Turnbull government rebuffs NSW intervention on negative gearing

The Turnbull government has rebuffed a surprise call from the NSW government to reconsider negative gearing, with Finance Minister Mathias Cormann effectively telling a senior state Liberal colleague to stick to his day job.

NSW Planning Minister Rob Stokes used a keynote speech on Friday to blame negative gearing for Sydney's intractable housing affordability crisis, taking aim at "generous federal tax exemptions and the ownership of multiple properties".

The comments put him on a collision course with the federal Coalition, which fought Labor's proposed negative gearing reforms at the July election, and has instead pressured the states to boost the supply of new housing.

Prime Minister Malcolm Turnbull on Friday confirmed the government had no plans to reconsider its position on negative gearing, while Senator Cormann essentially told his Liberal Party colleague to stick to his knitting.

"Rob Stokes should focus on his responsibilities as the state Planning Minister in NSW," he told Sky News.

"He's in the driver's seat when it comes to improving planning regulations, zoning regulations, pursuing higher density housing."

Senator Cormann reiterated the view that abolishing negative gearing would drive up rents - an argument the Grattan Institute and other experts have dismissed as a "myth" - and said the government completely rejected any change to its policy.

"We made very emphatic commitments in this regard to the Australian people before the last election and we completely stand by those commitments," he said.

Revenue and Financial Services Minister Kelly O'Dwyer said mums, dads and ordinary workers relied on negative gearing to get a foot in the property market and took aim at Labor for promoting a "simplistic solution" to a complex problem.

"It's got a lot to do with supply and demand, and the truth is we're just not building enough houses to meet up with the demand that is there," she told the Today show.

NSW is expected to have the biggest housing boom in Sydney's history, with government forecasts predicting 185,000 new houses and apartments will be built by 2021. It is also spending record levels on infrastructure.

Dr Stokes used his speech to the Committee for Economic Development of Australia to defend his government's record on housing, insisting it had answered the Commonwealth's call to boost supply.

"That's exactly what we're doing - with more homes than ever before," he said. "It is now time for the federal government to articulate how they will partner with the states in order to use the levers available to them to help more Australian families into stable and secure housing."

Labor seized on the speech, with senior frontbencher Anthony Albanese saying Dr Stokes had "belled the cat" on negative gearing, which was a centrepiece of Opposition Leader Bill Shorten's election pitch.

Shadow treasurer Chris Bowen said Dr Stokes' intervention was the latest in a long line of calls for negative gearing reform, and called on government ministers to "swallow their pride".

A Fairfax-Ipsos poll in March found 42 per cent of Australians opposed changes to negative gearing, 34 per cent were supportive and 24 per cent were undecided.

November 25 2016 / SMH

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