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Most Australians would have thought the Wentworth by-election was a specific issue for those who lost Malcolm Turnbull as their MP when he lost his gig as PM. However, the electorate showdown where the Libs were clobbered has made us think about life under a future Prime Minister Shorten.
But in light of recent events, I want to shine the spotlight on the policies that this current misguided Government failed to play up in what some might call the grand central of property markets in Australia — the eastern suburbs of Sydney!
A good guy
I live in the East and saw the campaign. I saw that Dave Sharma was a good guy, but he didn’t talk about what might worry every homeowner in these expensive real estate postcodes in this former PM’s seat.
Changing gearing has a negative effect
Following the by-election I argued that Shorten’s negative gearing policy will be good for homebuyers but not home sellers. My simple argument was that when you take away negative gearing on existing homes, meaning that less property investors will be interested in the property because on resale, there’ll be fewer prospective buyers.
I interviewed John McGrath of McGrath Estate Agents on my radio podcast show earlier this week. He too was perplexed why campaigning didn’t seem to deal with this big issue for residents in the Wentworth electorate.
A friend of mine, who has never voted Labor, was set to vote for Kerryn, when I told her about Bill’s property policies. Even though she thought Phelps was a good candidate and wanted to send the Libs a message, she looked worried about her major assets — real estate.
Tell us the truth
The point is that voters need to know the truth, even if they can’t handle it.
Australia is made up of very different Aussies and what should eventuate at an election should be the best representation of who we are, as a majority, and what we want.
At the risk of sounding JFK-ish, some commentators look at the world and make their comments to influence readers. Others, like me, try to illuminate the economic truth in a confusing area of thought called economics, so voters can make better decisions. That’s not to say I’m the sole purveyor of economic truth.
What about grandfathering?
To counter my argument that Shorten’s proposed negative gearing policies will reduce the number of property investors at home sale showings and auctions, one ‘true believer’ (as Paul Keating might call him) replied, via twitter, with the single word: “grandfathering.”
He seemed to think I ignored this part of Labor’s policy but I hadn’t. Grandfathering means current users of negative gearing keep it on their current properties. OK, that’s fine. But if they come to sell the property, the only investors who might want to buy the property will be those who are renovators with great vision, knockdown and rebuild merchants or people who haven’t been give good tax advice.
The garden variety property investor, who buys to make capital gain, using the tax system to receive rental income and provide digs for tenants to live in, won’t be seen as existing properties in Bill’s world.
Why was negative gearing introduced?
This tax ‘dodge’ was meant to save the Government building accommodation for less well-heeled Aussies, which they did ‘big time’ until the 1970s. Shorten’s policy would be more acceptable to me if he had a supply of housing innovation but, to date, we haven’t heard much about that.
What about the halving of the capital gains tax?
Also his reduction of the capital gains tax discount looks good on paper for reducing the budget deficit but this too could reduce the number of punters prepared to borrow from banks to be a property investor to make capital gain. This is especially so when banks are being forced to be hard on these investors.
So my hope is that we can encourage a national debate, which in turn will prompt politicians to revisit the proposals – and I bet Shorten’s policy and retiree tax refund ideas eventually.