The Turnbull government’s policy on negative gearing has come under fresh attack from a senior NSW Liberal minister.
Rob Stokes, the NSW Planning Minister, has said the policy does nothing to improve supply where it is needed, but does help some people reduce their taxable income at the expense of other Australians.
Stokes will use a speech on Friday at a Centre for Economic Development of Australia event to call on Malcolm Turnbull and Scott Morrison to rethink their party’s policy.
“Why should you get a tax deduction on the ownership of a multimillion dollar holiday home that does nothing to improve supply where it’s needed?” Stokes’s speech says.
“We should promote investment in the type of housing that is needed by the burgeoning populations in cities like Sydney.”
Turnbull government ministers quickly tried to douse the policy flare-up.
The finance services minister, Kelly O’Dwyer, told the Nine Network on Friday morning that policymakers would not fix the housing affordability crisis simply by scrapping negative gearing.
“A lot of average mums and dads rely on negative gearing to actually have a foot in the property market,” O’Dwyer said.
“It’s got a lot to do with supply and demand and the truth is we’re just not building enough houses to meet up with the demand that is there.
“We need to look at a number of measures, it’s not just one simple solution that’s going to fix the housing affordability crisis.”
Turnbull told Neil Mitchell on 3AW on Friday: “We haven’t got any plans to review the policy we took to the election on that.
“The issue ... of housing affordability, is overwhelmingly a question of supply. What we need to do, and we’re working with state governments now to do that, is to zone for more density, for more housing, for more affordable housing, the critical thing is to build more dwellings.”
But Stokes will say on Friday that the federal government had recently implored the states to focus on increasing supply and focus on transit-oriented development, and “that’s exactly what we’re doing, with more homes than ever before”.
“It is now time for the federal government to articulate how they will partner with the states in order to use the levers available to them to help more Australian families into stable and secure housing,” he will say.
“The premise that the more you supply of a product, it therefore increases the competition and reduces prices, is great in theory but in relation to the housing market it is much more complex,” he says.
“We should not be content to live in a society where it’s easy for one person to reduce their taxable contribution to schools, hospitals and other critical government services — through generous federal tax exemptions and the ownership of multiple properties — while a generation of working Australians find it increasingly difficult to buy one property to call home.”
Finance minister Mathias Cormann returned fire, saying Stokes “should focus on his responsibilities” as planning minister in NSW.
“That’s where he’s in the driver’s seat to ensure housing supply can be increased ... to improve housing affordability,” he told Sky News.
“He’s in the driver’s seat when it come to improving planning regulations, zoning regulations, pursuing higher density housing, greater diversity of housing building options.”
Negative gearing was one of the most contentious issues in the federal election campaign.
In the months before the election, at least six different pieces of economic modelling touched on negative gearing changes, none of them with the same conclusion.
Stokes backs up his case by pointing to a Reserve Bank recommendation that negative gearing ought to be reviewed.
In a submission to a parliamentary committee in June, the RBA said: “Policy should not unduly advantage property investors at the expense of prospective owner-occupier home buyers.”
Shadow treasurer Chris Bowen told Guardian Australia that the country was facing a housing affordability crisis and the AAA credit rating was under threat, but Turnbull and Morrison were unable to act.
“The NSW Libs know negative gearing needs reform and that housing affordability is not just a political football to be thrown at the states,” Bowen said.
“We also know that the prime minister and treasurer were rolled earlier this year by Peter Dutton and the right wing in Cabinet over negative gearing reform, so we’ve now got a government that is incapable of standing up for first home buyers.”
He later said he welcomed Stokes’ speech, saying some of the quotes in the speech could have been given by him.
“I say the time has come to stop the tax concessions for buying fifth, sixth and seventh houses when people can’t afford their first house,” he said.
Earlier this year, Morrison tried to use modelling from BIS Shrapnel to attack Labor’s negative gearing policy without realising that the modelling had been produced months before Labor’s policy had been announced.
