REFORMING NEGATIVE GEARING
A FAIRER HOUSING MARKET FOR ALL AUSTRALIANS
The Greens’ plan to reform negative gearing and fund the urgent supply of housing

Reforming negative gearing will help restore fairness to our housing
market, and directly benefit low and middle income earners, people
experiencing homelessness and families stuck on social housing
waiting lists.
> A HOUSING SYSTEM IN CRISIS

Australia’s chronic undersupply of affordable housing is at a
crisis point. Years of underinvestment in affordable supply has
been accompanied by decades of generous subsidies to
property investors and speculators which has driven prices up
as investors out-compete first home buyers. Our housing
market is now one of the most unaffordable in the world.
The Greens' proposal to reform negative gearing is based on
models outlined in consecutive reports by a wide range of
advocates and economists.

the top 20 per cent have 60 per cent of all investor housing
debt, while the bottom 40 per cent account for less than 10 per
iii
cent .
As income increases so does the average ‘loss’ or deduction
claimed. The average net property loss reported in 2011-12 was
$10,870; but for those earning between $250,000 to $500,000
iv
the average loss was $38,500 .
If negative gearing were removed, 95% of people earning
$50,000 or less would be unaffected, along with 90% of people
v
earning a total income of $50,001 to $80,000 .

> NEGATIVE GEARING: WHO BENEFITS?
Negative gearing allows investors to deduct losses made on
rental properties from their other income, thereby reducing
their overall annual tax liability.
The biggest winners from negative gearing are the nation’s
highest income earners:
-

Over half of individual taxpayers with negatively geared
rental housing investments are in the top 10% of
i
personal taxpayers, with 30% earning over $500,000
The tax benefit of negative gearing is 10 times more for
the highest income earners than for the lowest
The number of people using negative gearing is almost
four times higher for those with incomes of $150,000
than for those earning $50,000 or less
1930 millionaires collectively claimed rental property
losses of $115m – a tax deduction worth almost
$60,000 each

The proportion of low to moderate income earners who are
negatively geared is very low: only 10% of people earning a total
ii
income of $50,000-$100,000 are claiming a net property loss .
The majority of property investors are in the two highest
income quintiles (Table 1). The Financial Stability Review report
published by the RBA in September 2014 shows households in
Printed and authorised by Senator Scott Ludlam
, Parliament House Canberra ACT 2600.

Figure 1: Property Investors by total income
(Source: RBA 2014 cited in ACOSS 2015).

> WHAT COULD WE DO INSTEAD?
The Greens propose budget savings from reform of negative
gearing should be used to build new affordable rental
accommodation for thousands of families and individuals
stranded on social housing waiting lists and suffering
homelessness.

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 This is estimated to cost $1.875 billion over the forward
estimates

> PARLIAMENTARY BUDGET OFFICE COSTING
The Parliamentary Budget Office (PBO) was requested to
provide a costing to remove negative gearing for all asset
classes, for assets purchased on or after 1 July 2015, with
grandfathering arrangements for existing investments.
The PBO estimated this proposal would be expected to increase
revenue by almost $2.94 billion over the 2014-15 forward
estimates. This includes $2.95 billion in revenue and $11 million
in departmental expenses to administer. (Table 1)
The PBO estimate the proposal would increase revenue by
$42.5 billion over the period to 2024-25.
This includes an increase in departmental expenses to
implement and administer the proposal of $18 million over ten
years.
Table 1: Financial implications – Remove negative gearing for
all asset classes for assets purchased on or after 1 July 2015
Impact on
Underlying cash
balance ($m)
Fiscal balance
($m)

201415

201516

201617

201718

Total

..

-6

896

2,049

2,939

..

-6

896

2,049

2,939

• Include a target of high quality, fast build, modular or
‘prefabricated’ housing which will be significantly faster and
more affordable to construct. It’s proposed that one third of
the social housing and half of the homelessness housing
supply be prefabricated.
This initiative would cost a total of $2.845 billion over forward
estimates and would directly assist up to 22,000 of the most
vulnerable in the community.

> HOUSING THE HOMELESSS
On any given night more than 105,000 Australians are homeless.
That’s 1 in every 200 people.
According to the last census 6813 of these people were sleeping
on the streets. Many thousands more were forced to couch
surf, live in severely overcrowded housing, or in places like
caravan parks and boarding houses that lack personal space and
security.
More than a quarter of our homeless population are children
under the age of 18. On census night almost 18,000 children
under 12 were counted as homeless, 402 were sleeping rough.

The PBO note the negative impact in 2015-16 reflects an
increase in departmental expenses. The revenue impacts in
2014-15 and 2015-16 are small due to the grandfathering
arrangements and the timing of tax collections, and have been
rounded to zero.

Domestic violence is still the main cause of homelessness.
In 2013 over 77,000 cases of people receiving assistance from
homelessness agencies were escaping some form of domestic
violence or family violence, but emergency accommodation was
only provided in 81% of cases.

> WHO COULD THIS HELP?

> TAKING FAMILIES OFF THE WAITING LIST

The Greens propose the revenue raised from negative gearing
reform be redirected to increasing the supply of housing for the
most vulnerable: people who are currently experiencing primary
homelessness and families and individuals stranded on the
social housing waiting list.

In Australia today there are more than 217,000 applicants
vi
languishing on the social housing waiting list .

The Greens propose that revenue from negative gearing
reform be redirected to:
• Directly fund construction of 7000 new homes for the
homeless by 2020 – enough to house every person currently
sleeping rough or without adequate shelter.
This is estimated to cost $1.12b over forward estimates.
• Directly fund construction of 7500 new social housing
dwellings over the forward estimates, taking more than
15,000 people off the waiting list in just the next four years.

Printed and authorised by Senator Scott Ludlam, Parliament House Canberra ACT 2600.

The time spent on the waiting list has blown out massively. The
undersupply of social housing is so bad it’s currently taking an
average of 2.6 years to house those on the priority list in
greatest need, and 7.7 years for all applicants on the waiting list.
The figures vary greatly across the states and territories, and
can be deceptive. In Melbourne’s southern suburbs, one
applicant had to wait for 18 years and 10 months before they
vii
were given a home .
More than 67,000 (34%) applicants on the waiting list are
classified as being the ‘greatest need’ – they are homeless, or
their life, safety or health is at risk in their current housing.

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 The Greens do not believe the failures in our system or the
excruciating time on the waiting lists are acceptable in a modern
and prosperous economy.

> SUPPORTING INNOVATION WITH A PREFAB
TARGET

Core funding for social housing has been in decline for the last
15 years. The states have been selling off public housing stock
and using federal funding to prop up their housing programs
with little transparency on how many new dwellings they are
building.

Our housing supply initiative includes a target for 1/3 of social
housing and ½ of homelessness housing to be constructed from
sustainable prefabricated or modular housing. Modular housing
can be delivered in significantly less time and at up to half the
cost of conventional housing. In suburban Perth a one bedroom
house was recently delivered in just 14 weeks from the time of
order to delivery on site – at a cost of around $75,000 it can be
viii
installed in 10 hours by four people .

Meanwhile, demand for social housing will keep growing
dramatically. Before the Abbott Government closed it down, the
National Housing Supply Council projected demand for public
housing will be higher than that for private rental housing or
home ownership in coming years.
More housing is required to relieve the pressure on our social
housing system. As with the successful social housing
component of the 2009 stimulus package, a mix of public and
not-for-profit community housing will be funded according to
priorities set collaboratively with state and territory public
housing agencies and the community housing sector.

Modular and prefabricated housing is also far cheaper to
inhabit; high levels of insulation means the house is far easier to
heat in winter and keep cool in summer, and typically use just
10% of the energy of a five star home. High quality
prefabricated homes can also be built to a wide variety of
designs and are extremely well suited to medium density infill
developments in urban centres.

i

RBA 2014 Financial stability review, September 2014 Box C: Households
investment property exposures, evidence from tax and survey data, cited in
ACOSS 2015.
ii
Source: Parliamentary Library using ATO Taxation Statistics for 2011-12 (latest
available data).
iii
Parliamentary Library briefing using RBA and HILDA data 2015
iv
Parliamentary Library research using ATO Taxation Statistics, 2011-1
v
Parliamentary Library using ATO Taxation Statistics for 2011-12 (latest available
data). This is because just 5% of taxpayers earning below $50,000 and only 9.6%
of taxpayers earning between $50,000-$80,000 have net rental property losses.
vi
At June 30 2013, Australian Institute of Health and Welfare, Housing assistance
in Australia 2014, Canberra, 2014, p. ix,
http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129549033
(accessed 18 January 2015).
vii
http://www.theage.com.au/victoria/crisis-in-public-housing-201101301a9p1.html#ixzz2ZPQGhODo
viii
Cockburn Herald ‘Pre-fabulous’. September 15 2012

Printed and authorised by Senator Scott Ludlam, Parliament House Canberra ACT 2600.

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