Home' Policy Magazine : Policy Vol 34 - No 1 Contents 14 POLICY • Vol. 34 No. 1 • Autumn 2018
UNTANGLING THE DEBATE OVER NEGATIVE GEARING
1 Australian Labor Party, ‘Positive Plan to Help
Housing Affordability’ (2016), http://www.alp.org.au/
2 Greg Jericho, ‘When it Comes to Negative Gearing, This
Government Prefers Fiction to Fact’, The Guardian (14
3 John Daley and Danielle Wood, Hot Property: Negative
Gearing and Capital Gains Tax Reform (Melbourne:
Grattan Institute, April 2016), 55, http://grattan.edu.au/
4 This is the case even if the property is cash flow positive,
recognising that an investor could be negatively geared
but still cash flow positive given depreciation is a non-cash
expense. It is unwise for property investors to ignore the
depreciation of their properties in their investment decision
5 The Treasury, Re:think Tax Discussion Paper (Australian
Government the Treasury, March 2015), 66, http://
6 See, for example, estimates of the internal rates of return for
owner-occupied and rental properties in Australian Institute
for Progress, Housing investment—the Last Five Years (4 May
7 Daley and Wood, Hot Property, 28.
8 Ben Phillips and Miranda Stewart, ‘Fact Check: is 50% of
all Income Tax in Australia Paid by 10% of the Working
Population?’, The Conversation (28 July 2015), https://
9 The Treasury, Re-think, 64.
10 Tim Seelig, Alice Thompson, Terry Burke, Simon
Pinnegar, Sean McNelis and Alan Morris, Understanding
What Motivates Investors to Become and Remain Investors
in the Private Rental Market, AHURI Final Report no.
130 (Australian Housing and Urban Research Institute,
March 2009), 3, https://www.ahuri.edu.au/__data/assets/
11 Ben Phillips, Distributional Modelling of Proposed Negative
Gearing and Capital Gains Taxation Reform, Research Note
(Australian National University, Centre for Social Research
and Methods, February 2016), 5, http://csrm.cass.anu.edu.
12 As above, 6.
13 Dixie Blackley and James Follain, ‘In Search of Empirical
Evidence That Links Rent and User Cost’, Regional Science
and Urban Economics 26:3-4 (June 1996), 409-431.
14 As above.
15 Daley and Wood, Hot Property, 32.
16 Gene Tunny and Patrick Windle, Impact of Proposed
Negative Gearing Changes on the Property Market, report
prepared for Walshs Financial Planning (2016). The major
difference between the Grattan results and my own appears
to relate to the rate of return estimated. My colleague
Patrick Windle and I estimated the internal rate of return,
which is the true measure of yield, while Grattan estimated
the return on assets.
17 BIS Shrapnel, Economic Impact of Limiting the Tax
Deductibility of Negatively Geared Residential Properties
(March 2016), http://www.smh.com.au/cqstatic/gnanns/
18 Joanna Mather, ‘BIS Shrapnel’s Negative Gearing Report
is “Manifestly Ridiculous”’, Australian Financial Review (3
19 BIS Shrapnel, Economic Impact, 11.
20 Richard Holden, Switching Gears: Reforming Negative
Gearing to Solve our Housing Affordability Crisis (McKell
Institute, 2015), 28, http://research.economics.unsw.edu.
21 Yunho Cho, Shuyun Moy Li and Lawrence Uren, Negative
Gearing and Welfare: A Quantitative Study for the Australian
Housing Market, Paper presented to the Reserve Bank
of Australia Quantitative Macroeconomics Research
Workshop (13-15 December 2017), https://www.rba.
22 Max Floetotto, Michael Kirker and Johannes Stroebel,
‘Government Intervention in the Housing Market: Who
Wins, Who Loses?, Journal of Monetary Economics 80:C
23 George Fane and Martin Richardson, ‘Leave Negative
Gearing Alone and Repair the Capital Gains Loophole’,
The Australian (17 May 2016), 14.
24 Michael Potter, ‘Negative Gearing Debate Going Far Off
the Track’, The Australian (11 May 2016).
25 Andrew Worthington, ‘The Quarter Century Record
on Housing Affordability, Affordability Drivers, and
Government Policy Responses in Australia’, International
Journal of Housing Markets and Analysis 5:3 (2012), 235.
26 Peter Abelson, ‘Affordable Housing: Concepts and Policies’,
Economic Papers 28:1 (March 2009), 27-38.
27 CoreLogic, ‘National Dwelling Values Fall 0.3% in
December, Setting the Scene for Softer Housing Conditions
in 2018’ (2 January 2018), 1, https://www.corelogic.
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