Dangers of Playing with Negative Gearing
With a federal election looming both sides of politics will be keen to entice voters with a variety of policies. The benefits of the policies will be promoted and the detriments highlighted by the opposing side. Labor’s plan to limit negative gearing provisions to new dwellings only is premised on the idea that such a move will; encourage new construction, improve supply, create more construction jobs, improve affordability and raise $500 odd million over the forward estimates. These “positive” outcomes can be countered by; construction costs will rise due to shortening labour supply, supply of rental housing will plummet, construction jobs require skilled workers, property values will fall, affordability wouldn’t change much and $500 million is chump change given our current deficit.