Treasurer Jim Chalmers says negative gearing scheme still safe, despite Albanese government’s tax backflip

Treasurer Jim Chalmers has dismissed suggestions negative gearing could be the federal Labor government’s next major tax concession overhaul as Anthony Albanese continues efforts to sell his broken promises on the Stage 3 tax cuts.

Late last week the Albanese government flagged its controversial changes to the Stage 3 tax cuts, including moves to provide a greater tax relief than originally proposed to people earning less than $150,000.

Those changes come at the expense of those earning over that amount - they will still receive a tax break but less than what was originally slated.

Those reforms have created major issues for Mr Albanese, Dr Chalmers and the government, given their continued pledge heading into the 2021 federal election that the Morrison government’s original tax plan would remain untouched.

The government’s willingness to go back on its word has led to questions on whether negative gearing - tax concessions for property investors - were also safe, given the fact former Labor leader Bill Shorten campaigned in 2019 on a policy to wind the scheme back.

“That’s not something we have considered or are considering,” Dr Chalmers told press gallery reporters on Monday morning.

Dr Chalmers said the decision to amend the tax cuts came after scrutinising the scheme during the summer break, before making the decision in a bid to provide more cost-of-living relief to Australian households.

He also reminded reporters that while in Opposition, Labor had originally moved to alter the tax cuts in their original form.

“We didn’t want to vote against the whole package in the final vote because we didn’t want people on low and middle incomes to miss out,” he said.

That’s despite recent market reports showing that the federal budget will lose almost a quarter of a trillion dollars to negative gearing and capital gains tax concessions between 2010-33.

The Everybody’s Home Written Off report also argues investor tax breaks over the next decade could build more than half a million social homes, and have outstripped spending on social housing by at least five times.

In response, the national campaign to fix Australia’s housing crisis is urging the federal government to scrap tax concessions for property investors and build more dwellings for lower income Australians.

But the Property Council’s national policy and advocacy executive Matthew Kandelaars says Everybody’s Home’s proposal won’t fix the housing crisis.

“The best way to support housing affordability is to ensure we have enough new homes to meet demand, including social, affordable and at-market housing,” he said.

“Calls to remove investor incentives that support the supply of new homes are searching for a silver bullet that doesn’t exist and will do exactly the opposite to what is intended.”