‘Not unusual’ for a treasurer to model negative gearing, says Chalmers

Treasurer Jim Chalmers has defended the use of federal officials to explore changes to negative gearing after days of dispute over the housing crisis, as Labor ministers privately welcome a debate on the $2.7 billion tax concession.

Chalmers said it was “not unusual” for treasurers to gain advice on contentious issues but would not confirm whether he had asked for the expert modelling by his department, leaving room for future decisions on the tax rules.

Treasurer Jim Chalmers left room for future changes when asked on Friday if he had commissioned the work by Treasury officials to look at the options on negative gearing.Credit: Nine

Prime Minister Anthony Albanese did not rule out changes but declared that negative gearing was not his focus because the priority was to enact laws to add to housing supply.

This masthead revealed on Wednesday that federal officials were working on options to scale back negative gearing and capital gains tax concessions on investment properties, setting off a furious political argument about whether to change the rules.

In a move to calm the debate, Labor advisers have instructed all MPs to assure Australians the government would not “resurrect” the Labor policy on negative gearing that voters rejected at the 2019 election.

The official “talking points” for government MPs do not rule out policy change and instead play down the idea of repeating the 2019 policy, which sought to restrict negative gearing to new developments and stop it for existing homes.

The MPs are told to say that Treasury “routinely” works on a range of policy issues.

“Changes to negative gearing and capital gains tax are not part of our housing policy,” the talking points say. The use of the present tense does not bind the MPs on future decisions about policies to be taken to the next election.

The MPs are told that if they are pushed to say more, they should say: “This is not something we’re proposing.”

Chalmers left room for changes when asked on Friday if he had commissioned the work by Treasury officials.

“It is not unusual at all for governments or for treasurers to get advice on contentious issues which are in the public domain,” he said at a press conference in China.

“We have made it very clear through the course of this week that we have a broad and ambitious housing policy already and those changes aren’t part of it.”

Asked if he would rule out making changes, Chalmers avoided any binding commitment.

“Our priority and our focus is on rolling out $32 billion worth of investment because our highest priority and our biggest focus is supply,” he said.

Shadow treasurer Angus Taylor ruled out taking any changes to negative gearing and capital gains tax to the next election, while he turned the issue into a question of trust for Albanese.

“Trusting him on these tax issues is tough because he’s said one thing and done another on multiple occasions in the past when it comes to tax,” Taylor said.

“We are very concerned about this. We need more housing in the market. We need more supply, and adding a tax is not a way to increase supply of housing at a time when cost-of-living pressures continue to bear down on Australians, particularly when it comes to housing.”

Two federal ministers, speaking anonymously to detail policy deliberations, told this masthead on Thursday they were pleased the prime minister had not “buckled” to pressure to rule out any change on negative gearing.

Those ministers confirmed a change to wind back capital gains tax concessions was also an option, with one conceding the government needed to send a clear signal, particularly to younger voters, that it would do more to address the housing crisis.

“We have to do more so we are looking at options. Housing is such a pivotal issue in people’s lives, we have to go bigger, but the question is how,” one minister said.

On Friday, two more ministers spoke to this masthead on condition of anonymity to express frustration at the handling of the debate this week, with both saying they wanted the reform options on the table.

“We need to have the guts to do this, but it will depend on us being able to lead a complex debate in public,” one minister said.

The second minister said Labor had won 14 seats at the 2016 election while arguing for changes to capital gains tax and negative gearing and that with the housing market similarly tight, the preconditions for a third attempt at reform existed.

Former Labor leader Bill Shorten, who took changes to negative gearing to the 2016 and 2019 elections, said the government’s policy focus was on increasing housing supply and that changes to the tax concessions were not part of the policy.

Asked on Nine’s Today show to rule out the policy returning, Shorten said: “I’m very sure we’re not taking our 2019 policies to the 2025 election.” This was seen as a signal that a different policy could be considered and adopted before the election.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.