Treasurer Scott Morrison has rubbished the idea that curbing negative gearing would bring down house prices but made no mention of the effect of cutting capital gain tax concessions, which is under consideration.
Speaking on radio 2GB, the Treasurer said the idea that curbing negative gearing would ease housing prices was "just ridiculous", claiming all it would do was drive up rents. "I don't just see how an increase in your rent improves housing affordability, particularly if you're renting." Mr Morrison accepted housing affordabilty had become such a problem, people were deferring having children so they could buy a house.
The government is working on a housing affordability package for the May budget and has been actively looking at reducing the 50 per cent capital gains tax concession for investors among other measures.
Sources say negative gearing changes are not on the table but there have been two separate reports in the past week that the government has been looking at curbing the excesses of negative gearing. Mr Morrison appeared hostile to touching negative gearing on Monday. He continues to insist that increasing supply was "the most important thing". "There's no one housing market in Australia, they're all different." He said the proposal that "you put up a tax and somehow you can buy a house anywhere you like, that's a lie".
Move to Tamworth
The Treasurer said people, if they chose, should consider moving to regional cities like Tamworth where they could have a house and a better quality of life. For this reason, he supports Nationals leader Barnaby Joyce forcibly relocating government agencies from Canberra to other regional cities.
On the weekend, it was reported the government would stop foreign investors buying more than 50 per cent of a new housing or apartment development.
It is also looking at a proposal flagged two years ago by Mr Morrison when he was social services minister to encourage ageing homeowners to downsize and free up stock for young families. It would also unlock billions in capital. Some of the surplus funds left over after downsizing would be quarantined from the age pension assets test, and the new restrictions on superannuation, to remove one of the core reasons people stay in large homes long after their children have left. This would require exemptions to the $1.6 million cap on tax-free super retirement funds, or the $100,000 annual cap on non-concessional contributions.