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In a recent statement, the ACTU said housing affordability should take a key focus at the upcoming Economic Reform Roundtable, hosted by Treasurer Jim Chalmers from 19–21 August.
According to the unions, the current tax system is built to incentivise property investment.
This could be “invested more productively” to generate more homes across the country, read the statement.
The unions provided recommendations for reform, including limiting negative gearing and the capital gains tax benefits of housing to just one investment property.
It was said that this reform would help prevent people from being locked out of the housing market by those with multiple investment properties.
The Greens responded to the statement and called for negative gearing and the capital gains tax (CGT) discount to be grandfathered to one existing investment property and removed on all second and subsequent properties.
Under the current CGT discount, when you sell or otherwise dispose of an asset, you can reduce your capital gain by 50 per cent if you owned the asset for at least 12 months and you are an Australian resident for tax purposes.
According to the Greens, the reforms would continue support for “mum and dad” investors with a single property, while disincentivising further property investment.
ACTU secretary Sally McManus said there needs to be reform to housing as people can’t afford to live near where they work and are being locked into high rents.
“We cannot continue down the same path of giving investors tax supports while owning your own home gets further out of reach for average workers and becomes nearly unimaginable for young people,” said McManus.
“Limiting negative gearing and capital gains discounts to one investment property, alongside increasing supply will make a big difference.”
The ACTU suggested all negative gearing and capital gains tax housing tax arrangements should be grandfathered for five years to give property investors time to adjust.
Greens leader and spokesperson on climate and energy, Larissa Waters, agreed that changes to negative gearing and CGT concessions are necessary, as investors are getting a “leg up” while young people are being locked out.
A mixed bag of opposition and support
Negative gearing is a divisive subject, and opinions will vary depending on who you speak to.
Broker Daily published a deep dive into why politicians won’t touch it. Plenty are tied up in property investment, which may seem like the obvious answer as to why. However, many are opposed due to the impact it could have on the rental market.
In the latest episode of Broker Daily Uncut, Momentum Markets director Alex Whitlock said if negative gearing was abolished there would be “bloodshed for tenants.”
“There would be no property available for tenants. You would have a crisis on your hands,” he said.
The topic remains volatile. Both the Labor government and Coalition said they wouldn’t touch it.
As FirstPoint Mortgage Brokers director Troy Phillips said back in April, the Australian economy and property market may be too far gone to address negative gearing.
“Politicians talking about negative gearing? That’s like the Qantas Chairman’s Lounge membership – ‘nothing to see here, move along’,” he said.
[Related: Why politicians won’t touch negative gearing]
