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Category: Tax / Government and Politics / Housing Industry / Business, Economics and Finance

Negative gearing changes spark mixed messages from Government

Wednesday, 24 Feb 2016 07:25:45 | Stephanie Anderson

Malcolm Turnbull said Labor's negative gearing plans could be a "wrecking ball" for house prices, but Kelly O'Dwyer said it could have the opposite effect. (AAP/ABC)

There have been mixed messages between Prime Minister Malcolm Turnbull and his front bench about the effects of Labor's negative gearing changes.

Labor's policy, under which only new properties would be able to be negatively geared after a proposed 2017 introduction, has been criticised by the Government as poorly designed.

Malcolm Turnbull has said the Opposition's plans to wind back negative gearing could be a "wrecking ball" for house prices.

But Assistant Treasurer Kelly O'Dwyer told Channel Seven today Labor's proposal could have the opposite effect.

Does abolishing negative gearing push up rents?


The ABC Fact Check unit looks at claims by former treasurer Joe Hockey, and what happened when negative gearing was abolished in the 1980s.

"They have got a policy that is going to increase the cost of housing for all Australians, for those people who own a home and for those people who would like to get into the housing market through their negative gearing policy," she said.

"We think it's reckless, we think it's irresponsible and we think that you need a very considered and adult conversation with the Australian people to let them know what the implications will be."

Ms O'Dwyer has since issued a statement clarifying her comments, stating that she was referencing expected "increased demand for new property".

Mr Turnbull said while he did not hear Ms O'Dwyer's comments, he assumed she was referring to new housing.

He said new housing accounted for a small part of the housing stock, while established buildings — the "vast bulk" of housing — were at risk of being cut.

"It is the most ill-thought out, reckless economics," he said.

"They're saying we want to — what Labor is doing, they are going to undermine, smash housing values by reducing demand for existing houses, and then try to push up the price of new developments."

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