Since announcing a little over two weeks ago that under a Labor government negative gearing would be restricted to new housing only from 1 July 2017, the Labor party has been the subject of attack from numerous property and housing industry lobby groups.
Speaking to Sky News, Shorten has doubled down on the Labor proposal, claiming the changes will put investors and home buyers on equal footing.
“I think that what we will see is an opportunity where first homeowners are not competing with a long queue of property investors to be able to get that chance to be able to get that Australian dream,” Shorten said.
“No one has given any evidence that it'll decrease prices and our modelling shows that it won't,” he said.
The Real Estate Institute of New South Wales (REINSW) is the latest organisation to hit out at Labor’s proposals, claiming that restricting negative gearing to new housing only could have severe consequences for buyers.
“The potential of capital gain is less on new dwellings due to inflated new prices and the unregulated spruikers will have a field day enticing naïve investors into good returns and high depreciation in the first few years followed by years of disappointment after that,” REINSW president John Cunningham said.
“This leaves the door open to the savvy investor who is positively geared to have a field day and thereby robbing the average person of his or her opportunity to get ahead,” Cunningham said.
Cunningham said negative gearing is not a “huge tax saver for people” and any revenue the government would generate from the changes to the system would come at a cost.
“The abolition of negative gearing will push investment dollars out of property and into other areas of the economy that do not give the consequential social benefits that property provides. The removal of negative gearing would deny an allowable tax deduction that all other entities that are in the pursuit of taxable income receive. It is time for government to stop treating property unequally,” he said.
“People who invest in residential property do so as it is considered a safe haven but at the same time there is risk and as such a large assets class that risk is high. Negative gearing lessens that risk slightly. People are generally terrified of shares and don’t trust government with super, whereas property provides them with a sense of security as they can see and touch it.”
The attacks on Labor's plans may now intensify as well, with the Australian Financial Review reporting the Government has scrapped any plans to alter negative gearing.
The AFR claims the Government is no longer considering any alteration to neagative gearing as part of its tax reform package, quoting a senior Liberal party figure as sying "we're not going to touch it."