Malcolm Turnbull rules out changes to capital gains tax or negative gearing
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Version 0 of 1. Malcolm Turnbull has moved to shut down suggestions his government is considering curbing capital gains tax concessions for property investors as part of a broader policy effort it has been telegraphing for months on housing affordability. But while closing off the issue, the prime minister indicated during question time on Thursday that officials may have modelled some CGT changes – behaviour he characterised as responding to suggestions from interest groups making submissions about the forthcoming budget. In response to a question from Labor about whether officials had modelled any scenarios, Turnbull said: “The honourable member knows very well that Treasury officials look at a whole range of options, a whole range of studies – we get submissions from various parties, from various interest groups associated with the budget, and it would be remiss no the to examine all of those proposals, and to pay respect to them as well.” The government was on the back foot on Thursday after a detailed report surfaced in the Australian Financial Review indicating that the government was looking at curbing the 50% CGT concession for property investors – which would be a major about face. Thursday’s report followed signals from both the treasurer, Scott Morrison, and the finance minister, Mathias Cormann, that tax rises may need to be part of the mix to keep the return-to-surplus trajectory on track. The Nick Xenophon Team this week torpedoed a major government savings bill that it had wrapped in with its childcare reforms, which triggered the warnings from the government’s Treasury team about possible revenue measures in May. After leaving the door slightly ajar on CGT changes on Thursday morning, Turnbull moved during question time to categorically rule out adjustments to either capital gains tax or negative gearing, falling into line with a flat denial issued earlier in the day by Cormann. Asked early in the day about the news report, Turnbull said the government would not support “the Labor party’s plans” on CGT. By question time, after Cormann told journalists categorically the government had “absolutely no intention of reducing the capital gains tax discount or making changes to negative gearing”, Turnbull toughened his response to echo the finance minister’s line. “I can confirm the statement by the finance minister this morning was absolutely correct and the government has no intention or plan to change capital gains tax or negative gearing,” the prime minister told the house. “That has been our position, is our position, the only party with a commitment to increasing capital gains tax and abolishing negative gearing is the Labor party.” But the Liberal backbencher John Alexander, who has been leading an internal push on housing affordability, declared negative gearing and CGT needed to be on the table. “All of these things should be considered,” Alexander told Guardian Australia. He said when he had first sought to have a parliamentary inquiry into home ownership, he’d had a debate with the then treasurer, Joe Hockey, who didn’t want the process to examine negative gearing. “The point that I argued was it’s pointless to do something if you’re not going to look at that,” Alexander said Thursday. “It’s a very major part of what forms the market price of housing in Australia, because more than a third of it is held by investors who have access to negative gearing. The other factor is the discount on capital gains tax, which is another incentive for investors. “Taking away the advantages of the investor by how much money they can borrow, and therefore how much money they can deduct … and also looking at the capital gains tax situation, to me is just, you know, so obvious that we need to do these things.” Alexander said there were “components of Ponzi-ism to our housing market, and we’ve got to bring reality back to it”. He said the government’s political campaign about energy costs was not as potent as a considered policy response to housing affordability. “You can talk about energy costs and whatnot, but if you bring up housing then that’s where the conversation will stay,” he said. “It is as fundamental as food, water and a roof over your head.” The government has been urged by a range of experts to look at the current concessions that favour investors over owner-occupiers as a means of making the housing market more affordable. The former treasury secretary Ken Henry, the Business Council of Australia, the International Monetary Fund, the Grattan Institute, the economist Saul Eslake, and Labor and the Greens are among those who have called for reforms to negative gearing or the capital gains tax discount. The Reserve Bank has also been pulled into the debate. Last year an internal memo from 2014 showed RBA officials saying “any change which discourages negative gearing may be a good thing from an FS perspective”, with FS standing for financial stability. |