Dutton Rejects Negative Gearing Changes

Debate over negative gearing and capital gains tax reforms has resurfaced following the government’s decision to review them. Although there is no clear indication of whether the government is likely to scrap these measures, the Labor government has confirmed it is reviewing the tax arrangements, as it does with any policy from time to time.
Amidst this, Opposition Leader Peter Dutton has firmly stated that the Coalition will not alter negative gearing if they win the upcoming election.
“We are strongly opposed to any changes to negative gearing as it would disrupt the housing market.”
He further explained, “It will lead to higher rents and is not in the best interest of the nation.”
He also criticised Prime Minister Anthony Albanese for shifting positions on whether the government plans to adopt the Greens’ proposals to abolish or limit negative gearing.
Speculation is rife that the government is under immense pressure to scrap the policy, which the Greens argues is contributing to rising property prices by favouring investors over first-time buyers.
Greens MP Max Chandler-Mather, member for Griffith, has been calling for a phase-out of negative gearing. In an address on Sept. 26, he urged the government to cooperate with the Greens in addressing the escalating housing crisis.
Referring to the review, Chandler-Mather said, “Millions of Australians have hope now. They could see a phase-out of negative gearing and the capital gains tax discount, and if we phase out those discounts, they’ll finally have a chance to buy a home and build a good life.”
He added that Australia had seen a 35 percent increase in property investors entering the market in the last 12 months alone.
“And they’re doing it with the help of billions of dollars in tax handouts from property investors,” he said, warning that failing to scrap the reform would result in $176 billion (US$120 billion) in tax handouts amidst the worst housing crisis in years.
According to the Treasurer’s website, negative gearing is an investment strategy commonly used in Australian real estate. When the costs of owning an investment property exceed the income it generates, investors can claim the loss as a tax deduction, thereby reducing their taxable income and overall tax liability.
Albanese stressed that their key focus is increasing the housing supply, which remains their primary objective.
“We have allocated $32 billion for the Homes for Australia plan. We want more public housing, more build-to-rent units, but that’s stuck in the Senate,” he said.
Labor has been attempting to pass two key bills—Help to Buy and Build to Rent—but has struggled to secure support from the Greens and the Coalition.
When asked whether he believed negative gearing was equitable for all Australians, Albanese noted that, without investment in housing, there would be fewer private rentals, less supply, and reduced construction.
“This is why the Build-to-Rent scheme will provide incentives through the tax system for more housing construction,” he said.
On Sept. 25, Treasurer Jim Chalmers dodged questions about negative gearing, simply stating, “We’ve got a housing policy, and that’s not in it.”
“Negative gearing is a legitimate tax deduction, similar to any other investment where a loss is incurred,” he told The Epoch Times.
However, he acknowledges that its direct impact is uncertain.
“Some investors place more value on negative gearing than it’s really worth, so the impact may be larger than economists think,” he said.
Meanwhile, a report released by Housing Investment Australia (HIA) points out that negative gearing is not unique to Australia. Germany, Japan, Canada, and Norway have similar systems.
“Several other countries have limited versions of negative gearing, with restrictions on rental income deductibility and limitations on loss offsets against future income.”