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Axing Negative Gearing… Again?

 

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As we lead up to every federal election, there is always talk about taking a swipe at negative gearing and superannuation, in a constant effort to balance the books. The talk as of late has become more intense, and mostly directed from the opposition, when looking for ways to raise revenue.

How short their memories are! The Hawk/Keating government was heralded with great fan fair for the abolishment of negative gearing back in 1985. In the midst of a very robust economy, the decision to reinstate negative gearing couldn’t have come back fast enough as the building industry came to a standstill after its abolishment. Upon reintroduction, the building industry quickly took off again within 18 months.

By far the biggest short sighted decision of the policy makers is not taking into consideration the slowing of the economy or stimulation of the building industry which drives the economy, but the unseen factor of where over one million private investors, and developers construct investment properties to house the ever growing population of Australia, who are obviously induced to do so with negative gearing. With the abolishment of negative gearing the public housing sector will again become overburdened and draw on tax payers’ funds to constantly house our growing population. In Western Australia alone, there is over 350,000 private dwellings rented out by owners.

 

Whilst abolishing negative gearing might give some short term gain for tax revenue, the further far reaching consequences of using tax payers money to house the growing population needs to be strategically thought through, along with the huge down turning effects it will have to the building industry and the economy.

As with any business model, a thorough cost analysis needs to be conducted to show the true cost to Australians. Let’s hope that the politicians look at this longer and more thoroughly than they did last time.

– Written by Mark Hay

Read the full article here.

Source Mark Hay
February 19, 2016
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