Assistant Treasurer Kelly O’Dwyer douses hopes of changes to negative gearing

Assistant Treasurer Kelly O’Dwyer is insisting all tax reform options remain “on the table” but is playing down the prospect of the Turnbull government curbing negative gearing.

Negative gearing is the practice where investors use losses made on property investments to reduce their overall taxable income. Some 1.3 million Australians use the concession, making it a politically sensitive area for reform.

Former Treasurer Joe Hockey told Parliament this week that negative gearing should restricted.

“Negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property,” Mr Hockey said in his valedictory speech.

Asked on Sunday whether the government would be taking on the former Treasurer’s advice, Ms O’Dwyer said it is considering all options.

“[Mr Hockey] has a view on this, many other Australians also have a view on this and we will consider and weigh these matters very carefully,” the Minister told the ABC.

But she cautioned that negative gearing is widely used by mum and dad investors.

“It’s on the table – all these things are – although I would note…there’s obviously a lot Mr Hockey also said tax concessions on superannuation should be carefully pared back which the government is also considering.

In June, the Parliamentary Budget Office said curtailing negative gearing could save the federal government $42 billion in revenue over ten years.

The federal Labor party has already pledged to review the tax concession but has not promised any changes.

“I’m not saying it needs to be abolished. It needs to be dealt with,” Shadow Treasurer Chris Bowen said.

A lot of people say that only wealthy Australians take advantage of negative gearing.”

“When you look at the facts that’s not the case, average income earners are largely the people who do get to take advantage of negative gearing.”

“Nurses, police men and women on an average wage, for instance investing in a property, most of them hold only one property which adds to the housing stock that’s available for [other] people as well.”

“So you need to look at things holistically, which is what we’re saying we will do,” Ms O’Dwyer said.

SMH/ October 22, 2015