Negative gearing: Bill Shorten stares down real estate industry

If real estate agents wanted to scare Bill Shorten into waving the white flag on his planned crackdown of tax breaks for property investors, the Labor leader is not shaking in his boots.

Some of the nation’s biggest real estate firms are launching a grassroots campaign to attack Labor’s plans to curb negative gearing, warning families, renters and homeowners the policy is an “economy killer”.

The Negative Gearing Industry Alliance, a group of about 20 major real estate franchises as well as their state and national peak bodies, will campaign to their extensive client base.

“Everyone, at some point in there life, interacts with a real estate. Our members … have all built up enormous databases and … all those avenues are being utilised,” Real Estate Institute of Australia president Neville Sanders said.

“This is the first time that the industry has been so motivated into the sorts of volumes that we’re looking at now to really disseminate a great message.”

The group argues that removing negative gearing tax benefits will reduce house prices and shrink the supply of properties available for rental, pushing up rents.

It says most tenants desire established houses, so limiting negative gearing tax breaks to just new stock would not help tenants.

“People want to rent houses in suburbia and they’ll be procluded from the negative gearing arrangements and there will be limited numbers of that sort of stock coming onto the rental market,” Mr Sanders said.

But Mr Shorten says he’ll take the advice of the central bank over real estate agents crying out about losing their $10 billion yearly concessions.

An internal Reserve Bank memo suggests discouraging negative gearing may be a good thing for the financial stability of the country.

“Vested interests will always scream in defence of their particular taxpayer subsidy,” Mr Shorten told reporters as he campaigned in Sydney’s inner west on Friday.

The policy was sensible and would generate jobs and lower house prices, he said.

Prime Minister Malcolm Turnbull warned banning negative gearing would drive down property prices, telling reporters in Adelaide Mr Shorten posed a “dangerous threat” to the economy.

May 13, 2016 / Sydney Morning Herald