THE big Federal Budget moves on negative gearing and capital gains tax (CGT) will not be able to achieve the stated aim to free up hundreds of thousands of homes for first-homebuyers, a long-time Wallan real estate agents says.
Peter Hess, of Hess Real Estate, said the negative gearing is complicated and it doesn’t really give you more supply of houses.
“The biggest complaint is affordable housing and getting rid of negative gearing is not going to bring the prices down. The biggest thing is more affordable housing, which would probably mean smaller housing and more condensed housing,” Mr Hess said.
”If you really want affordable housing, you have to have more smaller premises, or you could do more of a mixture of housing, like do some smaller places and then do some bigger ones. I think they’re just trying to fix everything with one change of taxation and that doesn’t work.”
Asked whether the Federal Government’s changes could achieve its aim to help the first-homebuyers, Mr Hess simply said: “No, not one bit, because if you’ve got a house and if capital gains is going to be a problem, the solution is people just don’t sell it. People won’t sell it. They’ll just hold it. They go, well, if I’m going to cop it, I’ll just hold it a bit longer, and the actual scheme they’ve changed over to is not much different to the current scheme. It’s just a little bit. They’re doing a minimum of 30 per cent for capital gains tax, but most people are paying 25 per cent or maybe a little bit more anyway for their capital gains.”
But Federal Member for McEwen Rob Mitchell disagreed.
“Our negative gearing changes put homeowners first and will help more Australians get a foothold in the housing market. The Albanese Government is reforming how capital gains tax and negative gearing work to help 75,000 extra homeowners into the market.”
Mr Mitchell said it will help more people in McEwen get into the housing market.
“Right now, it’s too hard for too many Australians to get into the housing market and get ahead, but these reforms will help to address that,” he said.
“This builds on the government’s work over the last four years to build more homes, including investing $7.33 million in planning and enabling infrastructure under the Housing Support Program in our communities across McEwen.”
Under big budget changes, from July 1 next year, negative gearing is restricted to new builds. Losses from established residential properties purchased after May 12 will be quarantined and can only be offset against income from that property (rental income or capital gains), not against personal wages.
In capital gains tax changes, from July 1 next year, the 50 per cent CGT discount is abolished for most assets. It is replaced by a system that taxes only “real” capital gains after adjusting for inflation, with a minimum 30 per cent tax rate. On existing properties, investments made before May 12 are grandfathered, retaining current negative gearing and CGT rules until sold.
Mr Mitchell said the government is delivering more tax relief for 13.3 million workers, helping more people realise the dream of home ownership and creating a fairer and more sustainable tax system for all Australians.
He said 3.5 million people in Victoria will benefit from the government’s new $250 Working Australians Tax Offset. These new tax cuts meant that, on top of Labor’s existing tax cuts and a new $1000 instant tax deduction being introduced next financial year, an average Australian worker could benefit by up to almost $3000 by 2028.
Mr Mitchell also said Labor is making the $20,000 instant asset write-off permanent from next year so that small businesses have the confidence to invest.
“This will mean more certainty, more cashflow and less compliance costs for 1.2 million businesses in our community of McEwen,” Mr Mitchell said.
The government is delivering $37.4 million for a second bridge on Donnybrook Road over the Hume Freeway, as part of the Donnybrook Road Upgrade works. This brings Labor’s investment for the project to over $170 million.
Asked for comments on the breaking of last election promises that have dogged Prime Minister Anthony Albanese and Treasurer Jim Chalmers since the release of the budget, Mr Mitchell said this is a responsible budget that is focused on relief, resilience and reform.
“The world is a lot different than it was 12 months ago and a good government has to put the nation first. We have changed our position because we are listening to people that are locked out of the housing market.
“The dream of home ownership is disappearing for a generation of Australians. They cannot wait another two years. I would rather defend a change in policy than continue to see a broken system continue to make it harder for people to get into their own home.
“We’re delivering more cost-of-living help and building a more productive economy, a better tax system, a fairer housing market and a stronger and more sustainable budget.
“Going forward, we are limiting negative gearing for residential property so it can only be used for new builds.
“Let’s be absolutely clear all Australians who currently negative gear or own an investment property will not see any change to their arrangements. This includes contracts already entered into. Investors can still negatively gear new properties. The important bit is this, investing in new homes help address the number one problem of housing shortages.
“The introduction of a 30 per cent per cent minimum rate will mean a fairer and more sustainable rate of tax paid on discretionary trust income.
“Everyone in our community will benefit from lower taxes, more investment in health and continued investment in infrastructure. We didn’t take the easy road in the budget, we took the one that helps us all.
“We will be making announcements about some infrastructure projects soon, but most people in our communities will feel the benefits of lower taxes, high bulk billing rates, cheaper medicines, cheaper childcare and more affordable housing.”
But Federal member for Nicholls Sam Birrell said families, farmers and small businesses will be impacted by Labor’s broken promises on tax which “betrays the trust of Australians and will see regional Australians pay more”.
“This is a budget of broken promises, higher taxes, more debt, lower living standards and fewer homes for Australians,” Mr Birrell said.
“The Albanese Government’s spending is still out of control, and they are raising taxes and cutting from regions to fund it.”
Mr Birrell said the Coalition is opposed to these higher taxes because they are an “assault on aspiration”.
“Labor’s new taxes will see 35,000 fewer homes built and small business, the engine room of our economy and the businesses that support local communities, will be hit.”
“The argument that this is about intergenerational equity is a fallacy because young Australians are going to be paying for this governments reckless spending for most of their working lives.”
Mr Birrell said across the budget, regional Australians face at least $11 billion worth of cuts.
Mr Birrell, however, had some kind words for the government.
He said Labor has finally funded new rounds for Growing Regions (projects up to $15 million) and Stronger Communities (smaller community projects up to $20,000).
“For too long councils and community organisations have been starved of any opportunity to even apply for funding,” Mr Birrell said.
“While this is welcome, these regional grant funds are not enough to build the productivity enabling infrastructure needed in the regions, instead regional infrastructure spending is again being cut by Labor.”
Mr Birrell said $3 million to support the operation and maintenance of long-range fire capability at the Puckapunyal Military Area is also welcome.
