Labor MPs push negative gearing shake-up after Anthony Albanese’s $4.3m house splash

Labor MPs are pushing for negative gearing changes to be put on the table in the wake of revelations Anthony Albanese purchased a $4.3m beachside home, threatening a pre-election schism between the PM and Jim Chalmers over housing tax policies.

Anthony Albanese’s new $4.3m house at Copacabana on the NSW central coast.

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Labor MPs are pushing for negative gearing changes to be put on the table in the wake of revelations Anthony Albanese purchased a $4.3m beachside home, threatening a pre-election schism between the Prime Minister and Jim Chalmers over housing tax policies.

Amid internal debate over the effectiveness of Labor’s housing election policies and growing appetite for a clampdown on property tax concessions, Treasury has modelled a range of tightened rules around negative gearing for the government to consider.

While the Prime Minister has made clear in recent weeks that he is not contemplating adding negative gearing and capital gains tax overhauls to Labor’s housing election manifesto, Dr Chalmers’ ­department is working on options that would help counter the Greens’ housing scare campaign.

Following the voice referendum defeat last year and ahead of the crucial Dunkley by-election in March, Mr Albanese succumbed to long-term pressure from Dr Chalmers to overhaul Scott Morrison’s stage-three tax cuts based on detailed Treasury modelling.

Government sources told The Australian negative gearing modelling conducted by Treasury ­examined scenarios focused on the number of homes owned and property values, potentially up to $1.5m. It is understood options ­include capping access to negative gearing at two properties per person and grandfathering existing arrangements.

There are internal concerns that poorly targeted overhauls of negative gearing and capital gains tax would not be “magic bullets” to fix the housing crisis and could impose perverse outcomes on ownership arrangements, tax structuring, rent prices and stock.

Anthony Albanese and Treasurer Jim Chalmers on the Queensland election campaign trail on Tuesday. Picture: Steve Pohlner

However, one Labor MP said Mr Albanese’s multi-million-dollar property purchase would make it harder to convince voters the government was genuine about removing home ownership barriers and necessitated more ambitious policies.

“People are struggling to buy a home. How now can we look sincere?” the Labor MP said. “We have to do more on housing … the answer is in the tax (changes).”

Another Labor MP, who said they didn’t have a problem with Mr Albanese’s house purchase, strongly backed new limits on negative gearing. “If you could take the politics out of it and be ­realistic … grandfathering, only allowing negative gearing on to new builds to encourage supply, that stuff makes sense,” the government MP said.

In response to criticism from Labor MPs on Wednesday, Mr Albanese said “what I’m focused on is delivering more houses for Australians”.

“I’m focused on three things. One is making sure that more Australians can buy their own home. Second, is helping renters through our Build-to-Rent scheme. The third, is our Housing Australia Future Fund and making sure that there’s more public and social and community housing,” Mr Albanese said.

With the nation set to undergo the biggest wealth transfer from grandparents and parents to children in coming years, sources said Treasury would likely argue to lower the CGT discount from the current 50 per cent. At the 2019 election, Labor proposed a halving of the CGT discount to 25 per cent.

There has also been a longstanding push inside Labor and Treasury to target tax minimisation areas such as family trusts. Ahead of the 2022 election, Dr Chalmers was forced to rule out reviving Bill Shorten’s family trust crackdown.

Unions NSW this week released a survey of workers claiming 72 per cent supported reducing negative gearing tax concessions, 66 per cent backed reducing CGT on investment properties and 81 per cent endorsed cutting CGT concessions for properties valued over $3m.

But Master Builders Australia industry policy national director Alex Waldren on Wednesday told a Senate committee on home ownership that “changes to negative gearing and capital gains tax concessions will simply add to the tax burden and reduce housing supply”.

“The Henry Tax Review identified that it would be premature to unsettle existing taxation ­arrangements before concrete ­actions are taken to address housing affordability and supply,” Mr Waldren said.

The Business Council of Australia on Thursday will push for land rezoning to be a central focus in shoring-up more supply, mirroring a 2016 New Zealand policy that drove a significant increase in housing approvals and reduction in rents.

The Tax Expenditures and ­Insights Statement released by Dr Chalmers in January showed 1.1 million people had negatively geared properties in 2020-21, down from 1.3 million in 2019-20. Just under 10 per cent of taxpayers negatively geared properties in 2020-21, with the overwhelming majority having only one investment property. Fewer than 20,000 Australians had six or more rental investments in 2021-22.

All Labor MPs who spoke to The Australian agreed some sort of “reset” was needed after a bruising few weeks of little government legislation passing ­parliament and Mr Albanese’s property purchase being leaked.

A Labor MP said the government needed “new offerings” ahead of the election, particularly in the tax space. “We haven’t done major tax reform for decades and the question there is, can we do something which boosts labour productivity, which swaps inefficient taxes for efficient taxes, that kind of agenda,” they said.

“Of course, it’s easier said than done, but I think Australia is crying out for it a bit.”

While a number of Labor MPs were in favour of tax reform, particularly when it came to negative gearing, around half of those who spoke to The Australian cautioned against doing so before the next election – due by May – and suggested looking at the issue early in the next term, potentially through some sort of “tax summit”. Labor sources said Mr Albanese’s Central Coast clifftop purchase demonstrated the Prime Minister was “distracted, with a capital D”. “He should have waited six months. Max (Chandler-Mather) will be salivating over this,” a Labor MP said. Mr Chandler-Mather is the Greens housing spokesman.

Agents rejected suggestions Mr Albanese’s purchase was negotiated at an “outstanding” price for such a rare position.

Median house prices in Copacabana jumped to $2m at the end of 2021 just after the peak of the Covid pandemic but have since dropped back to $1.72m, paving the way for the Prime Minister to secure the home at a deep discount. The vendors, health professionals Stewart and Leanne Smith, suffered a $365,000 hit on the sale of the home.

The house last sold for $4.65m at the height of Covid to Mr and Mrs Smith, the operators of a Sydney health food store known as The Source Bulk Foods in suburban Balgowlah. They could not be reached for comment on Wednesday despite repeated attempts.

Amid speculation Mr Albanese could be preparing to exit politics at some point following the election, several Labor MPs said Dr Chalmers was the clear choice as successor, with one ­describing the Treasurer as “the most worthy candidate”.

Another Labor MP said the government’s childcare and Medicare policies were “clearly” not enough for voters struggling through a cost-of-living crisis.

“We need to stop making enemies and make some friends. Industrial relations has put big business off-side (and) housing is a big issue. We need to … work out some compromise with the Greens to get our legislation through.”

The Greens have made clear changes to tax concession for property investors would secure their vote for Labor’s housing legislation that has been stalled in parliament for months.

The Australian can also reveal that Treasury recently shifted the Retirement Income and Superannuation Division from its Markets Group to the Revenue Group, which oversees the formulation and implementation of tax policies and legislation. Coalition sources said they had kept the division out of the Revenue Group to push back against new tax proposals from Treasury.

Additional reporting: Lisa Allen