Greens demand PM take axe to negative gearing
The Greens have named their price to support Labor in a potential hung parliament despite the PM saying he “won’t do deals”.
Federal Election
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Greens leader Adam Bandt is set to detonate a negative gearing bomb in the election campaign demanding the PM wind back the landlord’s tax break if he wants to form government.
Despite the Prime Minister’s protestations that he won’t “do deals” with the Greens the reality is he may need them if there’s a minority government.
Now the Greens have named their price and it could send shockwaves through the campaign.
“This reform has always been urgent, but the threat of a Trump-fuelled attack on Australian renters and first-home buyers in the next few months now makes this a matter of housing life and death,” Mr Bandt said.
In a major speech at the national press club on Wednesday, Mr Bandt will say that wealthy investors spooked by Trump (could) leave stocks and shares and “pile into property, pushing house prices into the stratosphere”.
The Greens will urge Mr Albanese to “grandfather” and limit negative gearing and the 50 per cent CGT discount to one investment property.
Investors would retain existing negative gearing and CGT discount benefits for a sole investment property purchased before the policy commences.
What is negative gearing?
Negative gearing describes the tax break landlords use to claim expenses associated with an asset such as an investment property.
Individuals who are negatively geared can deduct their loss against other income, such as salary and wages and it’s entirely legal.
Critics argue that negative gearing hurts first home buyers because they don’t have access to tax deductibility to subsidise interest payments.
However, if you buy or inherit an investment property after the new rules come into force you will be banned from negatively gearing the property.
“Imagine being a renter armed with your life savings rocking up to an auction knowing that the wealthy property investor next to you gets a big fat cheque from Anthony Albanese and Peter Dutton, schemes that these politicians themselves have benefited from, that lets them bid the price up and out of reach for first-home buyers. How fair is that?” Mr Bandt said.
The Greens are also calling for a rent freeze with increases capped at 2 per cent every two years insisting that “unlimited rent increases should be illegal”.
“Landlords cannot be allowed to raise rents by whatever number they want. There has to be limits,” the Greens leader said.
“Rents don’t fall when mortgage rates fall. Labor claims they can’t do it, but they got the states and territories together to cap and regulate power prices, and they can do it with rents as well.”
Why Treasury asked for negative gearing advice
In September, 2024, Jim Chalmers conceded he tasked Treasury officials to look at options to scale back negative gearing, saying it was not “unusual” and again leaving the door open to revisiting the reforms.
“It is not unusual at all for governments or for treasurers to get advice on contentious issues which are in the public domain including in the parliament,” Mr Chalmers said.
Labor spent three days fending off speculation it is looking to scale back the tax breaks as Prime Minister Anthony Albanese initially failed to definitively rule it out.
“Just for clarity, what we are doing is what we have before the parliament. So I talk about what we’re doing, not what we’re not doing,” he told reporters in Melbourne.
Does the PM negatively gear?
Anthony Albanese has previously hinted he used negative gearing before he became Prime Minister to reduce his income tax.
But he has ruled out using it for his $4 million Copacabana holiday house.
The Prime Minister’s office has declined in the past to reveal if Mr Albanese is negatively gearing any of his investment properties.
It’s unclear why he is reluctant, given that it is entirely legal.
He recently issued a carefully worded answer insisting that he hasn’t used negative gearing “since he became Prime Minister”.
Mr Albanese earns $607,500 a year as Prime Minister. In simple terms that means he pays $244,042 a year in tax.
Mr Albanese also earns around $115,000-a-year in rental income he is pulling in on top of his salary as Prime Minister, although his mortgage bill is unknown.
If he was making a loss on one or more of his investment properties, he could legally use that to reduce his taxable income with his accountant.
Asked if he was negatively gearing his Copacabana holiday house on Friday by news.com.au, Mr Albanese instead took aim at Peter Dutton, suggesting he owned more property than the PM.
“Seriously. I will swap my property portfolio with Peter’s,” he said.
PM’s carefully chosen words
But when pressed again on if he was negatively gearing at Copacabana in Adelaide earlier this year, Mr Albanese used an interesting set of words.
“I have not used any negative gearing while I have been Prime Minister,” he said.
In other words, he did not deny using it in the past.
Mr Albanese previously doubled down using the same careful formulation with broadcaster Neil Mitchell when asked if was using negative gearing on his $4m holiday home.
“You’re a landlord, of course, did you negatively gear your property?,” Mitchell asked.
“No,” Mr Albanese replied.
“No? Paid cash?,” Mitchell said.
“No,” Mr Albanese replied.
“So you’re just not claiming?,” Mitchell said.
“No. I don’t want to go through all of my finances on air,” Mr Albanese said.
“But negative gearing is the important one, because there’s been a lot of criticism in the Labor Party,” Mitchell said in response.
Mr Albanese then used the same set of words he did in Adelaide.
“I’ve not used negative gearing at any time that I’ve been Prime Minister,” Mr Albanese said.
Labor’s negative gearing options
In August, the Australian Greens declared Labor was actively considering changes to negative gearing and the Capital Gains Tax (CGT).
Greens housing spokesman Max Chandler-Mather MP said the party of Labor landlords was cracking under pressure from the party of renters.
“After pretending it was impossible, all of a sudden under pressure from the Greens, millions of renters finally have some hope, as Labor is actively considering changes to negative gearing and CGT,’’ he said.
“If Labor gets this right it could be light at the end of the tunnel for millions of renters who are losing hope they’ll ever be able to buy a home.
“Labor went from refusing to negotiate with the Greens on negative gearing and CGT, to actively considering changes.
“It is good to see negotiations may have finally begun to scrap the tax handouts denying renters the chance to buy a home. We have two months to get a deal done. Let’s do this.”
Mr Dutton warned against a Labor-Greens government overnight at the Sky News debate.
”We don’t need a Labor Greens minority government after the election, given the headwinds that we’re seeing at the moment,’’ he said.
“The Treasurer today was in panic mode talking about the prospect of recession next month/
“It shows that Labor just doesn’t know how to manage money or the economy.”
Originally published as Greens demand PM take axe to negative gearing
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