Negative gearing attack a lie: ALP

Labor says the government’s claim the ALP’s negative gearing policy would crash housing has been exposed as a lie.

Labor Treasury spokesman Chris Bowen in Sydney.

Labor says newly released Treasury documents expose as a “lie” the Coalition government’s claim that the ALP’s negative gearing policy would act as a “sledge­hammer” on the housing market.

The documents, released to the ABC after a long-running Freedom of Information battle, contain advice to the government on the impact of Labor’s housing policy, which was a major federal election issue in 2016.

Labor proposed to limit negative gearing to new housing and reduce the capital gains discount for assets held longer than 12 months from 50 per cent to 25 per cent. Treasury said in the advice that the policy could have a “relatively modest” impact on prices in the long term.

“The ALP policies could introduce some downward pressure on property prices in the short term, particularly if the commencement of the policy coincides with a weaker housing market,” the authors wrote.

“In the long term, increases in taxation on rental property could have a relatively modest downward impact on property prices.”

Opposition Treasury spokesman Chris Bowen said the documents exposed the Coalition attack campaign.

“The Prime Minister and the Treasurer talked about a ‘sledgehammer’ on house prices, a ‘housing crash’ and a sledgehammer impact on the economy,” he said.

“We knew that that scare campaign was shrill, we knew that that scare campaign was unfounded, and we now know ­beyond a doubt that it was fundamentally dishonest.”

Education Minister Simon Birmingham said the Treasury documents backed the government’s arguments.

“These two-year-old Treasury documents show very clearly that there would be an impact on house prices, which is exactly what the government has been saying, and that is bad news for homeowners, who may well see the value of their existing home reduced if Bill Shorten was elected and his higher tax policies, his higher taxes on housing policies, were introduced,” he said.

Treasury officials advised that negative gearing benefited high-income families, with 52.6 per cent of benefits going to the top 20 per cent of income earners and 5.2 per cent of benefits going to the bottom 20 per cent.

The authors of the advice wrote that the capital gains tax discount “overwhelmingly benefits high-income families”.

Treasury officials said the negative gearing policy would ­increase revenue by $3.4 billion to $3.9bn a year, while reducing the CGT discount would generate an extra $2bn “in the long run in 2017-18 dollars”.