Federal Treasurer Scott Morrison rules out plan to change negative gearing
EXCLUSIVE: Scott Morrison’s conservative Cabinet colleagues have shot down a plan to change negative gearing after Liberal Party research highlighted the critical issue of housing affordability.
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SCOTT Morrison’s conservative Cabinet colleagues have shot down a plan to change negative gearing — a Budget policy the Treasurer was considering after new $200,000 Liberal Party research highlighted the critical issue of housing affordability.
The Daily Telegraph has confirmed Mr Morrison had been exploring the case for changes to negative gearing by limiting the deductibility of interest on residential investor mortgages.
The Treasurer firmly ruled out negative gearing changes after Prime Minister Malcolm Turnbull told him privately he needed consensus from the leaders of the Right, Immigration Minister Peter Dutton and Finance Minister Mathias Cormann, before he would consider the Budget measure.
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Mr Dutton and Mr Cormann are understood to have fiercely opposed the move. Their view was that there could be a downturn in the housing market and changing negative gearing could be detrimental to the economy.
They also argued the move would be against decades-long Liberal Party economic policy and also would have constituted a broken promise.
Colleagues said Mr Morrison hoped his move yesterday to kill off negative gearing changes would pave the way for him to reach a consensus on cutting concessions to capital gains tax for property investors instead.
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But, just four weeks out from the Budget, no consensus on this has been reached and various options for changing capital gains tax are still being costed and modelled.
The Daily Telegraph has learned the Liberal Party commissioned research firm Crosby Textor to help Mr Morrison formulate his second Budget, at a cost of more than $200,000.
As tensions rose between Mr Turnbull and his Treasurer over the Budget measures, Mr Morrison worked with Crosby Textor on its analysis of public attitudes on the economy. Mr Morrison drew on the research to help him convince Mr Turnbull of the likely public support for meaningful changes to housing affordability in the Budget.
Mr Morrison’s office said he did not personally request the research, which was commissioned by the Liberal Party.
Asked about capital gains tax changes, his push for negative gearing and the Crosby Textor research, Mr Morrison said: “This information is false.” However, he refused to say which aspects were false or respond to detailed questions.
Mr Dutton’s office declined to comment.
The Crosby Textor research has taken the temperature of the nation by exploring which ideas are resonating with the public and what their expectations are of the government ahead of the Budget.
The research found the public was not overly concerned about Australia’s debt. While they do not want it to get any worse, it’s not their greatest concern.
The research indicated that Australians were focused on future job growth for their children and were concerned their wages growth appeared to be flat while prices, from housing to electricity, were rising.
The research supported Mr Morrison’s argument that the public wanted action on housing affordability, although this was only one small part of the larger findings, which indicated that the public considered renewable energy a fashionable, trendy fad and were far more concerned about keeping electricity prices low.
A key element arising from the research was the risk to Australia’s economy and national security from foreigners buying into strategic assets, mines and ports, as well as buying up residential housing and, thus, pushing up prices.
Four central issues from the research are shaping the Budget: the public not being overly concerned about debt, the focus on jobs and growth, the need to keep prices low and the desire to protect Australia’s national interest.
In his address to the Australian Housing and Urban Research Institute yesterday, Mr Morrison formally ruled out changes to negative gearing.
“Regardless of one’s opinions of the merits or otherwise of negative gearing, it is an established and structural component of Australia’s housing markets,” he said.
“Disrupting negative gearing would not come without a cost, especially to renters.”
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