The Rudd- Swan government’s flat denial of negative gearing reform proves that modern politics is incapable of dealing with the difficult questions. It was all too risky in an election year.
The dreams of working families are set to play second fiddle to the propertied class for years to come. But yet the announced reforms are the most significant tax reforms in living memory Mr Swan? Who are you playing us for?
Even more so today as interest rates are again raised. Hurrah – those who already own property don’t even have to ask for a subsidy from their subjects – the government is cheering the way via negative gearing write-offs.
The higher the interest rate, the greater the write-off.
Today’s write-offs equate to a $29.44m gift to the owners of the Great Australian Dream (1.6m negative gearing property owners with an average $300K mortgage over 30 years x 0.25/ 40%).
Working class people will have to pay the wealthiest via their taxes to cover this $30m trickle up.
All this and more is obvious to foreign economic experts. Our government and selected media insiders are the only ones that can’t acknowledge our bubble mania.
Our land and housing prices are more than 70% over their long term average, according to one visiting expert, Edward Chancellor, but yet the Rudd government has failed to even consider reforming the two most obvious tax distortions, negative gearing or the 50% capital gains tax deduction.
Post bubble, will renters thank negative gearing for keeping housing so high that they can’t enter the market?
Will they be happy when their superannuation investments are wiped out 2 – 3 times before retirement because of the dominance of lobbyocracy lording over long term thinking? Asset Bubbles in a financialised economy are ever so risky.
And Swan tempts young people to scream by saying that he is proud of the $700m first annual federal permanent infrastructure fund. Remember the statement:
“Your Taxes Fund the Infrastructure That Makes My Land More Valuable.”
The Henry Review has opened up the field of discussion on land taxes – hurrah! However, we must take them to task over this statement:
Though the Review’s proposed reforms to taxes, in particular stamp duty and land tax, could play significant roles in addressing housing affordability, other policies are likely to have a more pronounced impact on the responsiveness of housing supply.
This has been jumped upon by the property lobby as another clarion call for further urban sprawl forever policies. What about the property lobby’s willingness to openly declare they will crimp supply to bump up profits? See Mirvac here and Stockland there.
Forget the fact that the National Housing Supply Council wimped out on stating that there are 622,781 speculative vacancies in Australia. Read our calculations plus other immediate supply resolutions in One Handed Housing Supply.
Christopher Joye even critiques the ABS/ government for there being no solid land valuation statistics. For years we have been wanting a central body to release the State data uniformly; S.A’s land price data is released the month after collection, whilst Victoria’s takes 18 sleepy months.
However, back to the land supply versus zoning issue. No government body has openly recognised the role of speculative vacancies. This must become a central COAG issue.
Few are talking about the need to build upwards, not outwards. Rob Adams talks about 500,000 people being able to be housed along our transport routes. Nothing was done about that by the Vic State Govt, but you can bet your bottom dollar the astute investor would have bought up along tram routes in cultural hot spots (see Sydney Rd).
The government must look at these factors to have a rounded view of the housing market.
Yesterday’s announcement’s that property prices have increased by 20% in the last year must make minimum wage earners wince. Workers received no wage increase last year, following a 4.1% increase (Oct 08) and a 7.7% increase in Dec 06.
‘Working families’ KRudd? The joke is on wage slaves when capital gains holds the reins.
Who lays the ALP’s golden eggs?