Labor negative gearing plan is purely a tax revenue raiser: Morrison
PRIME Minister Scott Morrison has warned that Labor’s plans to change tax relief on property would “torpedo” the market and cause a devastating house price crash.
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PRIME Minister Scott Morrison has warned that Labor’s plans to change tax relief on property would “torpedo” the market and cause a devastating house price crash.
And he accused Labor leader Bill Shorten of using the policy as a tax grab.
Mr Shorten has vowed to abolish negative gearing on all but newly built homes and to increase capital gains tax by 50 per cent, claiming they give investors an unfair advantage while pushing first-time home buyers out of the market.
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Speaking to The Daily Telegraph’s Miranda Devine on Miranda Live, Mr Morrison accused Mr Shorten of using the policy purely to raise tax revenue.
“I have always thought this will have massive impact on the housing market,” he said.
“What this simply is, is just another tax grab.
“He’s got heaps of tax grabs, whether it’s on retirees — that’s about $5 billion a year, he’s going to get rid of $70 billion worth of tax relief on Australians that work for a living by reversing our tax cuts, he’s going increase the taxes for small to medium-sized businesses from what we’ve delivered by law for them, from 25 per cent up to 27.5 per cent - and the list goes on.
“We had a soft landing (on the housing market) and that meant we avoided the economic shock that would come from that and we have more first-time buyers into the market.
“He wants to torpedo the whole thing.”
The Prime Minister said earlier in the day that the policy was a “sledgehammer” approach which could jeopardise the economy.
“The risk is this. If you now take the sledgehammer of negative gearing and capital gains tax changes — if you abolish negative gearing as we know it — then you’re inviting a housing market crash,” Mr Morrison said.
“And that’s good for nobody.”
Mr Shorten put the change front and centre of Labor’s policy platform more than two years ago.
Nearly 2.1 million Australians own investment properties and could be heavily affected by a change in property and tax regulations.
Mr Morrison said that recent falls in house prices, which have given home buyers some relief but sparked fears for sellers, had happened in a controlled way as a result of government policies.
“We’ve seen house prices come back to a soft landing, and that’s not me saying that, that’s ratings agencies, it’s the Reserve Bank,” he said.
“Everyone has recognised that one of the biggest economic risks that the country faced was a housing market crash.”
He said the ratings agencies, the banks, economists and he, as treasurer, had been “very concerned about” a crash.
“So we needed to bring the housing market into a soft landing.”
House prices in Sydney have fallen by 5.6 per cent since September 2017 and last weekend’s Sydney auction clearance rate of 52.6 per cent highlighted a sluggish market at a time when the arrival of spring traditionally gives it a boost.
Mr Morrison, though, was upbeat.
He said there were now more first-time home buyers in the market than there has been for six years, due to the First Home Super Savers scheme in which Australians save for a home deposit using their superannuation account, as well as a crackdown on interest-only mortgages, which made up about 40 per cent of all new home loans at their peak last year.
“When you get people who can just keep borrowing more and more and more and do it on an interest-only basis, they can bid up the price, and that was fuelling the exacerbation of the problem,” he said.