Above is an interesting short discussion on negative gearing, aired last night on the ABC’s Q&A program. The panelists, which included a range of prominent business leaders, were asked to respond to the below question by Western Australian single mother, Leanne Murphy:
I’m a single parent struggling to make ends meet but looking forward to the day that I might be able to once again own my own home. Property prices and rents continue to rise forcing my dream even more out of my grasp. When I think about the tax break negative gearing and am astonished at this subsidisation of investing in property at the expense of low and middle-income families. Do you think negative gearing should be abolished or at the very least quarantined – only available for new dwellings – thus giving low income earners an opportunity to get into the property market?
What ensued was a somewhat heartening discussion over the merits of negative gearing, whereby all panelists acknowledged that the system was inherently flawed, acting to push-up property values and unfairly subsidising wealthier investors at the expense of poorer taxpayers.
David Knox, CEO and Managing Director of Santos, also noted how negative gearing was something he had not heard of until he came to Australia – highlighting how the overwhelming majority of countries do not allow it.
Unfortunately, however, all panelists acknowledged that negative gearing is a political “hot potato” that is unlikely to be abolished by either side of politics, although Graham Bradley did suggest as compromise that it should
Aussie Home Loans founder, John Symonds, also correctly acknowledged the artificial restriction of land supply and upfront taxation on development, which has added up to $150,000 of costs to new houses, as a key ingredient in Australia’s housing affordability problem.
The rest of the show is also worth a look and is most remarkable in the fact that the “leaders appear to disagree with the Abbott Government on just about everything. They endorsed:
- a carbon price (with minor support for “Direct Action”)
- no paid parental leave
- fixing the gender pay gap
- loosening industrial relations
- selling Graincorp (with some reservations)
- abolishing negative gearing
There is also a heated discussion of coal seam gas and social conscience.
Looks like the Government is bound to disappoint its key most celebrated stakeholder, not to mention FHBs.
