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Treasurer Scott Morrison has foreshadowed new measures to encourage affordable rental housing after NSW Planning Minister Rob Stokes broke Liberal ranks by advocating reform of negative gearing.
Mr Stokes was roundly condemned by his federal Liberal colleagues after calling for changes to negative gearing to discourage investors from crowding- out owner-occupiers.
Malcolm Turnbull led a chorus of rebuttals even as the Prime Minister’s wife, Lucy, spoke on the same stage as Mr Stokes, endorsing his concerns about “inter- and intra-generational” equity in the housing market. Ms Turnbull, who is the chief commissioner of the Greater Sydney Commission, later declined to answer questions about her attitude to negative gearing. The advocacy organisation she formerly led, the Committee for Sydney, backed Mr Stokes.
The minister said NSW was doing everything it could to increase housing supply but that was not enough to address housing affordability, and instead pointed to investors who negatively geared multiple properties.
“When people are able to use it to buy a fourth, fifth, a sixth house or a multi-million-dollar holiday home, one questions what the social benefit is of that tax break,’’ Mr Stokes said.
Committee for Sydney chief executive Tim Williams added: “Our current policy settings are increasing the financial firepower of those who already own homes while driving first-home owners out of the market. This is driving generational inequality.”
Mr Morrison, Finance Minister Mathias Cormann and Revenue Minister Kelly O’Dwyer all rebuffed Mr Stokes, whose speech had been vetted by Premier Mike Baird’s office. Senator Cormann said the Turnbull government would not break promises it had taken to the last election and that Mr Stokes should focus on his own job.
Ms O’Dwyer said many used negative gearing to get a foothold in the housing market, and a majority of Australians who used it had after-tax incomes of $80,000 or less.
Mr Morrison said tightened lending standards by the Australian Prudential Regulation Authority had led to a halving of the rate of growth in investor loans.
He said a previous attempt to end negative gearing had resulted in rising rents, harmful for people trying to save to buy their first home. State and federal treasurers would meet next week to discuss affordable housing financing options.
That suggests the federal government may be considering a successor to the Rudd government’s National Rental Affordability Scheme. The NRAS, which gave incentives to private investors to provide rental housing to low-income earners at 20 per cent below market rates for 10 years, was closed to new entrants after disclosures it was being exploited by universities to provide accommodation for foreign students.
Mr Morrison hinted there could be a shift from providing states with direct grants for social housing to tax incentives for investors.
Source: The Australian - November 26, 2016 - Mark Coultan