s battle to win hearts and minds in key marginals Boothby and Sturt

Tax benefits on the chopping block under a Labor Federal Government are being used in Boothby and Sturt more than anywhere else in the state.

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Tax benefits on the chopping block under a Labor Federal Government are being used in Boothby and Sturt more than anywhere else in the state.

Analysis of the Australian Taxation Office’s latest figures for 2016-17, by The Advertiser, shows taxpayers in Sturt and Boothby have embraced negative gearing, with about one in 10 claiming rental losses.

Almost 6 per cent in Sturt and 5 per cent in Boothby also are likely to have benefited from discounts on capital gains tax, a higher rate than all other electorates.

This includes the Labor held seats of Spence, 1.7 per cent and Kingston, 2.5 per cent. Boothby has become the battleground for the federal election in South Australia, with the state’s smallest margin of 2.8 per cent.

Sturt, the seat that has been in Liberal Party hands for all but 55 months and 18 days in the past 70 years and held by a margin of 5.39 per cent, is also in Labor’s sights.

However the support of the tax benefits in these seats could be a major hurdle for Labor, despite it arguing nothing will change under its policy.

Boothby's Nicolle Flint

Labor Candidate for Boothby Nadia Clancy

Labor’s changes, which include limiting negative gearing to new housing and halving the capital gains tax discount to 25 per cent, are expected to be implemented from 2020.

While the policies will be grandfathered, the data reveals how widespread the use of the tax incentives are in Adelaide’s wealthiest suburbs.

According to Census data, the median weekly household income in Boothby increased 18 per cent from 2011 to 2016, to $1438. That was before last year’s redistribution, which saw it gain affluent beachside suburbs including Glenelg and Glenelg North.

SA Centre for Economic Studies director Michael O’Neil said while negative gearing has become a widespread way to minimise tax, the impact of Labor’s proposals would be most pronounced in the state’s wealthier areas.

“Negative gearing has a really strong historical context and it’s a complex issue — it’s become ingrained in Australians’ minds,” he said.

“If you look at Alexandrina Council as an example, taking in Victor Harbor, around 40 per cent of council rate notices are sent back to Boothby and Sturt — these are reasonably well off people with second properties and a significant number of them would be claiming rental losses on those properties. They (Labor) knew that a seat like Boothby might be slightly harder to win but I think they’re reasonably confident of winning (the election) anyway.”

Sturt Liberal and Labor candidates James Stevens and Cressida O'Hanlon.

Boothby incumbent Nicolle Flint said Labor’s negative gearing plan would lead to lower house values and higher rents. “When I am out in my community listening to local residents about the issues that are important to them there is always one common theme — Labor’s higher taxes,” Ms Flint said.

Her sentiments were echoed by the Liberals candidate for Sturt, James Stevens, who is running in the seat held by Christopher Pyne for 26 years.

Opposition treasury spokesman Chris Bowen downplayed the concerns.

“If you currently negatively gear there’s absolutely no change,” Mr Bowen said.

“Labor’s changes will limit negative gearing to new homes only, will encourage construction in the area, and will ensure that first home buyers aren’t competing with investors buying their sixth property.”

He said Boothby candidate Nadia Clancy has talking residents everyday and was “confident people know that if they currently negative gear nothing changes for them.”

This week the Real Estate Institute of Australia launched a campaign against the changes to negative gearing and capital gains tax. A day later the Grattan Institute repeated its calls that the tax benefit of negative gearing should be wound back.