Scott Morrison cites UK housing affordability woes in defence of negative gearing

Treasurer avoids responding to call from Liberal MP John Alexander to offer more ‘nuanced’ policies to curb investors

Scott Morrison has avoided responding to a call from a Liberal party colleague for the government to develop more “nuanced” housing policies that include negative gearing changes.

The Liberal backbencher John Alexander said the odds were stacked against homebuyers in their competition with investors, and the Turnbull government ought to stop ruling out particular policy areas for potential reform just for political reasons.

But the treasurer refused to buy into the debate, pointing to Britain’s housing affordability crisis as evidence that negative gearing was no solution.

“They have an even bigger problem than we do here, people pay more of their income in rents there, and they pay more of their incomes on their mortgages than they do in Australia,” Morrison said.

“What’s interesting in the UK is they’ve never had negative gearing. Yet they have the same and worse affordability problems than Australia has.

In an opinion piece at the weekend, Alexander floated the idea of allowing the Australian Prudential Regulation Authority to control house price inflation in the same way as the Reserve Bank controls inflation, saying when Apra pressed the banks to reduce their loan-to-value ratio requirements in 2015 – and cap lending growth for investor loans – investor appetite cooled immediately.

He asked: “Should this not be an area worth further consideration and development?”

“The RBA is charged with containing general inflation to between 2% to 3% – by monthly adjustments to the prime rate, taking into consideration all market factors.

“Should Apra be charged with containing investor-driven housing market volatility to a defined band – by monthly adjustments to the allowable loan-to-value ratio for new investor loans, taking into consideration all market factors?” he asked.

Alexander expanded on his idea on ABC radio on Monday, saying under his proposal Apra should target house price inflation by taking into account everything that makes prices increase.

He said the Turnbull government also ought to allow itself to reform all factors that made house prices increase, including negative gearing.

“So what then of your government’s policy to not look at [negative gearing], to say it’s all about supply?” the ABC’s Fran Kelly asked.

Alexander replied: “Well, I disagree with that. Supply is absolutely vital, but as I have said before … it’s like playing Roger Federer. If you play him once you will surely lose and if you were to play him 1,000 times you would lose 1,000 times, and that’s what it’s like for the homebuyer going against the investor the way things are at the moment.

“We’ve got to look at nuancing, whether it’s negative gearing, or nuancing some containment of the investor and the empowerment of the homebuyer,” he said.

Speaking to Sydney’s 2GB radio on Monday, Morrison said housing affordability was even worse in Britain and “they’ve never had negative gearing”. “What both countries I think are faced with are this supply issue,” he said.

Last week, when the federal infrastructure minister Paul Fletcher visited a Sydney electorate, he dismissed a question about negative gearing by saying he did not think Sydneysiders thought about housing affordability on a daily basis.

Alexander wrote at the weekend: “I’ve had thousands of conversations with constituents in my six years as the member for Bennelong; the most common concern and frustration for them is housing affordability.

“Bennelong housing costs have skyrocketed – 74% in the last three years, the fastest in Australia,” he wrote.

Contributor

Gareth Hutchens

The GuardianTramp

Related Content

Article image
Scott Morrison defends negative gearing after criticism from Mike Baird
Treasurer rejects New South Wales premier’s criticism of contentious housing policy and defends relaxation of rules on foreign buyers

Paul Karp

30, Nov, 2016 @1:09 AM

Article image
Scott Morrison seizes on report examining Labor's negative gearing policy
Adept Economics says plan would have ‘risks’ but cutting capital gains discount could make housing more affordable

Gareth Hutchens

21, Jun, 2016 @5:17 AM

Article image
Home ownership would rise if negative gearing is scrapped, study says
Melbourne University modelling, presented to Reserve Bank, says nearly 75% of Australian households will be better off if the policy is ditched

Ben Doherty

13, Jan, 2018 @12:15 AM

Article image
Scott Morrison shuts the door on changes to negative gearing rules
Treasurers says any amendments will upset the market but agrees to look into expansion of affordable housing

Gareth Hutchens

02, Dec, 2016 @8:01 AM

Article image
Scott Morrison says housing agreement a 'one-way ATM' that has failed to boost supply
Treasurer signals restructure of national affordable housing agreement, with plan to retain negative gearing and allow first-home buyers to access super

Paul Karp

09, Apr, 2017 @11:42 PM

Article image
No changes to negative gearing or capital gains tax in budget says Malcolm Turnbull
The prime minister says increasing supply of land is a better solution to housing affordability

Paul Karp

24, Apr, 2016 @12:51 AM

Article image
Labor negative gearing changes will crash economy, says Morrison
Treasurer claims property values would be undermined by Labor’s tax plans as he admits growth is dependent on housing

Gareth Hutchens

08, May, 2016 @2:05 AM

Article image
Labor's negative gearing changes would help stabilise housing market: McKell Institute
Thinktank’s report says policies wouldn’t deliver shock to property market but cause prices to rise more slowly

Gareth Hutchens

27, May, 2016 @3:07 AM

Article image
Scott Morrison is losing his negative gearing modelling war
The treasurer cites nuanced reports, partly critical and partly supportive of Labor’s policy, to claim it would be a ‘sledgehammer’ on the property market

Gareth Hutchens

22, Jun, 2016 @7:56 AM

Article image
Shorten condemns egging of Australian prime minister Scott Morrison – as it happened
Prime minister blames ‘cowardly activists’ after egg misses his head. This blog has now closed

Amy Remeikis

07, May, 2019 @7:44 AM