State revenues under threat from Labor policies, says Morrison

Scott Morrison warns two of the states’ key revenue sources could be hit by a property slump linked to Labor’s tax changes.

Prime Minister Scott Morrison playing table tennis at a multicultural event at suburban Koondoola, north of Perth, yesterday. Picture: AAP

Scott Morrison has warned that two of the states’ key revenue sources — stamp duty and GST — could be hit by a property slump linked to Labor’s negative gearing and capital gains tax changes.

As listed housing developer Stockland revealed a 26 per cent fall in residential sales in the March quarter, the Prime Minister sought to pile pressure on the Labor states over Bill Shorten’s changes to taxes affecting property investors.

At a property forum in the West Australian seat of Pearce with the local Liberal member, Attorney-General Christian Porter, Mr Morrison said the states should demand a guarantee from Mr Shorten that stamp duty and GST revenues would not be negatively affected by Labor’s property tax changes.

“I think it will have a negative impact on the stamp duties revenue of Western Australia,” Mr Morrison said.

It was possible that as a result of the changes, WA’s GST boost under the Coalition could also be lost.

Labor’s Treasury spokesman Chris Bowen said Mr Morrison was responsible for the current housing slump through his failure to order Treasury to model the impact of the banking regulator’s interventions in the market to restrict investor loans and interest-only loans.

“The facts are that house prices are falling now and state governments are writing down stamp duty now, all on his watch,” he said.

“Scott Morrison might want to explain to states what impacts his policies have had on stamp duty collections before lecturing anyone else.”

Shares in housing developer Stockland dropped 2.8 per cent to $3.77 yesterday after it warned that residential sales had declined and flagged further weakness this year.

Stockland chief executive Mark Steinert blamed “challenging market conditions, reduced credit availability and buyer uncertainty due to the upcoming federal election”.

Mr Porter, who is defending a 3.6 per cent margin, is campaigning hard on Labor’s vow to axe negative gearing on existing homes and wind back stamp duty concessions for property investors, arguing many of his constituents are already facing mortgage stress and would see the value of their homes fall under the ALP. He said many in his seat had bought house and land packages during the mining boom, hoping to then buy an investment property as a nest egg. But since then values had dropped.

Real Estate Institute of WA policy manager Sadie Davidson said falling property sales were already affecting state government revenues.

“During our peak, WA was averaging around 64,000 transactions a year. That has steadily decreased and we’re now looking at around 32,000 last year. So stamp duty revenue has halved.”

Modelling commissioned by HIA done by CIE suggested Labor’s changes to negative gearing and capital gains tax would affect GST revenues, because households facing lower house prices would feel less wealthy and less likely to consume.

Under Labor’s policy, negative gearing would be restricted to new dwellings and grandfathered for people using the tax break on existing homes. The policy, along with Labor’s plan to halve the capital gains tax discount, is due to start on January 1.

Master Builders Association of Australia chief executive Denita Wawn said tightened availability of finance and anticipation of Labor’s tax changes were taking a toll on investor confidence.

“We know that as soon as we get a perfect storm of confidence factors, or lack thereof, the market just goes into freefall,” she said.

Additional reporting: Ben Wilmot