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Tuesday, 14 June 2016

Negative gearing is good policy

I completed a voting intentions survey from the SMH yesterday which showed that my place on the political spectrum was closest to the Greens. I thought this was a bit funny since I'm planning to vote LNP on 2 July, and I said so in the Facebook post. But a person I know asked how it could be possible for me to vote conservative, and so I explained. He wasn't very impressed to put it mildly.

But as George Megalogenis, the journalist, has written in his recent book, immigration is the underpinning of Australia's economic strength. We've been taking in a couple of hundred thousand immigrants annually since the 1950s, which is why Australia is one of the strongest economies in the world. These people all need somewhere to live, and rental accommodation will be the solution for the great majority, at least in the beginning of their residence here. Cheap rents are important therefore, otherwise we fail all these people. So we need negative gearing to help maintain the supply of new properties. The "oversupply" of new constructions of late is for example just the result of three years of strong home price growth, and if you take away the incentive to build the supply will dry up and rents will rise commensurately.

We also need to support the tens of thousands of honest mums and dads who buy investment properties to ensure a secure future for themselves in their retirement. Not only do we help the government minimise the cost of the aged pension on the Commonwealth purse, we also make it easier for individuals to have a better quality of life, and more cash to spend in their twilight years.

It always bothers me when young people who want to live in tony suburbs like Stanmore and Newtown complain about the cost of housing. I want to tell them to look further afield, where there is plenty of housing for reasonable prices. But they will have their lifestyle no matter the cost to the public more generally. The debate on negative gearing has been going on for some time so this is not my first blogpost on the subject, but I hope that it will be the last. I predict a win to Mal with a margin of 5% in July, so the debate will hopefully finally be put to bed at that time.

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