3 days Ago By David Crowe
Labor is staring down a Greens demand to scrap tax breaks on negative gearing ahead of a crucial Senate vote on housing, setting up a clash in parliament on a federal government plan to help 40,000 people own their own homes. Prime Minister Anthony Albanese moved on Monday to turn the Senate blockade into an election test for the Coalition and the Greens, blaming them both for obstructing the housing scheme and stalling changes to environmental approval laws. Prime Minister Anthony Albanese berated both the Coalition and the Greens in his press conference.
Credit: Alex Ellinghausen But the Greens are holding out for sweeping cuts to the tax breaks on investment properties as a key condition for their support for the Help to Buy scheme, which Labor promised at the last election as a way for homebuyers to gain help from the government to own their first home. Albanese offered no concession on the Labor policy despite the Greens’ calls for more spending on public housing, a national rent freeze to be arranged with the states and the removal of tax concessions on investment properties and capital gains. “They need to get on with it, all of this legislation that is before the Senate, whether it be build to rent, whether it be this legislation for shared equity, whether it be the environmental legislation, whether it be the superannuation legislation on accounts of above $3 million,” Albanese said.
The government decided months ago to make the Senate the focus of political argument this week, choosing to suspend the House of Representatives from normal business until October 8 while keeping the upper house sitting. Loading “All of these issues, the Senate have a week where it’s just them,” Albanese said. “There’s no distractions here.
Can they get anything done? Can they get anything done this week? That’s the question. If not, I reckon Australians will question what they are doing.” The Help to Buy scheme seeks to allow the government to contribute up to 40 per cent of the purchase price of a new home for selected applicants, while also allowing it to buy 30 per cent of the purchase price for an existing home.
The scheme would be open to 10,000 applicants each financial year, up to a maximum of 40,000 places, over time, and would save buyers from having to take out lenders mortgage insurance. The policy aims to help first-home buyers with income of less than $90,000 for individuals and $120,000 for couples. It would cost taxpayers $324.
6 million over four years, but it can only start operating after states and territories pass laws to support the federal law. Albanese promised the Help to Buy scheme at the 2022 election and the draft law was introduced last November, but the Greens and the Coalition kept up their attacks on the policy since the bill passed the lower house in February and was sent to the Senate for an inquiry. Senate crossbenchers have called on Labor to scale back the use of negative gearing after Treasury revealed earlier this year that rental property deductions cost the federal government $24 billion last year.
But Independent senators David Pocock and Jacqui Lambie have not made negative gearing a reason for opposing the Help to Buy scheme, which they appear likely to support. Opposition Leader Peter Dutton ruled out changing negative gearing in February by saying “no” when asked if he saw any need to curb the practice despite support for the change within the Coalition when it held government. Treasury said in February that rental property deductions cost $24 billion last financial year, with about two-thirds of the benefits going to individuals in the top 30 per cent of taxable income.
About 1.1 million people, or half the total number of people with rental deductions, had a rental loss last year, which is the definition of negative gearing. These losses added up to $7.
8 billion and provided a tax benefit of $2.7 billion to those taxpayers. Cut through the noise of federal politics with news, views and expert analysis.
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.. David Crowe is chief political correspondent for The Sydney Morning Herald and The Age.
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