Prime Minister Anthony Albanese has sparked renewed debate on negative gearing following recent comments that appeared to leave the door open for potential reforms to the tax policy.
Initially, Mr Albanese did not deny reports that the Treasury had been asked to draft reform options for negative gearing, stating he welcomed ideas from the public service. However, within 24 hours, he appeared to shift tone, clarifying that no formal policy changes had been initiated.
Speaking on ABC’s News Breakfast, Mr Albanese raised concerns about the potential negative impact of altering negative gearing, specifically on housing supply.
“The issue with negative gearing is one of supply,” he said.
“Will it add to supply or will it decrease supply? The figures and research that has been produced by organisations like the Property Council indicate that it would reduce supply and therefore not contribute to solving the issue. And that’s the issue. We just want to get on with our plan of building more homes.”
The debate around negative gearing, which allows investors to offset losses on their investment properties against their taxable income, has long been a contentious issue in Australia.
Critics argue that the policy disproportionately benefits wealthy investors while pushing up property prices and making homeownership less accessible for first-time buyers. Others, like Mr Albanese, are concerned that reducing or removing these tax benefits could exacerbate housing supply shortages.
However, the PM’s cautious stance on the issue has drawn criticism from housing advocates who believe the current system is unsustainable.
RMIT’s Dr Liam Davies, an expert on social and affordable housing, weighed in on the issue, calling for a more targeted approach to negative gearing rather than a blanket policy.
According to Dr Davies, the Commonwealth forfeits around $6 billion annually due to negative gearing and capital gains tax discounts, yet the outcomes for tenants remain unclear. He suggests that instead of removing the tax concessions altogether, the government could introduce an “opt-in” system, where investors would only receive the benefits if their properties meet national standards for fair rental contracts and construction quality.
“The debate about negative gearing and capital gains tax has, so far, been largely binary. Some argue to remove negative gearing and capital gains tax, while others argue to retain it,” Dr Davies said.
“However, there is another option: to make negative gearing and capital gains tax an opt-in system for investors whose properties meet national standards for fair rental contracts and construction quality.
“Our solution would maintain the tax advantages for investors and housing supply, while also increasing security for tenants,”
