Whatever the merits of the Greens arguments to curb negative gearing and capital gains tax discounts, Labor is not prepared to tempt fate before the byelection in the outer Melbourne seat of Dunkley.
Voters trudge to the polls in three weeks’ time and while opinion surveys suggest the government will survive a swing against it, there is no appetite to throw housing affordability, rental and supply issues into the cauldron of yet another election contest.
That’s something the Greens are setting up by making their support for the government’s shared equity “Help to Buy” scheme conditional on these contentious reforms.
Former Labor leader Bill Shorten is still suffering post-traumatic stress from his losses at the 2016 and 2019 elections where his promise of a series of tax reforms including these were largely blamed for the defeats.
Shorten quipped on Friday that he took curbs to negative gearing and capital gains tax concessions to the 2019 election “… and what did we get? Scott Morrison”.
The politics of the housing crisis are diabolical as they lend themselves to the sort of scares that denied Shorten’s tenure in The Lodge.
The Greens are convinced that five years down the track the crisis has worsened and deride the government’s “Help to Buy” scheme as a “housing lottery” that will only push up house prices while failing to help 99.8 per cent of eligible renters and first-home buyers. A description rejected by the government.
The Greens housing spokesperson Max Chandler-Mather certainly gets under the Prime Minister’s skin.
Chandler-Mather went straight for Anthony Albanese’s throat in question time, suggesting “Labor’s refusal to phase out billions of dollars in property tax concessions to investors like yourself is denying millions of renters the chance to buy a home”.
The Greens’ tyro politician (Chandler-Mather is 32) noted that 75 per cent of all Labor MPs owned investment properties and he demanded an explanation as to why they support negative gearing, which helps investors outbid renters who are trying to buy their first home.
Albanese bristled at the question’s imputation of bad faith and ruled out any negotiations on these terms. He accused the Greens of a juvenile approach, “This is not a student council, it is a Parliament.”
The Coalition has played the Greens into the picture by rejecting the legislation outright, and last November joined them in the Senate delaying consideration of the $329 million scheme that the government says will bring home ownership back into the reach of 40,000 Australian households.
The scheme will provide shared equity home loans to eligible buyers with a deposit as low as 2 per cent. The government acts as an equity partner funding and owning 30 to 40 per cent of the property.
Albanese says the scheme stands on its own merits and the Greens are grandstanding.
The Prime Minister outlined multibillion-dollar measures his government has taken in co-operation with the states to address the nub of the crisis, which is supply.
Providing more social and lower-cost housing without fuelling inflation and provoking the Reserve Bank to keep interest rates high or go even higher is a policy tightrope walk.
Greens leader Adam Bandt says the government should end the “tax handouts for big property investors” and use the saved revenue to build more public housing to “help renters and first-home buyers”.
Analysis by economist Peter Martin says the Australian Bureau of Statistics has found that the overwhelming bulk of investor home loans benefiting from negative gearing go to investors planning to buy existing homes.
It helps them to bid against likely would-be owner-occupiers.
In December 2023 only 23 per cent of the loans to investors were used to build a home or buy a newly built home.
The increase to supply, which Albanese rightly says matters, is minimal.
Peter Martin says Labor should revive its old policy of restricting negative gearing to new homes.
Peter Dutton and his shadow treasurer Angus Taylor at the weekend accused the government of being “wishy washy” in their denials of wanting to reform negative gearing.
We should be grateful Albanese and Chalmers haven’t bought into the nonsense of ruling out changes forever.
These tax concessions helping to distort the housing market are crying out for reform, it’s just a matter of judging when the best time is for a rational debate.
The eve of a byelection certainly doesn’t fit the bill.
Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with more than 40 years’ experience covering Australian politics