Labor’s plans to rein in negative gearing and capital gains tax deductions are dividing voters.
At the Labor national conference in Adelaide this week, leader Bill Shorten also announced a new policy to subsidise the construction of 250,000 low-cost rental homes over the next ten years to sit alongside its negative gearing plans, and he also urged industry super funds to invest in affordable housing projects.
The Labor Party are ahead in the polls so there’s a good chance Bill Shortens will become a reality next year.
Mr Shorten plans to spend $6.6 billion over a decade on subsidies for investors who build new houses and then rent them to people on low and middle incomes at 20 per cent below the market rate.
Investors will receive $8,500 a year for 15 years.
With the housing markets in Melbourne and Sydney on the downward trend there has been pressure on Labor to dump their negative gearing policies but Bill Shorten stood by them this week.
“No tax reform is universally loved. I get that. But for us, governing is about choices, it’s about priorities,” he said at the Labor national conference.
“I would rather see more young couples buy their first home, than spend billions subsidising investors acquiring multiple properties.”
Labor will have a battle trying to get the reforms through the Senate even if it does win the election with little support for them among Senate crossbenchers but shadow treasurer Chris Bowen says if they win it gives them the mandate to bring in the reforms.
“We’ll be saying to the Senate we have a mandate to do this, the moral authority of having announced these policies very early,” he told Australian Financial Review.
Grattan Institute chief executive John Daley slammed the policy, comparing the subsidy proposal to a lottery.
“It has the appearance of helping people at the bottom, whereas the reality is it helps a small group of people at the bottom in a fashion much akin to a lottery,” he said.
Mr Daley said the private sector would provide housing more efficiently without the need for subsidies if the government changed planning rules to boost new housing.