Home ownership could soar
AUSTRALIAN renters and owner-occupiers would benefit from a cut to negative gearing, which could see home ownership soar to its highest level since 1991, say researchers.
Experts from Melbourne University said in a paper presented at a Reserve Bank of Australia workshop that scrapping negative gearing could improve housing affordability.
They said it would have a minimum impact on the economy while curbing the appetite of investors and the top 20 per cent of earners for owning multiple properties, Fairfax Media reports.
Labor seized upon the paper to back its case for doing away with negative gearing but the Government said the work was "preliminary and incomplete".
Earlier in the week, NSW Premier Gladys Berejiklian was criticised for ignoring advice from her Treasury officials that the federal government should conduct a comprehensive study of negative gearing and capital gains tax arrangements "and consider alternative policies that would improve outcomes for Australians".
Confidential Federal Treasury advice published earlier this week contradicted Turnbull government claims that changing negative gearing and the capital gains tax discount would act like a "sledgehammer" on the Australian economy.
NSW opposition treasury spokesman Ryan Park said on Thursday that both the NSW and federal governments had misled the community about policies that could address the housing affordability crisis.
The paper, posted on the RBA's website, is based on economic modelling carried out by Melbourne University's Yunho Cho, Shuyun May Li and Lawrence Uren.
Federal Financial Services Minister Kelly O'Dwyer, who labelled the Melbourne University paper "preliminary and incomplete", said Labor cannot argue negative gearing and capital gains tax reforms would both make houses more affordable and have no impact on prices.
Shadow treasurer Chris Bowen said the research showed Australian households would be better off.