The REAL reason Albos government is tiptoeing behind the scenes to slash negative gearing - and its got nothing to do with Australias housing crisis, writes PETER VAN ONSELEN

So negative gearing is potentially back on the table as another tax concession Labor wants to curb.

Well soon see if they have the courage of their convictions to pursue the change.

Former Opposition Leader Bill Shorten lost two elections trying to make the argument to reduce negative gearing on investment properties.

The second defeat, in 2019, was considered an unloseable election before it was duly lost and we were inflicted with three years of Scott Morrison in charge before he lost the 2022 election.

Prime Minister Anthony Albanese tied himself in knots this week trying to rhetorically navigate his way through questions about whether his government had asked Treasury to model different ways to cut into the tax concession.

The word salad Albo delivered eventually suggested not.

Voters and commentators alike, unsurprisingly, arent convinced by his denials, believing instead that curbing negative gearing may again be a live political option.

Thats because Albo has lied to us before when denying policy changes are afoot.

Prime Minister Anthony Albanese is considering major changes to negative gearing

He did it when asked about plans to change the legislated stage three income tax cuts, right before changing them.

Labor did the same when it changed super rules and imposed IR changes it didnt take to the last election.

Irrespective of whether or not Albo ultimately decides to take negative gearing reforms to the next election, we need to call out the true motivation for even considering it.

It has nothing to do with making housing more affordable or accessible.

The motivation to cut negative gearing is all about increasing the governments tax take at the same time as clamping down on what is perceived to be a tax advantage for the wealthy.

The idea that changes to negative gearing can help fix the housing crisis is almost to absurd for words, but Ill spell out why anyway.

Not only does it do nothing to increase supply - which is the real problem when not enough people can currently access the housing they need - but cutting negative gearing risks making it even harder to access affordable homes.

Thats because investment properties currently rented out provide residencies for people who often cant afford to buy. So they rent instead.

Remove negative gearing and, yes, purchase prices might come down slightly - although thats far from guaranteed. But not by enough for many renters to decide to buy instead.

However, if reduced negative gearing takes investors out of the housing market and into other more tax effective investments, this leaves renters with fewer options.

At the core of Australias housing crisis is a lack of supply and new residential construction 

Especially if it reduces the number of properties being built, which it likely would.

Plenty of developers spruik what they are selling to investors who buy to take advantage of the tax concessions.

If that market dries up so might supply.

So we really do need to call out the governments primary motivation here: reducing negative gearing as a way of increasing taxes and ideologically clamping down on wealthy investors.

Only many people who negative gear investment properties arent all that wealthy to begin with.

For example, a certain writer for a left wing publication who is always rabbiting on about housing issues but never discloses that she has an investment property currently being negative geared.

This is probably a good time for me to disclose I do not have any properties negatively geared. I invest in other asset classes beyond the family home.

But the point here is that it is a misnomer that only the affluent negatively gear investment properties.

Some do, but most invest their money in myriad of other ways. Many who negatively gear properties are aspirational not wealthy.

The median house price in Australias capital cities combined hit a staggering $997,352 in September 2024 

I have no philosophical opposition to reforming negative gearing rules, and I think having the ability to own large multiples of properties (rather than just one or two) to reduce ones tax liability should be changed.

But it needs to be incorporated in a wider tax reform package to improve the whole ambit of how we tax and spend.

Otherwise Labor would merely be using the change to falsify the real purpose behind it.

To appear like it is addressing the housing crisis when all it is doing is lining the pockets of Treasury in a bid to stifle aspiration.

If Labor really cared about increasing housing supply it would do what it promised but has so far failed to do, and cut back on sky high immigration levels.

It would also do deals with state governments to release more housing supply, aka land, and find ways to cut the cost and time consuming nature of red tape attached to new building projects.

And it could look at limiting negative gearing to longer term rentals rather than short term style accommodation.

This would ensure such investment properties are used to help with housing for dwellings rather than just holiday accommodation.