If it is adversely affected by wholesale changes – the effects of which can’t be fully predicted or anticipated – then every Australian will suffer, either directly or indirectly.
If negative gearing is heavily restricted in line with the policy proposal from the ALP, it is estimated that some $19bn will be slashed from Australia’s GDP every year: this money isn’t the profits made by “rich” investors, but consumer spending that flows from property investment, employment, construction
and real estate activity that washes through the whole economy.
Reduced overall economic activity means more failing businesses and fewer jobs, and this affects everyone.
Fewer employees and businesses paying tax means less revenue for the government to spend: and less tax revenue wipes out any “saving” from abolishing negative gearing.
Less money for the government to spend means less government services, which would impact the entire community: unless government borrows more to provide those services, that is, which isn’t sustainable in the longer run.
The prospect of rent rises pricing many families out of the rental market means greater demand for social housing, which in turn means greater demands on government just as revenues are being permanently diminished by the $19bn hit on the economy and the reduced tax revenues that flow from it.
Ending negative gearing would mean fewer houses being built at a time of rapid population growth.
And in our own industry – the property industry – it means job losses for property managers because rental lists would shrink; job losses in sales, marketing, administration and other support functions, owing to reduced levels of investor activity; and some in the industry losing their businesses altogether, as overall activity makes businesses in some areas unviable.
As the property industry is a big employer of young people, women, and older people wishing to remain in the workforce, the social cost of Labor’s policy stands to be catastrophic if it is ever implemented.
And whilst the economy would eventually recover from the shock, right now it is already fragile following the end of the mining boom and the uncertain economic climate globally, which affects Australia too: and the most immediate effects of inflicting a further $19bn hit on it could well include triggering a recession.
If anyone accuses our industry of acting from self-interest in opposing this policy, it is a charge we will gladly wear; we know this policy will hurt a lot of people – who can hardly be described as “rich” – and we are simply not prepared to stand idly by and watch the consequences of that unfold without
making people aware of just how bad it is likely to be.
For more information visit the Negative Gearing Affects Everyone Website here.