Millions in dark on Labor’s property tax changes

Millions of Australians remain ignorant of Labor’s proposed changes to negative gearing and capital gains tax for investors.

Opposition Treasury spokesman Chris Bowen revealed last Friday that, in the event of a Labor election win, the new tax regime would start on January 1. Picture: Alan Barber

Millions of Australians remain ­ignorant of Labor’s proposed changes to negative gearing and capital gains tax for property investors, with only a third of voters saying they understand the measures.

With analysts warning the measures could worsen a national housing slump, polling conducted by the Housing Industry Association, released to coincide with Bill Shorten’s budget reply today, reveals the Coalition’s campaign to raise awareness about Labor’s promised property tax changes has failed to gain traction, with about half of voters still oblivious.

A survey of 1500 people, weighted towards those in marginal seats, found three out of four voters backed a review of the proposed changes before their implementation, amid concerns among more than half of respondents that the measures would push up rents.

Pollster JWS found only 53 per cent of respondents were aware of Labor’s plan to restrict negative gearing tax concessions to buyers of new homes, with just 12 per cent saying they had a “good understanding” and 22 per cent claiming “some understanding” of the policy. When made aware of the change, about 40 per cent of respondents said they opposed it, while only 26 per cent declared their support.

 

Opposition to the policy was highest among property investors, with 68 per cent of those with investment properties rejecting the negative gearing changes.

The survey, conducted in January, reveals similar levels of awareness of Labor’s plan to increase the capital gains tax paid on investment properties after 12 months of ownership, with only 49 per cent of voters saying they were aware of the policy. Of those, only 8 per cent said they had a “good understanding” of the policy, while 21 per cent said they had “some understanding”.

When given a brief explanation of the proposed capital gains tax change, more than twice as many respondents opposed the proposed measure (43 per cent) than supported it (22 per cent).

Opposition Treasury spokesman Chris Bowen revealed last Friday that, in the event of a Labor election win, the new tax regime would start on January 1, raising an expected $2.9 billion over four years.

But HIA managing director Graham Wolfe urged Labor to rethink its plans in light of the survey. “Because of the lack of understanding by most people of Labor’s changes, 74 per cent of Australians believe there should be a review of the policy before any changes are made,” he said.

Mr Wolfe said the proposed property tax changes would deter investors, smashing the housing industry and driving up rents. “These changes are anti-investment,” he said. “They fail to recognise that private rental accommodation provides homes for almost three million families, and reducing the supply of private rental homes will only lead to an increase in rents.”

An estimated 1.3 million Australians take advantage of the current negative gearing policy and studies have found its removal would slow building activity and cost jobs. Property analysts believe house prices will slump further if Labor’s proposed property tax changes are introduced, potentially prolonging the property downturn.

BIS Oxford Economics recently warned rents were likely to rise as investors turned away from the housing market without the support of the tax breaks, at a time when approvals for new home building were in sharp ­decline.

The forecaster said it expected the housing market to bottom out around the June quarter of next year, with Sydney and Melbourne hardest hit. Analysis by the Master Builders Association suggested 32,000 jobs would be lost in the construction sector as a result of the changes, while economics firm SQM Research warned property prices could fall 30 per cent.

The Coalition is holding a roundtable on Labor’s housing policies at parliament today.