Nat Barr loses it at Anthony Albanese’s govt after struggling to get a straight answer to simple question

By William On Sep 25, 2024

Nat Barr has criticised a Labour minister over the Albanian government’s refusal to confirm or deny whether it is considering changing negative gearing rules.

The Sunrise presenter was speaking in a heated interview with Social Services Minister Amanda Rishworth on Wednesday morning, following reports that the government had asked the Treasury for advice on scaling back tax breaks for property investors.

Earlier on Wednesday, Prime Minister Anthony Albanese dodged a direct answer to the question when pressed by reporters at a press conference in Tasmania.

A negative gearing policy allows property investors to claim tax relief when the costs of owning and maintaining their investment properties, such as interest on loans and maintenance costs, exceed the rental income they earn from them.

This tax benefit can reduce the taxable income of real estate investors and investors use this to reduce their tax bill.

“Amanda, are you considering rolling back the negative gearing in this country?” Barr asked.

Ms Rishworth said Labour was focused on building more homes to address the country’s housing shortage and it was not Labour’s current proposal to add negative gearing measures to that.

“We have a very ambitious housing policy that focuses on supply. We are not proposing to tackle or add negative gearing. We are continuing to work to increase the supply of housing,” she said.

Labour and Social Services Minister Amanda Rishworth (left) was questioned by Nat Barr (right) over reports the government has sought advice on scaling back negative gearing

Barr pressed further, however, asking whether the administration had specifically sought advice on scaling back the Treasury Department’s tax breaks, even though that was not part of a current proposal.

Barr repeated the question several times, but instead of answering yes or no, Ms Rishworth turned to her political opponents.

‘I have to make it very clear that as a government we are primarily focused on implementing the housing agenda that we have before us, to be honest, if only the Greens and the coalition would not let themselves get in the way in the Senate.’

“Okay, that’s clearly not an answer,” an exasperated Barr said.

Shadow Chancellor of the Exchequer Jane Hume, who appeared in the same interview as Ms Rishworth, claimed that reducing negative gearing could reduce the number of rental properties offered by private landlords.

“If you take away the negative gearing, which the government clearly intends to do, and that’s why they’re commissioning the work… then you have a dramatic impact on the supply of rental housing,” she said.

“That’s already a real problem in this country. It would only make it worse.”

Former Labor leader Bill Shorten’s plan to ditch negative gearing contributed to his loss of the “unlosable election” to Scott Morrison in 2019.

When Mr Albanese took over, he said changes to negative gearing were off the table.

Anthony Albanese would not confirm whether his government is considering changing tax breaks for real estate investors due to the housing shortage.

In interviews last week, Mr Albanese was repeatedly asked whether Labor would consider changes to negative gearing, but at no point did he rule it out.

“I don’t answer those kinds of questions,” he said on ABC Radio National last Thursday.

But two days earlier, he publicly referred to a claim by the Property Council of Australia that changing negative gearing would harm housing stock.

“That’s one of the reasons we’re being very cautious about this,” he told ABC Radio Sydney.

Being ‘cautious’ doesn’t mean ruling anything out, though. A Labor official who spoke to Nine Newspapers said: ‘This is what Labor needs and wants: they need to fight for policies that show what they stand for.

“It’s in the value framework. That’s why Albo was reluctant to rule it out the other day. Look at what Albo said, he didn’t knock it on the head.

“This will give the government something big and positive to talk about. It will be a major talking point in the campaign.”

Governments often ask finance ministry officials for policy reviews without any intention of implementing changes.

However, the official said the models indicated the Labor Party was preparing to make changes before the upcoming election.

The Labour Party asked the bureaucracy for a similar model before amending the coalition’s stage three tax cuts earlier this year.

What is negative gearing?

By Stephen Johnson

Investor-landlords can deduct a rental loss from their taxable income. This arrangement is known as negative gearing.

Even if they do not make a loss, they can deduct costs for interest payments, municipal taxes and maintenance of the property. In this way, they can reduce their taxable income.

In the 2019-2020 tax year, 35 percent of people claiming rent deductions belonged to the highest group of taxable income earners.

The Treasury Department calculated that in 2019-2020, 2.4 million people claimed $51.3 billion in rent deductions on their taxable income.

This cost the budget $18.6 billion in lost revenue, as 1.3 million people reported losses because their rental income could not keep up with their mortgage payments, a situation known as negative gearing.

Of the taxpayers who claimed rental costs as taxes, including municipal taxes and property maintenance, 47 percent claimed the ‘other rental deductions’ category.

Another 44 percent claimed interest deductions, while 9 percent claimed capital investments.

Australians claimed an average of $7,790 in rental deductions.

Men claimed an average of $8,840 in rent deductions, compared to $6,660 for women — a difference of $2,180.

“A greater share of the reduction attributed to men is due to higher average deductions and higher average taxable incomes,” Treasury said.

Men claimed 59 percent of the deductions, women 41 percent.

Real estate investors also reduce their taxable income to a very low level by claiming rental deductions.

“The share of the benefit for those in the lowest taxable income decile is determined by both the number of taxpayers and their relatively high average deductions,” Treasury said.

‘These taxpayers typically have higher pre-deduction incomes, but their claims for expenses related to the maintenance of their rental property significantly reduce their taxable income, putting them in the lower brackets.’