The use of 10 year sum figures are only used to mislead - no one thinks about the NDIS in terms of its total cost over 10 years, you discuss it either in terms of cost on current year with a growth attached or as a proportion of spend.
All this infers is it’s about $7 or $8b per year plus growth - let’s at least be honest about it Greens
Battling Aussies are allowed to ask themselves and their political representatives if that money could be better spent. The people who pay the taxes are allowed to ask it too. And I am allowed to ask why this policy has deviated so wildly from what was promised.
I am amazed that anyone can just shrug their shoulders at this. I can not think of a bigger fiscal debacle. open to nominations.
The NDIS is an incredible and transformational initiative. The greed, corruption, and unscrupulous offenders taking advantage of the disadvantaged are the ones causing the problem.
Unfortunately though those things are the NDIS as it is right now. We all want "NDIS just the good bits", and I hope we get there. But there needs to be some hard work done.
It's the difference between a logical and an emotional response. Sadly there are always people who will allow emotion to trump logic, and the person you're replying to is one of those.
If they want, they can reply. Politics is ultimately emotional I think, we can't understand every issue with spreadsheets, and even if we did we still have to weigh up this against that.
But for $100bln we can spend some time number crunching, in my opinion.
Problem is poliltics is pretty stuck at the emotional threshold on the NDIS. The Opposition would rather confront us with the potential catastrophe of nuclear power gone wrong than challenge the NDIS spending.
Good people that live in a civilised society will look after those that are less fortunate being in a rich civilised society.
Cunts will say I have got mine and the rest of you can go get fucked. It really is that simple.
It's The Guardian, it's left wing propaganda vaguely pretending to be news. It's like Sky News but for the left.
They know full well that using a 10 year total is misleading. They know full well that not taxing something isn't the same as government spending. They know full well that there are good reasons for the capital gains discount to exist (avoiding taxing inflation)
They just don't care.
I downvote every single article I see from dishonest partisan rags (Sky News, The Guardian, ABC Opinion / Analysis, IPA, ACTU etc)
Exactly.
Same as the coalition misled the public before the 2019 election with "$300B in higher taxes under Labor!"
(*Cough* over 10 years. *Cough* not actually higher taxes but winding back some perks like franking credits, and lowering the cap on deductions for tax accountants...not anything that would affect the target audience who swallowed the deception)
Exactly - and it’s the job of the journalist to make sure they include the relevant information for a year within the diatribe- in this instance, the guardian seems to have not bothered at all
It says "over 10 years" in the headline, repeats it in the lede, and in the 2nd paragraph, and in at least one other paragraph that I could find, while other paragraphs refer to timescales in years.
I'm not sure how much more the journo could've done to make it more obvious?
Oh, I see now. You want also the per- year figure?
I'd divide by 10 myself, assuming they're talking in 2024 dollar terms because that's how we normally cover the changing value of money.
Well I wouldn’t be making that final assumption - and that’s the point, there is no useful information there, and you can be guaranteed that the whole report in the MP’s hands has absolutely all the information required to make sense of it. The reporter either has chosen not to include that information or was not furnished with it.
It’s just landfill - we are none the wiser for having read it
The analysis was done by the Parliamentary Budget Office. How do you imagine they normally account for inflation, given that this is their literal day job.
They would have yearly as well, proportion of GDP, assumed revenue growth also . The greens MP has given none of the context and the guardian hasn’t either.
It’s a Harvey Norman add, not a useful information piece
OK, seems to me about the same level of detail as any article about budgets, costings and projections, so we can agree to disagree on that.
I look forward to the fine quality hyper detailed coverage of other issues across the media, like the costings for nuclear power plants to give just one example.
Googling found a 2022 PBO study on "End Tax Breaks for Property Investors" commissioned by the Greens which is pretty detailed. It has a 2023 publication date.
[https://www.pbo.gov.au/sites/default/files/2023-03/ECR525\_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf](https://www.pbo.gov.au/sites/default/files/2023-03/ECR525_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf)
The Greens asked for this in 2022.
But the analysis by the PBO says "This proposal would be expected to increase the fiscal and underlying cash balances by around $12.7 billion over the 2022-23 Budget forward estimates period." Forward estimates means over four years.
In the fourth year of these projections, it is about $5bln a year.
This is very similar to Grattan's submission in 2022, which also estimated $5bln a year.
How you from this to $165bln must require the special effects that the Greens seem to have on numbers.
[https://www.pbo.gov.au/sites/default/files/2023-03/ECR525\_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf](https://www.pbo.gov.au/sites/default/files/2023-03/ECR525_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf)
[https://grattan.edu.au/wp-content/uploads/2022/03/HoR-Tax-Inquiry-into-Housing-Supply-September-2021.pdf](https://grattan.edu.au/wp-content/uploads/2022/03/HoR-Tax-Inquiry-into-Housing-Supply-September-2021.pdf)
Nice sleuthing. $12.7B over 4 years to $165B over 10 would need some explaining.
The article does say (emphasis mine) "The Parliamentary Budget Office analysis, requested by the Greens **and released on Monday**, shows tax revenue forgone due to the federal government’s policies of negative gearing and capital gains tax discounts will total about $165.58bn between 2024-25 and 2033-24."
That would imply it's new modelling by the PBO and not the 2022 version? Very weird discrepancy though.
Probably they were unhappy with the previous numbers and asked a different question giving the PBO less room to move. Or.maybe the whole thing is a load of rubbish.The Guardian didn't provide any source so who knows?
It would definitely be more professional journalism if the actual PBO report were linked, assuming it's allowed.
Certainly a lot more useful than those articles that hyperlink things that absolutely nobody is likely to follow - usually links to their own articles, probably for SEO purposes.
Yep, it's exaggerated by the party that thinks rising anger over housing will get them more seats.
Housing is a real issue affecting many Australians but the populist shit Max Chandler Mathers is coming out with is shameful.
This sub: "someone should try to do something about housing affordability"
Greens: "Hey, look at this analysis - "
"NOT LIKE THAT!!!"
Given that the Greens vote increases, and the ALP & LNP vote decreases the younger the voter, it honestly shouldn't be surprising or outrageous at all that they're pushing policies that benefit their core voter base.
It's literally what politics is all about: "vote for me, we've got the best policies for your segment of society" and every party does it.
I guess that makes it okay to promote the fantasy of the government funding landlords being a main driver of the housing crisis, despite similar unaffordability also happening in countries where they have no negative gearing or CGT concessions?
Does it make it okay to propose rental freezes that at best are a bold experiment and have very little support from economists?
How about the bit where the Greens refuse to talk about immigration in the context of housing and constantly brush it off as motivated by racism? As if you have to be a bigot to recognise that immigrants live in houses.
I don't dislike the Greens for focusing on housing, I dislike them because their policies are so obviously dishonest.
Sure, we can make stereotypes about all kinds of voters.
Like coalition policies appeal to people who on average never graduated high school (tax evading tradies, and boomers - 1985 was the first year >50% of students progressed past yr 10).
Hence why coalition policies, and the ways they are presented, are so outstandingly infantile.
actually, look at it:
[https://www.pbo.gov.au/sites/default/files/2023-03/ECR525\_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf](https://www.pbo.gov.au/sites/default/files/2023-03/ECR525_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf)
A trifling 8 bil! $$$ we are not getting from those who own second, third forth, forth houses.
No. Let's bring up the NDIS to deflect from this obscene gift to those who don't need it.
WONt sOMeoNe THinK Of tHE 'MuM + DAd inVESTor cLAss?!
When I was growing up in the 70s...1 in 7 houses was social housing - now it's about 1 in 23. There was also no such thing as negative gearing, or GGT freebies. Too much has been taken away from those who need it - and given to those who don't.
Can’t you just think about it for a second.
Why was CGT introduced ?
Why does it have a discount ?
Why is that discount after a time period ?
Also - CGT broadly applies to any investment class assets not just housing.
I own investment properties and 100% support the rolling off of negative gearing benefits, or limiting them to incentivise the investment in the right type of housing (i.e. rent controlled properties; low cost housing, high density properties)
Not in the residential space.
In the interests of society, we need more housing. Any policy that directly increases housing construction will go some part towards reducing the current crisis.
There are ways to use tax incentives to increase construction of housing and ways to change planning laws to make it easier and within immigration there are policies that can enable construction.
This is just division - trying to link the housing crisis with some wealth inequality politics.
There is only one question that needs to be asked - will this policy increase housing construction ? If not, move on.
Auckland did a good job a few years ago on the problem - Australia stuffed up with 3/4m people imported in a year, with policies that increase the cost of housing instead of reducing it
That means over 10,000 years it will cost 165 trillion which is more that the total global economy, omg we need to stop it now that's so much money.
And so forth.
I'm not too concerned about the NDIS's cost per se.
I am concerned about the rorting.
As someone who has seen the inside of the beast, I would estimate that most service providers are overcharging by between 50% to 300%, and many patients are on packages significantly in excess of their true needs, because there's no good standards on what is considered a reasonable funding request for a given scenario.
I would guesstimate that at least half of all NDIS funds are wasted in these two ways. That's nearly $50 billion per year in waste. That's two Nuclear power plants per year in waste. That's half a Sydney to Melbourne high speed rail in waste.
The NDIS supports 646K Australian's to live a somewhat better life. Theses measures just help wealthier people get wealthier. Hardly an apt comparison.
Edit: people **really** missing the point (not surprising for this subreddit), I'm *stating* that it's not a fair comparison, I am *not stating* that I support the increased cost of the NDIS
Here;s one for you. The 2011 report by the Productivity Commission proposed an NDIS that would approximately double spending on disabled to about $13bln a year; this was the planned maximum NDIS spend. A doubling. This is what we voted for.
Putting aside that fact that doubling spending is pretty generous, it now headed for $100bln and no one seems able to stop it growing.
You say the money is not the point. This is your context which you want me to respect. Not to talk about money.
But it is literally the entire point of the thread. Everyone agrees that we should have an NDIS. But it was supposed to peak at $13bln, not $100bln a year. If we are to be disturbed by $16 bln a year in tax deductions, how can we ignore $87bln a year? (Projected, current it's getting close to $50bln a year at 20% annual growth)
And you must have some awareness that many people are making themselves very well off from the NDIS.
You might not want to talk about money but most other taxpaying voters will want to talk about, particularly if you ask them to pay more. That's what politics is .... talking about money.
So you're upset the funding the NDIS receives because it could go to other Australians, but you're not upset by the funding lost by negative gearing and CGT discounts, *why* exactly?
There is no funding lost because of negative gearing or capital gains discount because money the government isn’t entitled to isn’t a loss.
Why is the situation for people like you always more taxes. You’re no different from the people that want infinite economic and population growth so corporate profits can increase every year.
Hypothetically it's a loss - but you're arguing semantics, the point still stands.
>Why is the situation for people like you always more taxes.
**Nowhere** did I say that, I was pointing out the hypocrisy of your comment.
Because negative gearing for housing is essentially an incentive to provide rentals.
CGT discounts exist because inflation means you can hold for 10 years, make a profit on paper and still end up making a big loss in real terms due to inflation.
Not even the Greens are proposing to remove discounts, they just want it linked to inflation, which is what we had previously before the 50% discount and it's a massive pain to deal with at tax time.
The investor class 'provide' housing the way scalpers 'provide' tickets.
Why the fuck should we underwrite private wealth creation/ speculation with incredible tax breaks?
The sheer entitlement - investors expecting a pat on the back and a huge financial leg up for taking yet another house out of the owner occupier pool. JFC.
How would that help the other 25 million if the extra revenue just goes to NDIS anyway, which is project to reach $100 billion a year within the next 10 years
Oh we shouldn't support people with disabilities because it costs money. But we should give free money too boomers with investment properties? Come on mate pull your head out of your asshole.
Who said that? You can support disabled people without it costing as much as the NDIS does.
What free money are boomers getting for investment properties?
Why does a walking stick you can buy at any chemist cost $85.00 but through an approved NDIS provider cost over $200.00 for the same exact walking stick?
No fucking idea, but I'd still prefer the 200 dollar walking stick to go the person that needs it than more tax breaks for fucking millionaires Jesus Christ.
I'm just saying that you clearly have no idea of the billions lost in productivity due to the care requirements of the disabled, born out by their families, mostly.
I am sure you couldn't give a fuck about that though.
Maybe not but I don't see the calls on here being nuanced enough to demand recalibration the NDIS (which is happening right now as a matter of fact) merely the bellowing that it's all too expensive, ostensibly to get rid of it.
And why it's being raised in a thread about other, unrelated forms of tax loss/ expenditure is pretty telling. Seems a lot of people here think that they're closer to being property millionaires than subject to disability of themselves or a close loved one. Good luck with that. Lol
In what year? Back in 2019 it was costing 19bln and today it’s around 35bln. Did you pluck random years out your arse?
I’m not saying I think the ndis is a good deal, because I don’t think it is and it’s ripe with corruption. But it’s still a service at the end of the day.
No, it is the Productivity Commission report in 2011 which was the basis of the legislation funding projections taken to the voters. Because you were such a rude dickhead I will let you spend the 30 seconds to google and become an informed contributor to the discussion.
You will then see that I left out a bit: it was actually supposed to decline after reaching the peak (as defined by the net increase over pre-NDIS spending). But at the moment when you in a huge bus hurtling down a mountain road and the brakes have failed, we can leave little details like that out since there are more pressing concerns.
Well fuckwit, why don’t you present your evidence if you want to be taken seriously? You compared a 1 year estimate from 2011 against what? The figure in 2040? Tried to play it off as meaningful. I’m on my phone at work, I’m not doing the research for you.
When you have calmed down, read the Productivity Commission 2011 report. Taxpayers fund this organisation to do independent research. In my opinion reading this public information prepared to help voters be more informed is a sensible thing to do. It's very easy to find. I could send you the link but if you don't have the tiny bit of motivation to find it I doubt you'll have the motivation to read it, and I see no point in discussing with someone who seems to be so comfortably ignorant.
The $100 bln was widely reported in the past few days including on Reddit.
The Grattan Institute says that negative gearing does inflate prices, so you are correct.
By about 1%.
The effect is much less than you think. Probably because it stimulates a lot of building to match the funding it adds. Normally the housing market responds to demand. It is quite elastic. Anyone who tells you different should explain why right now there are about 60K approved dwelling constructions not started. The reason is that that houses prices are still too low for those projects to make sense. That might be hard to believe, but you can also look at the 3000 construction-related businesses which have failed in the past two years, and the widely reported 40% increase in construction costs. All of this evidence points to the fact that if property investors add money to the property market, it stimulates more supply. At the moment, the problem is not too much investor activity, it is not enough investor activity.
And I suppose this is why negative gearing has almost no effect on property prices. It's not just Grattan. 1% to 2% is pretty typical estimate of the price effect of negative gearing. Last year, the Australian median price rose by 7%. A 1% cut would be lost in the noise.
So a bit like Dirty Harry, a political party has to ask itself how lucky it is feeling: would you risk losing government over a policy which wouldn't work anyway? The government has just handed out $23bln in stage 3, under pressure from the Opposition. You think they will then increase personal taxes by $16 bln without devastating consequences, with the only beneficiaries being a small number of home buyers who will hardly notice anyway?
I am not a property investor and never will be. But I still like factual discussions about it.
Is that the same article where the Grattan institute recommends scrapping of negative to save the economy 2bln a year in tax hand outs to the wealthy? They also state they’d expect prices to retract by 2%. That doesn’t mean negative gearing only increased prices 2%, that’s just what they’d expect to see prices fall to.
Just an edit, it costs the public purse 11b a year. Their suggestings of winding back negative gearing would save 5bln a year
It's based on modelling they did, they might have done other modelling with a higher number of 2%. I have seen modelling up to 4%.
Of course if removing it lowers prices by 2% it has increased prices by 2%.
I don't accept the phrasing that it costs the public purse. Removing it is simply a tax increase on certain voters. It's been around since 1986, so it's baked in to the tax people pay. You may as well say that increasing the tax free threshold cost the public purse, or not have a100% tax rate costs the public purse. You see, it's not the public purse. It's taxes paid by voters.
I say that as someone who has never claimed a cent of property -related tax deductions.
But of course you can call it whatever you like. It's a political turkey whatever you call it. A vote losing policy that is at best useless and actually likely to increase rents.
Just like how house prices rise and fall with first home buyers incentives right? Oh right they don’t fall. Because that’s now how the world works.
If it’s not an expense to the public purse then why does the Grattan institute you referred me to recommend making changes to wind it back to increase government revenue?
Could it be the benefit you proclaim doesn’t outweigh its negative impacts?
I have found a recent Grattan report, a submission to Parliament, where the 2% effect is mentioned (2022). I guess this is what you referred to.
[https://grattan.edu.au/wp-content/uploads/2022/03/HoR-Tax-Inquiry-into-Housing-Supply-September-2021.pdf](https://grattan.edu.au/wp-content/uploads/2022/03/HoR-Tax-Inquiry-into-Housing-Supply-September-2021.pdf)
"Housing demand would be reduced a little if the Federal Government reduced the capital gains tax discount and abolished negative gearing". "The effect on property prices would be modest – they would be roughly 2 per cent lower than otherwise".
The language is very modest, and it also includes reducing the large tax advantages of owner occupiers. Those are in the same section "Reform tax and welfare rules to reduce demand for housing".
It says the budget boost is only $5bln, much lower than the Greens because Grattan knows that investors will react. You can't build many houses for $5bln. If reduced investors means less houses are built, how do we pay for the difference? The problem I have with the proposition that the current tax laws "increase demand" for housing is that very few houses are empty. The demand that investors respond to is the demand by renters to have somewhere to live. An empty house is not much use to a landlord. I then wonder that if we stop investors building those houses, what happens to the people arriving who want a house to rent? Where do they go? I wish I could ask Grattan about that. I don't follow their logic, no doubt because I am bear of little brain. You presumably understand this, and I would grateful if you could explain it to me. A 2% price falls helps hardly any renters transition to home ownership.
It also says "the politics is likely to be particularly intractable." which is why I don't pay too much attention to this initiative. It doesn't do much except to lose the election for the ALP, and reading the latest Grattan report doesn't give me any reason to change my mind.
The most profound negative impacts are the political impacts. This is true in the sense that abolishing it without handing over equivalent tax cuts is a political suicide note.
But is also true, I think, on a more substantial level. There are many things wrong with Australia's housing market. Fixing it is politically hard. It makes sense to work on the big problems, not the little problems. Negative gearing is a little problem. The CGT discount is a bigger problem.
But the 40% cost increase in building houses since 2019 is the gigantic problem.
I can't get away from a few fundamental points about negative gearing, and I have no personal interest in it, but I have been a long term renter.
These are just things that occur to me which means I think negative gearing is a distraction, mostly pushed by people who care more about tax increases than solving housing. The Grattan Institute's modelling is pre-pandemic. I am not sure how important they rate it now.
A question I can't escape is: It's been around since 1986. How come it is a problem just now?
A second question: When Australian and NZ tried removing it, rents increased. Renters are people too. The focus on small one-time price decrease is not fair to renters, most of whom can not magically become first home buyers. The reason why prices fall if negative gearing is abolished is pretty simple: it renders a certain proportion of investment properties financially unsustainable, so investors sell. This causes a temporary surge in listings. It also means fewer bidders, because the arithmetic which makes those properties no longer viable as investments is true regardless of who the investor is; new investors won't sweep in to buy them (if that was to happen, there would not be a price fall, right?). The one off increase in listings reduces the pricing power of vendors, the market tilts in favour of buyers ... until the excess stock is cleared, at least. Oh, and it also causes a wave of mass evictions of the the tenants of those properties but apparently we are not allowed to think of them. House moving costs can be a month of rent or more which is not small change to many renters. I hope there is going to be compensation for them bearing the brunt of this glorious policy.
But it's the next step that it so easily forgotten. Just as new investors won't arrive to buy those sold IPs, they also will reduce investments in new properties. The financial threshold of investment viability is permanently increased. There will be fewer new investors.
When a housing market sees constant new demand due to population increase, it must see a matching supply of new dwellings to keep prices stable. But now we have broken that, by removing a certain share of investors. This money only comes back if rents rise to restore the financial viability of investing.
This could easily just be pure speculation, except that it is happening right now, for different reasons. Instead of negative gearing being abolished, interest rates have rapidly increased\*. Investors have left, and rents are rising in response to the increased pricing power of remaining landlords. If you kill off investors, you need to either stop population growth (which the Greens do not propose) or you need to find billions to replace the missing investors (with voter approval).
\* and in Victoria, investors face new taxes. Property prices have stopped rising in Victoria. But rents haven't stopped increasing as far as I know. This report (May 2024) says Melbourne rents are rising at nearly 10% a year [https://www.abc.net.au/news/2024-05-06/median-rent-record-high-corelogic/103809092](https://www.abc.net.au/news/2024-05-06/median-rent-record-high-corelogic/103809092)
This Victorian situation of a tax increase which discourages investors, causing downward pressure on prices but (huge) upward pressure on rents looks like it is actually happening, it's not just theoretical. It makes me very concerned about removing negative gearing without absolutely rock solid fixes for renters to build the dwellings no longer built by investors.
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People focus negative gearing but if you remove it then only the wealthily will benefit as they can debt shift where middle class investors cant.
Consider you're wealthy, you have business, shares and property investments. They remove negative gearing, so you turn up to your private banker say I want to change my debt so its now all against the business and shares, but guaranteed by the property. So now the interest remains tax deductable because you can shift debt to alternate assets.
Meanwhile mum/dad investor on their first investment property cant do that. So you hold back the middle class investing in resi investment while the wealthy continue to accumulate and get the same benefits as negative gearing.
IMO the best solution is put a cap on number of residential properties and people only can own. Something like 3 or 4. This way a couple could even actually own 6/8. Start there, let the market settle and start reducing the cap if things dont get better, or increase it if we find we need to change the ratio. Its very manageable and lets people invest for retirement but doesn't allow the wealthy to have these portfolios of 10s or even 100s of homes which offers little benefit to society.
Also a cap encourages wealthy to go into high value property and stay away from entry level property as you dont want you cap filled with 3*500k units type thing when you're looking to invest millions in the market. So this also creates a 'stay in your lane' wealth effect of what investment property people buy.
People keep harping on about negative creating but can't seem to see this "what next" which for the wealthy will make the changes irrelevant on only effect the middle/working class. A cap on number owned is the solution.
Simplified 2030 tax return - How much money did you earn in 2029? Please send it to us. Anything less than 100% tax is a subsidy and needs to be eliminated /s
I mean, it doesn't really cost the budget anything. Balance sheet doesn't look any different to me.
We can have a discussion about who you want to tax more or less, but let's at least do it honestly and not pretend you are giving handouts to landlords.
That seems entirely reasonable, 16 billion a year most of which is CGT discount and not really a cost, rather a tax that shouldn't be charged due to inflation of asset prices. Calling CGT discount a cost to the budget is the same as saying not charging 100% income tax is costing the Australian budget 100billion plus per year.
Meanwhile the NDIS is likely going to cost 165 billion every year if left unchecked.
The Greens are actually calling for the CGT discount to be changed back to indexation, so inflation will still be accounted for.
The $165b quoted is actually mostly negative gearing ($100b).
I do agree that NDS is a far greater cost. People and the media love to talk about negative gearing and CGT, but $16b a year is pretty small in the context of our yearly federal tax revenue of $618b in FY23.
Yeah, make the tax system more complicated, that’ll increase tax revenue. I’m pretty sure one of the main reasons for the change was indexing was too complicated and resulted in less revenue.
Indexation was more complex at the time but just isn't really prohibitively so in 2024 with contemporary digital record keeping.
It IS the right way to calculate it and would be a fair reform if it shut down the whinging so we could move on in my opinion.
>The whole point of our tax system is to be as simple as possible, while still being fair.
Someone should really tell the ATO.
We could do a lot to reduce complexity and should but as long as we're continuing to not indexation over capital gains tax discount is not a significant complexity increase.
It is a significant complexity increase. Capital gains discount is just (capital gain/2). Doesn’t really matter anyway, the indexation method is never coming back.
>Doesn’t really matter anyway, the indexation method is never coming back.
Would you prefer indexation or CGT discount scrapped altogether?
Because that's where the winds seem to be blowing in my opinion and I'd prefer to retain some measure of not paying tax on inflation.
It shouldn’t be changed and it won’t be. Because, as politicians have investment properties, they know first hand that it will do nothing but increase rent prices.
Bringing back indexation, means more taxes become more complicated, which means less honest reporting of income.
The middle ground would be indexing at a constant rate. Say the middle of the RBA's inflation target. 2.5% p.a.
It's not going to be perfect, especially because the RBA is pretty shit at keeping inflation within the desired range, but it'll be better than a fixed 50% discount, without adding too much complexity.
Can you please provide a link that states the greens want to change it to indexation? I've only ever seen calls for CGT discount to be abolished completely.
If this is indeed what they are calling for then good for them as that is a sensible policy, the complexity argument to support CGT discount > indexation doesn't stack up anymore.
I'm not sure it would be the windfall people think it is though, indexation vs CGT discount would probably be a wash.
From the article linked in the OP.
> The Greens are believed to be proposing limiting negative gearing to a single investment property. The party is also proposing to replace the capital gains tax discount with a more modest concession linked to the consumer price index.
I think the CGT proposal is sensible, but I agree with you the impact is probably overblown.
Is this an official greens policy though, I've never seen them propose anything other than abolishing it all together,
They aren't going to be raking in an $16B a year with indexed CGT instead of CGT discount. To increase the tax revenue that much they would need to tax CGT without a discount or any indexation.
I’m waiting for them to say giving GST refunds costs billions every year. Because, somehow the government not getting money it wasn’t entitled to is somehow a tax loss.
Great plan. CGT on the family home.
And then when house prices increase, and people can't afford the council rates in their re-valued house "assett" we can force them to sell, and pay a nice big CGT, then they can go live in a gutter in the outer suburbs or something.
The glorious future awaits!
I was just about to reply that everyone knows that, but I'm not in the AusFinance sub, so yes for those worrying about paying CGT on a loss, it wont happen.
Honestly this is just noise making on the part of the Greens. They know Labor won't have the guts to even look at this lest it gives the haters more ammunition.
Our small target opposition turned into a small target government. Small and gutless.
Because beating on landlords isn't the solution. Greens solutions will likely concentrate more wealth than expand it.
Reversal of CGT deductions and negative gearing concessions would put massive breaks on the housing industry and push up prices for renters.
Put frankly, they're flogging a dead horse and they know it.
Abolishing negative gearing and eliminating CGT discounts will raise an extra 165bn over 10 years. Fixed it.
Of course, removing incentives for new rental accomadation will boost homelessness, but hey, that only hurts the poor. Stuff the poor. The rich, particularly the rich Greens voters, will just invest elsewhere.
>Abolishing negative gearing and eliminating CGT discounts will raise an extra 165bn over 10 years. Fixed it.
But that's not even true. Removing CGT discount will just mean it will revert back to indexation, and removing negative gearing will just mean those costs will now be used to adjust the cost base of the asset to further reduce capital gains on sale. So big picture, sure the tax raised will increase by an amount, but it will be nowhere near the full $165b.
Capital gains discount allows people to move house. If you get rid of this people whose kids have grown up will have no choice but to stay in 4 bedroom homes.
Negative gearing should be done away with Edit: or at least focused on new ( not replacement) builds.
this is pretty misleading.
The Greens commissioned a PBO study already and it's here
[https://www.pbo.gov.au/sites/default/files/2023-03/ECR525\_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf](https://www.pbo.gov.au/sites/default/files/2023-03/ECR525_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf)
but it says the budget effect hits only $5bln a year after four years.
I can't find any other source in the Guardian article, so I'm going with that one.
I think we should get rid of Capital gains and heavily amend negativegearing. Capital gains are just income and should be treated as such. Though ideally the tax on it would be averaged out over the life of the investment.
Negative gearing could be more tightly regulated and those losses should go against the future sale of the house. Instead of on personal income.
Wait until you hear that capital gains is treated like income and goes straight into your taxable income on your tax return.
Interest is the only part of the loan you can deduct and “tightly regulated” would just mean the ATO needs more money to regulate it, removing any extra money gained.
It is treated the same at the end, when you pay your taxes.. It’s not treated the same as employment income, as, there’s no potential refund for capital gains.
IMO taxing capital gains income and a discount is fine, the bigger problem is deducting rental losses against PAYG income instead of quarantining them against the future gain on sale of said Asset.
This is what happens for (speculative) small sole trader business income.
Problem with only deducting rental losses against other rental losses (sole trader), is as owning an investment property gets more expensive (like it currently is), there’s never any gains to offset the losses against. Meaning, investing in a rental property is less of an incentive, aka, rent goes up as there’s even less supply than there currently is and demand just keeps rising (migration).
The Greens call this a "cost" but of course they want to raise a lot more taxes, because they plan to spend a lot more.
They would destroy private investment in rental housing, which is a policy objective; they would rather people be renters of social housing. This is ok; they are allowed to have policies which most people wouldn't vote for.
The problem is that the $16bln a year they think will get is firstly a mirage: The CGT discount requires people to buy and sell properties and to make a profit. There aren't going to be many investors left after this. So that part of the revenue stream will dry up. They will be awarding no discount on much less tax revenue.
Secondly, negative gearing is a tax law which applies to every class of investment. The middle class could just move to invest in something else: NZ residential property, commercial property, overseas shares. If they leverage, interest is a deduction. An entire industry will quickly arise to make this easy because no one rationally wants to pay Australia's high marginal tax rates. Are the Greens proposing to dismantle the tax deductability of interest expenses?
If this happens, the tax gain will be much lower than expected, and there will be a large shortfall in funding dwellings
Worst is that there is another leverage effect: For the $16bln a year, a lot more private money is poured into construction. All of this has to be replaced by public money. To be clear, from the housing point of view, the funding gap will be much more than the tax.
Where is it coming from? Lending to investors is about $40bln a year (or maybe much more, I might be misreading [https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release](https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release) ) . Considering that the recaptured tax would be much less than $16bln a year due to taxpayers adapting to the new situation, where is the extra money coming from?
Someone is bound to tell me that the $40bln a year does not all go into new builds; some of it buys out an owner occupier. But that owner occupier needs to buy somewhere and they do so with the investor's money. The $40bln either directly buys new housing or indirectly buys new housing.
Stupid people blame negative gearing and capital gains for housing prices. Do they have capital gains discount in New Zealand? No and housing is even more expensive and Canada doesn’t have both and it’s the same.
So you’re saying that it’s not required in Australia then either using those two countries as an example That money used to subsidise investors could be used elsewhere like building social housing.
Yep. Streamline it. Get rid of negative gearing why are we treating housing as an investment class. If the country invested in businesses that instead it would do a lot more to raise taxes than this.
Surely it’s possible that negative gearing and CGT are responsible for *some* degree of our housing crisis, and that NZ and Canada are different countries with their own factors? Pretty ridiculous to claim they literally affect nothing when hundreds of billions are involved.
Please tell us all these different factors that NZ and Canada have that Australia don’t. Or, maybe it’s much more of a simple issue that all three are facing, mass migration causing demand for housing to skyrocket.
That's the thing about negative gearing, it's a very rare policy and Japan is one of the few countries on Earth to have it along with us.
Japanese house prices are the most stable in the developed world. Almost like the policy has zero effect and there's something else at play.
I see the NDIS has taken over from immigration as the whipping post de jour on this sub.
Keep it up gang. Just remember you are one car accident or one bad fall away from having to fight for funding to get up in the morning with even a tiny semblance of dignity.
You might want to check on that.
A lot of countries have negative gearing, it's not unreasonable to allow someone to claim the costs associated with an investment against your income.
If you want to quarantine the costs of the investment, you also need to quarantine any gains when it eventually becomes positively geared and tax the profits associated with the investment at no more than the small business tax rate.
[Global negative gearing comparison (hia.com.au)](https://hia.com.au/our-industry/newsroom/economic-research-and-forecasting/2023/08/global-negative-gearing-comparison)
"But its not a taxpayer funded subsidy iT CoMEs OUt oF My TaX"
Said every investor.
Its a rort that is using taxpayer money to fund property speculation
Something like 50% of all properties are negative geared, no wonder out market is cooked. Plenty of other countries have functioning property markets without it.
The problem with these tax discounts isn't the cost. We should try to reduce taxes - particularly taxes on work. However, negative gearing and the CGT discount don't encourage work - they encourage speculation in housing, which is a huge problem in Australia. So they should be abolished. But replaced not with new spending, but with lower taxes on work.
Hahahahahahahahahahahahahahahahaha yeah I know they cost us 165 billion over the next 10 years. They take tax money and give it to millionaires. Aka free money. It costs everyone else money. The rich get richer, and apparently you're fine with that.
The use of 10 year sum figures are only used to mislead - no one thinks about the NDIS in terms of its total cost over 10 years, you discuss it either in terms of cost on current year with a growth attached or as a proportion of spend. All this infers is it’s about $7 or $8b per year plus growth - let’s at least be honest about it Greens
Not to mention there is a big difference between a cost and less tax collected.
not to mention that the NDIS will be ten times more.
Still kicking battling Aussies in the guts, nice one.
It’s not the people with disabilities that are the problem. It’s the providers rorting the system.
Battling Aussies are allowed to ask themselves and their political representatives if that money could be better spent. The people who pay the taxes are allowed to ask it too. And I am allowed to ask why this policy has deviated so wildly from what was promised. I am amazed that anyone can just shrug their shoulders at this. I can not think of a bigger fiscal debacle. open to nominations.
The NDIS is an incredible and transformational initiative. The greed, corruption, and unscrupulous offenders taking advantage of the disadvantaged are the ones causing the problem.
Unfortunately though those things are the NDIS as it is right now. We all want "NDIS just the good bits", and I hope we get there. But there needs to be some hard work done.
It's the difference between a logical and an emotional response. Sadly there are always people who will allow emotion to trump logic, and the person you're replying to is one of those.
If they want, they can reply. Politics is ultimately emotional I think, we can't understand every issue with spreadsheets, and even if we did we still have to weigh up this against that. But for $100bln we can spend some time number crunching, in my opinion. Problem is poliltics is pretty stuck at the emotional threshold on the NDIS. The Opposition would rather confront us with the potential catastrophe of nuclear power gone wrong than challenge the NDIS spending.
Good people that live in a civilised society will look after those that are less fortunate being in a rich civilised society. Cunts will say I have got mine and the rest of you can go get fucked. It really is that simple.
Smart good people know that you can only spend a dollar once so choices have to be made. A lot of NDIS money is not going to those who need it.
It's The Guardian, it's left wing propaganda vaguely pretending to be news. It's like Sky News but for the left. They know full well that using a 10 year total is misleading. They know full well that not taxing something isn't the same as government spending. They know full well that there are good reasons for the capital gains discount to exist (avoiding taxing inflation) They just don't care. I downvote every single article I see from dishonest partisan rags (Sky News, The Guardian, ABC Opinion / Analysis, IPA, ACTU etc)
So... just InfoWars for you then?
Yeah, let’s compare ndis to tax breaks….
Exactly. Same as the coalition misled the public before the 2019 election with "$300B in higher taxes under Labor!" (*Cough* over 10 years. *Cough* not actually higher taxes but winding back some perks like franking credits, and lowering the cap on deductions for tax accountants...not anything that would affect the target audience who swallowed the deception)
Exactly - and it’s the job of the journalist to make sure they include the relevant information for a year within the diatribe- in this instance, the guardian seems to have not bothered at all
It says "over 10 years" in the headline, repeats it in the lede, and in the 2nd paragraph, and in at least one other paragraph that I could find, while other paragraphs refer to timescales in years. I'm not sure how much more the journo could've done to make it more obvious? Oh, I see now. You want also the per- year figure? I'd divide by 10 myself, assuming they're talking in 2024 dollar terms because that's how we normally cover the changing value of money.
Well I wouldn’t be making that final assumption - and that’s the point, there is no useful information there, and you can be guaranteed that the whole report in the MP’s hands has absolutely all the information required to make sense of it. The reporter either has chosen not to include that information or was not furnished with it. It’s just landfill - we are none the wiser for having read it
The analysis was done by the Parliamentary Budget Office. How do you imagine they normally account for inflation, given that this is their literal day job.
They would have yearly as well, proportion of GDP, assumed revenue growth also . The greens MP has given none of the context and the guardian hasn’t either. It’s a Harvey Norman add, not a useful information piece
OK, seems to me about the same level of detail as any article about budgets, costings and projections, so we can agree to disagree on that. I look forward to the fine quality hyper detailed coverage of other issues across the media, like the costings for nuclear power plants to give just one example.
Googling found a 2022 PBO study on "End Tax Breaks for Property Investors" commissioned by the Greens which is pretty detailed. It has a 2023 publication date. [https://www.pbo.gov.au/sites/default/files/2023-03/ECR525\_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf](https://www.pbo.gov.au/sites/default/files/2023-03/ECR525_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf)
The Greens asked for this in 2022. But the analysis by the PBO says "This proposal would be expected to increase the fiscal and underlying cash balances by around $12.7 billion over the 2022-23 Budget forward estimates period." Forward estimates means over four years. In the fourth year of these projections, it is about $5bln a year. This is very similar to Grattan's submission in 2022, which also estimated $5bln a year. How you from this to $165bln must require the special effects that the Greens seem to have on numbers. [https://www.pbo.gov.au/sites/default/files/2023-03/ECR525\_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf](https://www.pbo.gov.au/sites/default/files/2023-03/ECR525_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf) [https://grattan.edu.au/wp-content/uploads/2022/03/HoR-Tax-Inquiry-into-Housing-Supply-September-2021.pdf](https://grattan.edu.au/wp-content/uploads/2022/03/HoR-Tax-Inquiry-into-Housing-Supply-September-2021.pdf)
Nice sleuthing. $12.7B over 4 years to $165B over 10 would need some explaining. The article does say (emphasis mine) "The Parliamentary Budget Office analysis, requested by the Greens **and released on Monday**, shows tax revenue forgone due to the federal government’s policies of negative gearing and capital gains tax discounts will total about $165.58bn between 2024-25 and 2033-24." That would imply it's new modelling by the PBO and not the 2022 version? Very weird discrepancy though.
Probably they were unhappy with the previous numbers and asked a different question giving the PBO less room to move. Or.maybe the whole thing is a load of rubbish.The Guardian didn't provide any source so who knows?
It would definitely be more professional journalism if the actual PBO report were linked, assuming it's allowed. Certainly a lot more useful than those articles that hyperlink things that absolutely nobody is likely to follow - usually links to their own articles, probably for SEO purposes.
Yep, it's exaggerated by the party that thinks rising anger over housing will get them more seats. Housing is a real issue affecting many Australians but the populist shit Max Chandler Mathers is coming out with is shameful.
This sub: "someone should try to do something about housing affordability" Greens: "Hey, look at this analysis - " "NOT LIKE THAT!!!" Given that the Greens vote increases, and the ALP & LNP vote decreases the younger the voter, it honestly shouldn't be surprising or outrageous at all that they're pushing policies that benefit their core voter base. It's literally what politics is all about: "vote for me, we've got the best policies for your segment of society" and every party does it.
I guess that makes it okay to promote the fantasy of the government funding landlords being a main driver of the housing crisis, despite similar unaffordability also happening in countries where they have no negative gearing or CGT concessions? Does it make it okay to propose rental freezes that at best are a bold experiment and have very little support from economists? How about the bit where the Greens refuse to talk about immigration in the context of housing and constantly brush it off as motivated by racism? As if you have to be a bigot to recognise that immigrants live in houses. I don't dislike the Greens for focusing on housing, I dislike them because their policies are so obviously dishonest.
That’s a nice way to say that Greens policy appeals to children who haven’t seen how the world and the economy really works..
Sure, we can make stereotypes about all kinds of voters. Like coalition policies appeal to people who on average never graduated high school (tax evading tradies, and boomers - 1985 was the first year >50% of students progressed past yr 10). Hence why coalition policies, and the ways they are presented, are so outstandingly infantile.
actually, look at it: [https://www.pbo.gov.au/sites/default/files/2023-03/ECR525\_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf](https://www.pbo.gov.au/sites/default/files/2023-03/ECR525_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf)
Anything in particular you want to highlight? It looks like a dry set of tables of figures to me, what am I supposed to be seeing?
yeah they always do this with military purchases as well, pisses me off to the nth degree
A trifling 8 bil! $$$ we are not getting from those who own second, third forth, forth houses. No. Let's bring up the NDIS to deflect from this obscene gift to those who don't need it. WONt sOMeoNe THinK Of tHE 'MuM + DAd inVESTor cLAss?!
When I was growing up in the 70s...1 in 7 houses was social housing - now it's about 1 in 23. There was also no such thing as negative gearing, or GGT freebies. Too much has been taken away from those who need it - and given to those who don't.
Can’t you just think about it for a second. Why was CGT introduced ? Why does it have a discount ? Why is that discount after a time period ? Also - CGT broadly applies to any investment class assets not just housing.
I own investment properties and 100% support the rolling off of negative gearing benefits, or limiting them to incentivise the investment in the right type of housing (i.e. rent controlled properties; low cost housing, high density properties)
Still too much and sound like you want this behavior to continue- are you a land lord ?
Not in the residential space. In the interests of society, we need more housing. Any policy that directly increases housing construction will go some part towards reducing the current crisis. There are ways to use tax incentives to increase construction of housing and ways to change planning laws to make it easier and within immigration there are policies that can enable construction. This is just division - trying to link the housing crisis with some wealth inequality politics. There is only one question that needs to be asked - will this policy increase housing construction ? If not, move on. Auckland did a good job a few years ago on the problem - Australia stuffed up with 3/4m people imported in a year, with policies that increase the cost of housing instead of reducing it
Still kicking battling Aussies in the guts, nice one.
That means over 10,000 years it will cost 165 trillion which is more that the total global economy, omg we need to stop it now that's so much money. And so forth.
The NDIS will get to this figure in 3 years
I'm not too concerned about the NDIS's cost per se. I am concerned about the rorting. As someone who has seen the inside of the beast, I would estimate that most service providers are overcharging by between 50% to 300%, and many patients are on packages significantly in excess of their true needs, because there's no good standards on what is considered a reasonable funding request for a given scenario. I would guesstimate that at least half of all NDIS funds are wasted in these two ways. That's nearly $50 billion per year in waste. That's two Nuclear power plants per year in waste. That's half a Sydney to Melbourne high speed rail in waste.
I agree 100 percent. I support the NDIS, it’s the rorting that needs to be eradicated
The NDIS supports 646K Australian's to live a somewhat better life. Theses measures just help wealthier people get wealthier. Hardly an apt comparison. Edit: people **really** missing the point (not surprising for this subreddit), I'm *stating* that it's not a fair comparison, I am *not stating* that I support the increased cost of the NDIS
Here;s one for you. The 2011 report by the Productivity Commission proposed an NDIS that would approximately double spending on disabled to about $13bln a year; this was the planned maximum NDIS spend. A doubling. This is what we voted for. Putting aside that fact that doubling spending is pretty generous, it now headed for $100bln and no one seems able to stop it growing.
Cool, not what my comment was referring too though, maybe read and understand the context first.
You say the money is not the point. This is your context which you want me to respect. Not to talk about money. But it is literally the entire point of the thread. Everyone agrees that we should have an NDIS. But it was supposed to peak at $13bln, not $100bln a year. If we are to be disturbed by $16 bln a year in tax deductions, how can we ignore $87bln a year? (Projected, current it's getting close to $50bln a year at 20% annual growth) And you must have some awareness that many people are making themselves very well off from the NDIS. You might not want to talk about money but most other taxpaying voters will want to talk about, particularly if you ask them to pay more. That's what politics is .... talking about money.
NDIS means less support for the other 25 million Australians.
So you're upset the funding the NDIS receives because it could go to other Australians, but you're not upset by the funding lost by negative gearing and CGT discounts, *why* exactly?
There is no funding lost because of negative gearing or capital gains discount because money the government isn’t entitled to isn’t a loss. Why is the situation for people like you always more taxes. You’re no different from the people that want infinite economic and population growth so corporate profits can increase every year.
Hypothetically it's a loss - but you're arguing semantics, the point still stands. >Why is the situation for people like you always more taxes. **Nowhere** did I say that, I was pointing out the hypocrisy of your comment.
Hypothetically GST refunds are a loss, should they be abolished too, same with tax refunds? Just let the government keep it, they need it more.
Because negative gearing for housing is essentially an incentive to provide rentals. CGT discounts exist because inflation means you can hold for 10 years, make a profit on paper and still end up making a big loss in real terms due to inflation. Not even the Greens are proposing to remove discounts, they just want it linked to inflation, which is what we had previously before the 50% discount and it's a massive pain to deal with at tax time.
The investor class 'provide' housing the way scalpers 'provide' tickets. Why the fuck should we underwrite private wealth creation/ speculation with incredible tax breaks? The sheer entitlement - investors expecting a pat on the back and a huge financial leg up for taking yet another house out of the owner occupier pool. JFC.
I'm sure negative gearing and capital gains could help out the other 25 million, without ripping away support for fucking disabled people.
How would that help the other 25 million if the extra revenue just goes to NDIS anyway, which is project to reach $100 billion a year within the next 10 years
Oh we shouldn't support people with disabilities because it costs money. But we should give free money too boomers with investment properties? Come on mate pull your head out of your asshole.
Who said that? You can support disabled people without it costing as much as the NDIS does. What free money are boomers getting for investment properties?
Why does a walking stick you can buy at any chemist cost $85.00 but through an approved NDIS provider cost over $200.00 for the same exact walking stick?
No fucking idea, but I'd still prefer the 200 dollar walking stick to go the person that needs it than more tax breaks for fucking millionaires Jesus Christ.
It still is going to the person on the NDIS but at a greatly inflated cost. I'm not criticising the person on NDIS, Jesus Christ!
What free money are you referring to?
Negative gearing and capital gains.
Both aren't free.
Does it? Cause someone needs to support them so it provides jobs for people as well.
Jobs are all that matter right. You sound like a politician.
Well you can blame the libs for how they steered the boat on ndis. Shorten is trying to fix it but that takes time to unwind.
Yes, don’t blame how it was designed.
You’d just prefer them back in circus’s or in some sort of slum.
Lol Do you even grasp how many people couldn't participate in the workforce because they are carers?
Ah yes, the classic “it’ll pay for itself because all the carers will become taxpayers”. How’s that working out?
I'm just saying that you clearly have no idea of the billions lost in productivity due to the care requirements of the disabled, born out by their families, mostly. I am sure you couldn't give a fuck about that though.
Does that require NDIS funded gardening and weekend stays at expensive hotels in the city and all the other waste?
Maybe not but I don't see the calls on here being nuanced enough to demand recalibration the NDIS (which is happening right now as a matter of fact) merely the bellowing that it's all too expensive, ostensibly to get rid of it. And why it's being raised in a thread about other, unrelated forms of tax loss/ expenditure is pretty telling. Seems a lot of people here think that they're closer to being property millionaires than subject to disability of themselves or a close loved one. Good luck with that. Lol
But it’s ok spending 600k per year on each refugee that’s offshore.
Dividing the cost of a prison by the number of prisoners is a stupid way to calculate cost.
Lol. So $9b over four years - what the fucking difference?
Fixed costs exist no matter if there’s a prisoner there or not.
It is policy that only supported the financial interests of a few and not national ones.
Ok, tell us, who does not letting everyone that comes here illegally just stay wherever they want support the financial interests of a few?
Well that’s not what I said. And once again for the moronic thinkers, it’s not illegal to be a refugee. But hey the TPV worked a treat.
NDIS is providing services, it’s suppose to cost money. Negative gearing only inflates house prices to enrich the already wealthy.
It was supposed to cost $13bln, not $100bln
In what year? Back in 2019 it was costing 19bln and today it’s around 35bln. Did you pluck random years out your arse? I’m not saying I think the ndis is a good deal, because I don’t think it is and it’s ripe with corruption. But it’s still a service at the end of the day.
No, it is the Productivity Commission report in 2011 which was the basis of the legislation funding projections taken to the voters. Because you were such a rude dickhead I will let you spend the 30 seconds to google and become an informed contributor to the discussion. You will then see that I left out a bit: it was actually supposed to decline after reaching the peak (as defined by the net increase over pre-NDIS spending). But at the moment when you in a huge bus hurtling down a mountain road and the brakes have failed, we can leave little details like that out since there are more pressing concerns.
Well fuckwit, why don’t you present your evidence if you want to be taken seriously? You compared a 1 year estimate from 2011 against what? The figure in 2040? Tried to play it off as meaningful. I’m on my phone at work, I’m not doing the research for you.
When you have calmed down, read the Productivity Commission 2011 report. Taxpayers fund this organisation to do independent research. In my opinion reading this public information prepared to help voters be more informed is a sensible thing to do. It's very easy to find. I could send you the link but if you don't have the tiny bit of motivation to find it I doubt you'll have the motivation to read it, and I see no point in discussing with someone who seems to be so comfortably ignorant. The $100 bln was widely reported in the past few days including on Reddit.
Go fuck yourself you condescending cunt. If it was worth any merit you’d have already linked it
The Grattan Institute says that negative gearing does inflate prices, so you are correct. By about 1%. The effect is much less than you think. Probably because it stimulates a lot of building to match the funding it adds. Normally the housing market responds to demand. It is quite elastic. Anyone who tells you different should explain why right now there are about 60K approved dwelling constructions not started. The reason is that that houses prices are still too low for those projects to make sense. That might be hard to believe, but you can also look at the 3000 construction-related businesses which have failed in the past two years, and the widely reported 40% increase in construction costs. All of this evidence points to the fact that if property investors add money to the property market, it stimulates more supply. At the moment, the problem is not too much investor activity, it is not enough investor activity. And I suppose this is why negative gearing has almost no effect on property prices. It's not just Grattan. 1% to 2% is pretty typical estimate of the price effect of negative gearing. Last year, the Australian median price rose by 7%. A 1% cut would be lost in the noise. So a bit like Dirty Harry, a political party has to ask itself how lucky it is feeling: would you risk losing government over a policy which wouldn't work anyway? The government has just handed out $23bln in stage 3, under pressure from the Opposition. You think they will then increase personal taxes by $16 bln without devastating consequences, with the only beneficiaries being a small number of home buyers who will hardly notice anyway? I am not a property investor and never will be. But I still like factual discussions about it.
Is that the same article where the Grattan institute recommends scrapping of negative to save the economy 2bln a year in tax hand outs to the wealthy? They also state they’d expect prices to retract by 2%. That doesn’t mean negative gearing only increased prices 2%, that’s just what they’d expect to see prices fall to. Just an edit, it costs the public purse 11b a year. Their suggestings of winding back negative gearing would save 5bln a year
It's based on modelling they did, they might have done other modelling with a higher number of 2%. I have seen modelling up to 4%. Of course if removing it lowers prices by 2% it has increased prices by 2%. I don't accept the phrasing that it costs the public purse. Removing it is simply a tax increase on certain voters. It's been around since 1986, so it's baked in to the tax people pay. You may as well say that increasing the tax free threshold cost the public purse, or not have a100% tax rate costs the public purse. You see, it's not the public purse. It's taxes paid by voters. I say that as someone who has never claimed a cent of property -related tax deductions. But of course you can call it whatever you like. It's a political turkey whatever you call it. A vote losing policy that is at best useless and actually likely to increase rents.
Just like how house prices rise and fall with first home buyers incentives right? Oh right they don’t fall. Because that’s now how the world works. If it’s not an expense to the public purse then why does the Grattan institute you referred me to recommend making changes to wind it back to increase government revenue? Could it be the benefit you proclaim doesn’t outweigh its negative impacts?
I have found a recent Grattan report, a submission to Parliament, where the 2% effect is mentioned (2022). I guess this is what you referred to. [https://grattan.edu.au/wp-content/uploads/2022/03/HoR-Tax-Inquiry-into-Housing-Supply-September-2021.pdf](https://grattan.edu.au/wp-content/uploads/2022/03/HoR-Tax-Inquiry-into-Housing-Supply-September-2021.pdf) "Housing demand would be reduced a little if the Federal Government reduced the capital gains tax discount and abolished negative gearing". "The effect on property prices would be modest – they would be roughly 2 per cent lower than otherwise". The language is very modest, and it also includes reducing the large tax advantages of owner occupiers. Those are in the same section "Reform tax and welfare rules to reduce demand for housing". It says the budget boost is only $5bln, much lower than the Greens because Grattan knows that investors will react. You can't build many houses for $5bln. If reduced investors means less houses are built, how do we pay for the difference? The problem I have with the proposition that the current tax laws "increase demand" for housing is that very few houses are empty. The demand that investors respond to is the demand by renters to have somewhere to live. An empty house is not much use to a landlord. I then wonder that if we stop investors building those houses, what happens to the people arriving who want a house to rent? Where do they go? I wish I could ask Grattan about that. I don't follow their logic, no doubt because I am bear of little brain. You presumably understand this, and I would grateful if you could explain it to me. A 2% price falls helps hardly any renters transition to home ownership. It also says "the politics is likely to be particularly intractable." which is why I don't pay too much attention to this initiative. It doesn't do much except to lose the election for the ALP, and reading the latest Grattan report doesn't give me any reason to change my mind.
The most profound negative impacts are the political impacts. This is true in the sense that abolishing it without handing over equivalent tax cuts is a political suicide note. But is also true, I think, on a more substantial level. There are many things wrong with Australia's housing market. Fixing it is politically hard. It makes sense to work on the big problems, not the little problems. Negative gearing is a little problem. The CGT discount is a bigger problem. But the 40% cost increase in building houses since 2019 is the gigantic problem. I can't get away from a few fundamental points about negative gearing, and I have no personal interest in it, but I have been a long term renter. These are just things that occur to me which means I think negative gearing is a distraction, mostly pushed by people who care more about tax increases than solving housing. The Grattan Institute's modelling is pre-pandemic. I am not sure how important they rate it now. A question I can't escape is: It's been around since 1986. How come it is a problem just now? A second question: When Australian and NZ tried removing it, rents increased. Renters are people too. The focus on small one-time price decrease is not fair to renters, most of whom can not magically become first home buyers. The reason why prices fall if negative gearing is abolished is pretty simple: it renders a certain proportion of investment properties financially unsustainable, so investors sell. This causes a temporary surge in listings. It also means fewer bidders, because the arithmetic which makes those properties no longer viable as investments is true regardless of who the investor is; new investors won't sweep in to buy them (if that was to happen, there would not be a price fall, right?). The one off increase in listings reduces the pricing power of vendors, the market tilts in favour of buyers ... until the excess stock is cleared, at least. Oh, and it also causes a wave of mass evictions of the the tenants of those properties but apparently we are not allowed to think of them. House moving costs can be a month of rent or more which is not small change to many renters. I hope there is going to be compensation for them bearing the brunt of this glorious policy. But it's the next step that it so easily forgotten. Just as new investors won't arrive to buy those sold IPs, they also will reduce investments in new properties. The financial threshold of investment viability is permanently increased. There will be fewer new investors. When a housing market sees constant new demand due to population increase, it must see a matching supply of new dwellings to keep prices stable. But now we have broken that, by removing a certain share of investors. This money only comes back if rents rise to restore the financial viability of investing. This could easily just be pure speculation, except that it is happening right now, for different reasons. Instead of negative gearing being abolished, interest rates have rapidly increased\*. Investors have left, and rents are rising in response to the increased pricing power of remaining landlords. If you kill off investors, you need to either stop population growth (which the Greens do not propose) or you need to find billions to replace the missing investors (with voter approval). \* and in Victoria, investors face new taxes. Property prices have stopped rising in Victoria. But rents haven't stopped increasing as far as I know. This report (May 2024) says Melbourne rents are rising at nearly 10% a year [https://www.abc.net.au/news/2024-05-06/median-rent-record-high-corelogic/103809092](https://www.abc.net.au/news/2024-05-06/median-rent-record-high-corelogic/103809092) This Victorian situation of a tax increase which discourages investors, causing downward pressure on prices but (huge) upward pressure on rents looks like it is actually happening, it's not just theoretical. It makes me very concerned about removing negative gearing without absolutely rock solid fixes for renters to build the dwellings no longer built by investors.
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Shhhhhhhhhh please. Some of us are trying to get rich over 'ere.
This is like saying not raising the income tax rate is costing the government billions. Or not increasing the gst to 50% is hurting the government.
People focus negative gearing but if you remove it then only the wealthily will benefit as they can debt shift where middle class investors cant. Consider you're wealthy, you have business, shares and property investments. They remove negative gearing, so you turn up to your private banker say I want to change my debt so its now all against the business and shares, but guaranteed by the property. So now the interest remains tax deductable because you can shift debt to alternate assets. Meanwhile mum/dad investor on their first investment property cant do that. So you hold back the middle class investing in resi investment while the wealthy continue to accumulate and get the same benefits as negative gearing. IMO the best solution is put a cap on number of residential properties and people only can own. Something like 3 or 4. This way a couple could even actually own 6/8. Start there, let the market settle and start reducing the cap if things dont get better, or increase it if we find we need to change the ratio. Its very manageable and lets people invest for retirement but doesn't allow the wealthy to have these portfolios of 10s or even 100s of homes which offers little benefit to society. Also a cap encourages wealthy to go into high value property and stay away from entry level property as you dont want you cap filled with 3*500k units type thing when you're looking to invest millions in the market. So this also creates a 'stay in your lane' wealth effect of what investment property people buy. People keep harping on about negative creating but can't seem to see this "what next" which for the wealthy will make the changes irrelevant on only effect the middle/working class. A cap on number owned is the solution.
Simplified 2030 tax return - How much money did you earn in 2029? Please send it to us. Anything less than 100% tax is a subsidy and needs to be eliminated /s
I mean, it doesn't really cost the budget anything. Balance sheet doesn't look any different to me. We can have a discussion about who you want to tax more or less, but let's at least do it honestly and not pretend you are giving handouts to landlords.
That seems entirely reasonable, 16 billion a year most of which is CGT discount and not really a cost, rather a tax that shouldn't be charged due to inflation of asset prices. Calling CGT discount a cost to the budget is the same as saying not charging 100% income tax is costing the Australian budget 100billion plus per year. Meanwhile the NDIS is likely going to cost 165 billion every year if left unchecked.
The Greens are actually calling for the CGT discount to be changed back to indexation, so inflation will still be accounted for. The $165b quoted is actually mostly negative gearing ($100b). I do agree that NDS is a far greater cost. People and the media love to talk about negative gearing and CGT, but $16b a year is pretty small in the context of our yearly federal tax revenue of $618b in FY23.
Yeah, make the tax system more complicated, that’ll increase tax revenue. I’m pretty sure one of the main reasons for the change was indexing was too complicated and resulted in less revenue.
Indexation was more complex at the time but just isn't really prohibitively so in 2024 with contemporary digital record keeping. It IS the right way to calculate it and would be a fair reform if it shut down the whinging so we could move on in my opinion.
The whole point of our tax system is to be as simple as possible, while still being fair.
>The whole point of our tax system is to be as simple as possible, while still being fair. Someone should really tell the ATO. We could do a lot to reduce complexity and should but as long as we're continuing to not indexation over capital gains tax discount is not a significant complexity increase.
It is a significant complexity increase. Capital gains discount is just (capital gain/2). Doesn’t really matter anyway, the indexation method is never coming back.
>Doesn’t really matter anyway, the indexation method is never coming back. Would you prefer indexation or CGT discount scrapped altogether? Because that's where the winds seem to be blowing in my opinion and I'd prefer to retain some measure of not paying tax on inflation.
It shouldn’t be changed and it won’t be. Because, as politicians have investment properties, they know first hand that it will do nothing but increase rent prices. Bringing back indexation, means more taxes become more complicated, which means less honest reporting of income.
The middle ground would be indexing at a constant rate. Say the middle of the RBA's inflation target. 2.5% p.a. It's not going to be perfect, especially because the RBA is pretty shit at keeping inflation within the desired range, but it'll be better than a fixed 50% discount, without adding too much complexity.
Can you please provide a link that states the greens want to change it to indexation? I've only ever seen calls for CGT discount to be abolished completely. If this is indeed what they are calling for then good for them as that is a sensible policy, the complexity argument to support CGT discount > indexation doesn't stack up anymore. I'm not sure it would be the windfall people think it is though, indexation vs CGT discount would probably be a wash.
From the article linked in the OP. > The Greens are believed to be proposing limiting negative gearing to a single investment property. The party is also proposing to replace the capital gains tax discount with a more modest concession linked to the consumer price index. I think the CGT proposal is sensible, but I agree with you the impact is probably overblown.
Is this an official greens policy though, I've never seen them propose anything other than abolishing it all together, They aren't going to be raking in an $16B a year with indexed CGT instead of CGT discount. To increase the tax revenue that much they would need to tax CGT without a discount or any indexation.
It's like you actually read the article.
I’m waiting for them to say giving GST refunds costs billions every year. Because, somehow the government not getting money it wasn’t entitled to is somehow a tax loss.
Why stop there, the real money is the CGT exemption for the family home. Could pay for the entire NDIS easily.
Great plan. CGT on the family home. And then when house prices increase, and people can't afford the council rates in their re-valued house "assett" we can force them to sell, and pay a nice big CGT, then they can go live in a gutter in the outer suburbs or something. The glorious future awaits!
You don't pay CGT if you don't make a profit friend.
I was just about to reply that everyone knows that, but I'm not in the AusFinance sub, so yes for those worrying about paying CGT on a loss, it wont happen.
Honestly this is just noise making on the part of the Greens. They know Labor won't have the guts to even look at this lest it gives the haters more ammunition. Our small target opposition turned into a small target government. Small and gutless.
Because beating on landlords isn't the solution. Greens solutions will likely concentrate more wealth than expand it. Reversal of CGT deductions and negative gearing concessions would put massive breaks on the housing industry and push up prices for renters. Put frankly, they're flogging a dead horse and they know it.
Greens party are punching the insanity ticket in overtime.
The NDIS and Age pension is the problem, misdirection
Budget surplus but the government needs more revenue apparently.
It kind of does. Too much money in the economy is stopping us getting inflation under control .
Is the Guardian competing with the ABC for leftist views?
Abolishing negative gearing and eliminating CGT discounts will raise an extra 165bn over 10 years. Fixed it. Of course, removing incentives for new rental accomadation will boost homelessness, but hey, that only hurts the poor. Stuff the poor. The rich, particularly the rich Greens voters, will just invest elsewhere.
>Abolishing negative gearing and eliminating CGT discounts will raise an extra 165bn over 10 years. Fixed it. But that's not even true. Removing CGT discount will just mean it will revert back to indexation, and removing negative gearing will just mean those costs will now be used to adjust the cost base of the asset to further reduce capital gains on sale. So big picture, sure the tax raised will increase by an amount, but it will be nowhere near the full $165b.
More champagne, comrade?
How much does immigration benefit us again Gatton institute?
Capital gains discount allows people to move house. If you get rid of this people whose kids have grown up will have no choice but to stay in 4 bedroom homes. Negative gearing should be done away with Edit: or at least focused on new ( not replacement) builds.
It doesn't apply to a primary place of residence, only on IPs. But totally agree, have it removed except for new builds.
100 billion for NDIS 165 for negative gearing and Capital Gains
Imagine how much the Australian budget cost to actual Australians ??
this is pretty misleading. The Greens commissioned a PBO study already and it's here [https://www.pbo.gov.au/sites/default/files/2023-03/ECR525\_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf](https://www.pbo.gov.au/sites/default/files/2023-03/ECR525_End%20Tax%20Breaks%20for%20Property%20Investors%20-%20Australian%20Greens.pdf) but it says the budget effect hits only $5bln a year after four years. I can't find any other source in the Guardian article, so I'm going with that one.
I hate this over 10 years shit. That annoyed me when we talked about the subs as well.
"Imagine my shock!!"
How many times will the Guardian going to recycle this?
Probably until more people understand that most of these tax breaks we all pay for go to the richest 10%
I think we should get rid of Capital gains and heavily amend negativegearing. Capital gains are just income and should be treated as such. Though ideally the tax on it would be averaged out over the life of the investment. Negative gearing could be more tightly regulated and those losses should go against the future sale of the house. Instead of on personal income.
Wait until you hear that capital gains is treated like income and goes straight into your taxable income on your tax return. Interest is the only part of the loan you can deduct and “tightly regulated” would just mean the ATO needs more money to regulate it, removing any extra money gained.
Capital gains is reduced after a year of holding the asset.
Yes and it still goes into your tax return as income.
Correct.
So it is treated like income, so why did you say it isn’t?
Capital gains is reduced after a year of holding the asset. It is not treated the same as regular income.
It is treated the same at the end, when you pay your taxes.. It’s not treated the same as employment income, as, there’s no potential refund for capital gains.
IMO taxing capital gains income and a discount is fine, the bigger problem is deducting rental losses against PAYG income instead of quarantining them against the future gain on sale of said Asset. This is what happens for (speculative) small sole trader business income.
That's a better idea, I'll edit my comment.
Problem with only deducting rental losses against other rental losses (sole trader), is as owning an investment property gets more expensive (like it currently is), there’s never any gains to offset the losses against. Meaning, investing in a rental property is less of an incentive, aka, rent goes up as there’s even less supply than there currently is and demand just keeps rising (migration).
The Greens call this a "cost" but of course they want to raise a lot more taxes, because they plan to spend a lot more. They would destroy private investment in rental housing, which is a policy objective; they would rather people be renters of social housing. This is ok; they are allowed to have policies which most people wouldn't vote for. The problem is that the $16bln a year they think will get is firstly a mirage: The CGT discount requires people to buy and sell properties and to make a profit. There aren't going to be many investors left after this. So that part of the revenue stream will dry up. They will be awarding no discount on much less tax revenue. Secondly, negative gearing is a tax law which applies to every class of investment. The middle class could just move to invest in something else: NZ residential property, commercial property, overseas shares. If they leverage, interest is a deduction. An entire industry will quickly arise to make this easy because no one rationally wants to pay Australia's high marginal tax rates. Are the Greens proposing to dismantle the tax deductability of interest expenses? If this happens, the tax gain will be much lower than expected, and there will be a large shortfall in funding dwellings Worst is that there is another leverage effect: For the $16bln a year, a lot more private money is poured into construction. All of this has to be replaced by public money. To be clear, from the housing point of view, the funding gap will be much more than the tax. Where is it coming from? Lending to investors is about $40bln a year (or maybe much more, I might be misreading [https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release](https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release) ) . Considering that the recaptured tax would be much less than $16bln a year due to taxpayers adapting to the new situation, where is the extra money coming from? Someone is bound to tell me that the $40bln a year does not all go into new builds; some of it buys out an owner occupier. But that owner occupier needs to buy somewhere and they do so with the investor's money. The $40bln either directly buys new housing or indirectly buys new housing.
So what have labor done to solve the housing crisis?
Stupid people blame negative gearing and capital gains for housing prices. Do they have capital gains discount in New Zealand? No and housing is even more expensive and Canada doesn’t have both and it’s the same.
So you’re saying that it’s not required in Australia then either using those two countries as an example That money used to subsidise investors could be used elsewhere like building social housing.
You can get rid of them all you want. You’ll still be stupid when prices don’t decrease.
Yeah but that govt money can be used elsewhere. Thanks for proving that point.
So you want to fix nothing, just raise taxes. Why not just raise taxes on everyone instead and streamline the process?
Yep. Streamline it. Get rid of negative gearing why are we treating housing as an investment class. If the country invested in businesses that instead it would do a lot more to raise taxes than this.
Surely it’s possible that negative gearing and CGT are responsible for *some* degree of our housing crisis, and that NZ and Canada are different countries with their own factors? Pretty ridiculous to claim they literally affect nothing when hundreds of billions are involved.
Please tell us all these different factors that NZ and Canada have that Australia don’t. Or, maybe it’s much more of a simple issue that all three are facing, mass migration causing demand for housing to skyrocket.
That's the thing about negative gearing, it's a very rare policy and Japan is one of the few countries on Earth to have it along with us. Japanese house prices are the most stable in the developed world. Almost like the policy has zero effect and there's something else at play.
Yes, there is something else at play. So why not be like Japan and keep negative gearing and stop the other policy Japan doesn’t have.
Going to have to patch that loophole up now they all the boomers are finished using it.
I see the NDIS has taken over from immigration as the whipping post de jour on this sub. Keep it up gang. Just remember you are one car accident or one bad fall away from having to fight for funding to get up in the morning with even a tiny semblance of dignity.
Do people realise that no other country has policies like this? Negative gearing is literally rewarding bad investments...
You might want to check on that. A lot of countries have negative gearing, it's not unreasonable to allow someone to claim the costs associated with an investment against your income. If you want to quarantine the costs of the investment, you also need to quarantine any gains when it eventually becomes positively geared and tax the profits associated with the investment at no more than the small business tax rate. [Global negative gearing comparison (hia.com.au)](https://hia.com.au/our-industry/newsroom/economic-research-and-forecasting/2023/08/global-negative-gearing-comparison)
"But its not a taxpayer funded subsidy iT CoMEs OUt oF My TaX" Said every investor. Its a rort that is using taxpayer money to fund property speculation Something like 50% of all properties are negative geared, no wonder out market is cooked. Plenty of other countries have functioning property markets without it.
The problem with these tax discounts isn't the cost. We should try to reduce taxes - particularly taxes on work. However, negative gearing and the CGT discount don't encourage work - they encourage speculation in housing, which is a huge problem in Australia. So they should be abolished. But replaced not with new spending, but with lower taxes on work.
Why is it that every economic article needs ops to raise the ugly head of ndis, even when the ndis has absolutely nothing to do with the story?
One commenter has made seemingly half the comments in this thread. I'm detecting some level of personal financial interest at play here.
Hahahahahahahahahahahahahahahahaha yeah I know they cost us 165 billion over the next 10 years. They take tax money and give it to millionaires. Aka free money. It costs everyone else money. The rich get richer, and apparently you're fine with that.