Investment property owners are warned Labor could tamper with negative gearing should it be forced to rely on the Greens to form a minority government.
Labor has vowed to leave the tax breaks untouched if it wins the May 3 election, but if the ALP does not win enough seats to govern in its own right, it would need to negotiate with the Greens and other crossbench MPs.
Greens leader Adam Bandt has declared he would make Labor reform negative gearing as a price to get other bills passed, potentially forcing Anthony Albanese to break that election promise.
Mr Bandt has asked Treasury and the Department of Prime Minister and Cabinet to prepare briefs on that minority government scenario, factoring in the Greens policy of restricting negative gearing where landlords can claim rental losses on tax.
The Greens want that tax break – and the 50 per cent capital gains tax discount when selling an investment home – limited to just one property for existing investors, and have vowed to scrap it altogether for future purchases.
‘The Greens will make reforming negative gearing and the capital gains tax discount a priority in the next Parliament, including when there’s a minority government,’ he said.
Mr Bandt told the ABC Insiders program on Easter Sunday the Greens needed departmental advice on implementing its housing policies.
‘With the experts saying we’re heading for a minority Parliament – every chance of that – given we know that the departments are looking at things like negative gearing and capital gains tax, let’s do the work now to get the policy work done so that we can put some of those ideas on the table and have a discussion about them in the early days of the next Parliament,’ he said.
Greens leader Adam Bandt has asked Treasury and the Department of Prime Minister and Cabinet to prepare briefs on a possible minority government, after his party unveiled a new policy of restricting negative gearing and the 50 per cent capital gains tax discount to just one property for existing investors
Should Labor need the Greens to form government, the ALP could be facing a re-run of the 2010 election when the Greens and independents forced it to introduce a carbon tax – which did much to destroy the political standing of then prime minister Julia Gillard.
Michael Sukkar, the Opposition’s housing spokesman, said stopping investors from using negative gearing tax breaks would ultimately reduce the number of homes available to rent at at time when there was already a shortage, pushing up prices.
‘Where you tax housing more, you get fewer homes and you get higher rents,’ he told Insiders host David Speers.
‘You’ll have fewer homes built because of higher taxes and rents will increase – that will be terrible for renters and terrible for first-home buyers too who in the end will have fewer homes to choose from.’
Property Council of Australia chief executive Mike Zorba said restricting negative gearing would reduce the supply of new homes during a housing shortage crisis.
‘We are in the middle of a housing crisis, and the only way to get out of it is to build more homes,’ he said.
‘Tampering with negative gearing will only lower the supply of new homes.’
Adam Hubbard, a senior wealth strategist with buyers’ agent Metropole, said the Greens had failed to address the undersupply of new homes, based on expensive building costs and planning restrictions.
Property Council of Australia chief executive Mike Zorba said restricting negative gearing would compromise the supply of new homes during a housing shortage crisis (pictured is a Sydney auction)
‘While the intentions behind the Greens’ proposed changes to negative gearing and capital gains tax are aligned with making housing more affordable, the strategy misses the mark by not addressing the root cause of the crisis – insufficient housing supply,’ he said.
‘Effective solutions should enhance the construction of new homes and improve the efficiency of the housing market, not just reshuffle taxation policies.’
Mr Bandt argued housing became unaffordable in the early 2000s after John Howard’s Coalition government in 1999 introduced a 50 per cent capital gains tax discount for investors.
The policy pushed more investors in the housing market, reducing the number of homes available to first home-buyers and causing price growth to outstrip wage increases.
‘In the late 1990s, with a capital gains tax discount really lit a fire under the housing market, put a big time bomb there,’ he said.
In 1999, Sydney’s median house price of $272,500 cost 6.9 times Australia’s average, full-time salary.
In 2025, Sydney’s mid-point of $1.474million is 14 times an average, full-time salary.
The median capital city house price of $1.008million is now 9.8 times the average full-time wage of $102,742, CoreLogic data shows.
Labor went to the 2019 election with similar policies the Greens have now – vowing to scrap negative gearing for future purchases of existing properties and halve the 50 per cent capital gains tax discount.
Mr Albanese shelved those policies soon after replacing Bill Shorten as Labor leader.
But now government backbenchers have been arguing in favour of restricting the tax breaks for investor landlords, with MPs Graham Perrett and Josh Burns going on the record calling for changes to existing negative gearing rules.
Labor’s plan to build 1.2million homes over five years is falling short.
The home building completion rate of 177,313 was well below the 240,000 needed to fulfill the government’s target.
Labor has promised that all first home buyers will be able to get a mortgage with a five per cent deposit, with taxpayers underwriting the rest of the 20 per cent deposit that banks demand.
Mr Sukkar rebuffed a suggestion the Coalition’s plan would benefit high-income earners, and said it would remove existing financial hurdles.
‘They can’t service a mortgage and therefore they can’t get finance and the deposit hurdle is too high,’ he said.
‘Our plan is the only plan that seeks to address both.’
Opposition Leader Peter Dutton is proposing to allow first-home buyers to claim interest repayments as a tax deduction on mortgages up to $650,000 for five years if it’s a new property.
