Negative gearing explained: why it's time to #ShutThisPartyDown
Australian Politics. Malcolm Turnbull. Negative gearing. Excited yet? With the double dissolution election fast approaching and Waleed Aly’s recent #ShutThisPartyDown monologue on The Project, negative gearing has been getting a whole lotta
love media attention.
And as boring as taxes and the housing market might seem, it affects us. A lot.
The ‘Australian Dream’ used to involve buying a house in the ‘burbs – three bedrooms, maybe double storey, and a big yard. Lol.
Now, the goal is to rent something bigger than a shoebox for less than 99% of your weekly wage. Times are tough and negative gearing is, well … negative.
If you have the money to buy property that you can rent out and negatively gear, good for you. The odds (and the government) are ever in your favour. But for those of us yet to enter the housing market, who hope to do so in the future, things are bleaker.
Your grandparents and parents will tell you that it’s always been hard to buy a house. And you know what, they’re right. But the thing is, it’s never been this hard.
"The industry has a vested interest in keeping the current arrangements," Opposition Leader Bill Shorten said.
"I tell you who doesn't have a vested interest in keeping the current arrangements - hundreds of thousands of first home buyers who are being locked out of the market."
What a time to be alive.
The Labor Party proposes to reform negative gearing policies to allow new investors to fully gear, only if they buy new properties. Existing negative gearers would be able to continue deducting rental losses against their income for as long as they owned those properties.
Prime Minister Malcolm Turnbull says this would cost investors by driving up capital gains tax and reducing the value of properties.
But negative gearing is costing the rest of us. And ol’ Malc hasn’t exactly done a good job of defending it.
To start things off, Turnbull and Assistant Treasurer Kelly O’Dwyer contradicted each other when it came to abolishing negative gearing.
Whilst Turnbull claimed that Labor’s plan to wind back negative gearing would be a “wrecking ball” for housing prices, O’Dwyer said the proposal could see housing prices soar.
Then there was the PM telling a radio host that parents should “shell out” to help their children buy a home, coming under fire again when he showcased a family who bought an investment property for their one-year-old.
For the last 17 years, investors have been partying like it’s 1999. But it’s time we shut this party down.
But the policy was properly called out with Aly’s speech on The Project.
“Economists agree that negative gearing pushes house prices up, contributes to making our houses some of the most expensive in the world and if you’re from Generation X or Y, or you’re a millennial, it’s one of the reasons you can’t afford a house,” Aly explained.
The video, when posted to The Project’s Facebook page, received almost 9,000 shares and became yet another of Aly’s viral “rants”.
The newly appointed Gold Logie winner has been widely commended (save for one commentator who for privacy reasons will be referred to as Mandrew Lolt) for his topical yet accessible editorials.
He’s reached millions of Australians by sparking a national conversation that’s usually reserved for boring old white men, shock jocks (here’s looking at you, Alan Jones) and your racist Grandma.
“Your grandparents and parents will tell you that it’s always been hard to buy a house. And you know what, they’re right. But the thing is, it’s never been this hard,” Aly said about our old friend/enemy (lol obviously enemy), negative gearing.
“For the last 17 years, investors have been partying like it’s 1999. But it’s time we shut this party down.”
Enforcing lock out laws against this party, anyone?
Brittney is a Media/Law student at UNSW who dreams of owning a very cute dog and finishing her (never-ending) degree. You can find her at Bunnings for the sausage sizzle on most weekends. She is not ashamed of this.