NSW Planning Minister calls for reform of negative gearing

MALCOLM Turnbull says there are no plans for a review of negative gearing, despite rebellion within Liberal Party ranks.

The federal government should look at negative gearing reform, NSW Planning Minister Rob Stokes says.

PRIME Minister Malcolm Turnbull says he is not looking at a review of negative gearing, despite criticism from the NSW Planning Minister that the policy makes homes less affordable.

NSW Planning Minister Rob Stokes set off a rebellion within Liberal Party ranks today after calling for negative gearing to be changed despite an election commitment to keep it.

Mr Stokes was expected to use a speech in Sydney on Friday to attack negative gearing, arguing the Federal Government needed to focus on helping Australians who wanted to own their home rather than favouring investors with million-dollar properties.

He rejects arguments the policy is not to blame for high housing prices and that increasing supply will fix the problem.

In the speech obtained by news.com.au, Mr Stokes acknowledged there was an undersupply of close to 100,000 homes in the state, and increasing supply was a fundamental driver and lever for increasing affordability.

But he said the NSW Government was meeting this challenge with record approvals and more than 185,000 homes were expected to be built over the next five years.

“The federal government has recently implored the states to focus on increasing supply and focus on transit orientated development. That’s exactly what we’re doing — with more homes than ever before,” Mr Stokes is expected to say.

With the price of borrowing at record lows and generous federal tax incentives, Mr Stokes said Sydney had become a prime target for investors. He said supply alone wouldn’t solve Sydney’s housing affordability problem.

“We should not be content to live in a society where it’s easy for one person to reduce their taxable contribution to schools, hospitals and other critical government services — through generous federal tax exemptions and the ownership of multiple properties — while a generation of working Australians find it increasingly difficult to buy one property to call home,” his speech states.

Rob Stokes, NSW Minister for Planning is calling for changes to negative gearing. Picture: Justin Lloyd

“It’s time for a real debate about the policies, outside of supply, that governments all levels can do to help provide greater opportunity for people to buy homes.”

He said governments should look at how they could encourage private and institutional investment in affordable housing for working Australians on low incomes.

”It’s a major concern to me as a dad to three young children, of increasing reports that without parental support the dream of home ownership is being harder and harder to obtain.”

“Surely the focus of the tax system should be directed towards the type of housing we need.

Why should you get a tax deduction on the ownership of a multi-million dollar holiday home that does nothing to improve supply where it’s needed?

“It is now time for the Federal Government to articulate how they will partner with the states in order to use the levers available to them — to help more Australian families into stable and secure housing.”

But Prime Minister Malcolm Turnbull did not show any signs of backing down on negative gearing, telling 3AW this morning that there was no plans to review the policy it took to the election.

“The issue of housing affordability is overwhelmingly a question of supply,” he said.

“The critical thing is to build more dwellings, that’s what we’ve got to do.”

Finance Services Minister Kelly O’Dwyer also defended the government’s retention of negative gearing.

“A lot of average mums and dads rely on negative gearing to actually have a foot in the property market,” Ms O’Dwyer told the Nine Network on Friday.

Federal Government minister have defended negative gearing.

“In fact, the majority of Australians who use negative gearing have got an after-tax income of $80,000 or less.”

The “simplistic solution” of scrapping negative gearing would not fix the housing affordability crisis, Ms O’Dwyer said.

“It’s got a lot to do with supply and demand and the truth is we’re just not building enough houses to meet up with the demand that is there,” she said. “We need to look at a number of measures, it’s not just one simple solution that’s going to fix the housing affordability crisis.” The federal government is working “hand-in-glove” with states and territories to help young families crack the market, Ms O’Dwyer said.

Opposition infrastructure spokesman Anthony Albanese said overhauling negative gearing — a key Labor policy despite its election loss — was crucial to fixing affordability.

“We’re in danger of developing a society whereby some people are able to buy their sixth, seventh, eighth home but people trying to get into the housing market to buy their first home simply aren’t able to,” Mr Albanese said.

The federal government must cut back on excesses in the application of capital gains and negative gearing tax breaks, he said.