TRANSCRIPT
Treasurer Jim Chalmers has been keen to spruik the headline news.
“Well, first of all the real story today is inflation. The story today is about a substantial moderation in headline and underlying inflation in our economy.”
It's as focus pulled to reports that Treasury is costing a new housing policy.
But Prime Minister Anthony Albanese didn't rule it out altogether.
REPORTER: "Will you rule out changes to negative gearing and property taxes this term, or next?"
ALBANESE: "Well, what we're doing is the legislation that we have before the Senate. I talk about what we're doing, not what we're not doing, and what we're doing is trying to get that legislation through the Senate."
Mr Albanese was pressed a second time by 2GB host Chris O’Keefe later in the day.
O'KEEFE: "You've got a chance to rule it out now, and I think it's important you rule it out if you don't plan on doing it."
ALBANESE: "I have no plans to do it. It's not our policy. What we're doing is trying to get legislation through the Senate."
Labor took negative gearing to two elections, with little success.
It promised no changes this term – the same stance it had on Stage 3 tax cuts.
Mr Albanese says his party's position hasn't changed.
But it did, to benefit more low-income earners.
Opposition Treasury spokesperson Angus Taylor says the government can't be trusted when it comes to tax.
"Only this Prime Minister and this Treasurer could be so out of touch and out of their depth to believe that improving the affordability of housing is best done by adding taxes. That is absolutely the wrong way to make sure we have affordable housing for all Australians in this country."
In short, negative gearing works like this:
Say, John pays $50,000 dollars in interest on an investment property, but only earns $20,000 in rent.
That loss can be deducted from his income, so he'll pay less tax.
If he buys a house for 400-thousand dollars, then sells it for $500,000 a year later, he'll only pay tax on half the profit.
That's capital gains tax.
The foregone revenue will total $12.3 billion dollars this financial year.
Polls suggest most Australians are keen to see those concessions curbed.
Everybody's Home spokesperson Maiy Azize explains that data.
"Basically, every newspaper has done a poll on this in the last couple of years and they all show either majority support, or close to majority support, and only about one in five people opposing. This is actually something people are open to. They're getting more open to it as housing crisis gets worse.”
Grattan Institute's Trent Wiltshire says it could help more renters become homeowners.
"These potential home buyers would be bidding against fewer investors at auctions. There's some recent modelling of similar reforms to what we've proposed and what the ALP brought to the previous elections is that the home ownership rate would rise from about 67 per cent to 70 per cent."
Opposition spokesperson for Finance Jane Hume told Sunrise that might not be a good thing.
“If you take landlords out of the system, all happens is that rents go up. I was down in western Victoria just on Monday, walked into a real estate agent and there's a sign up saying 'no rental properties available'. That's a catch-cry that we're hearing right around the country. You take away negative gearing - as clearly the government are planning to do, that's why they're commissioning the work. Clearly they're planning to do this. You take away negative gearing and you're going to have a dramatic impact on rental supply."
The extent to which negative gearing is pushing up prices is being debated.
This is AMP Chief Economist Shane Oliver.
“I think it is having an impact in explaining poor affordability, but it’s not the major factor, in fact, I think it's really a sideshow, the real issue is the lack of supply relative to the higher level of underlying demand for housing in Australia. That's clearly evident in very low rental vacancy rates and the shortage of property that we constantly hear about."
That position is backed by the Prime Minister.
But Labor's plans to boost housing supply and help buyers into the market are being blocked in the Senate.
Green's MP Max Chandler-Mather says: scrap negative gearing and they'll pass the legislation.
"Come to the Greens now that you're considering changes to negative gearing and the capital gains tax discount. Let's talk through a plan and actually start to tackle the scale of this housing crisis. People have had enough of politicians fighting, people have had enough of politicians trying to pass dodgy schemes that don't fix anything but make it sound like they care when they don't. What they want is real and substantial change."
But for now, there's little sign of an imminent deal.
