New South Wales Treasury advised the State Government negative gearing changes would improve housing affordability, leaked documents have revealed.
The confidential cabinet briefing note, obtained by Labor, was provided in December 2016 to then-treasurer Gladys Berejiklian ahead of a Council on Federal Financial Relations meeting.
The note suggested negative gearing and the capital gains tax discount create substantial distortions to the housing market and favour investors.
It recommended the Commonwealth Treasury review the impact of the policies on housing affordability and consider alternative options.
Just a month later Ms Berejiklian said she was reluctant to pursue negative gearing changes with the Federal Government, despite declaring as the new Premier housing affordability was one of her top priorities.
“I don’t feel at this stage that is something I would necessarily touch in relation to housing affordability,” she told ABC’s Fran Kelly in January 2017.
Shadow treasurer Ryan Parker said the Government had failed to act on the Treasury advice.
“They have never advocated for the type of reform their own Treasury says could make a difference,” he said.
The Government maintains it is addressing housing affordability and has delivered a comprehensive package for first homes buyers including stamp duty exemptions, a boost to housing supply and delivering infrastructure.
Acting Treasurer Brad Hazzard added: “The Premier has made clear previously if the Government can do more to ease affordability it will.”
Labor continues push for negative gearing changes
NSW Labor has used the briefing note to push Federal Labor’s proposal for restrictions on negative gearing deductions and a halving of the capital gains tax discount.
The shadow treasurer argued the Government needed to push for change.
“They need to make sure that [Prime Minister] Malcolm Turnbull very, very clearly understands that in NSW we have a crisis, and they can contribute to fixing that crisis by adopting Federal Labor’s reforms,” Mr Parker said.
The briefing note has been released just days after it was revealed that in 2016 the Federal Treasury advised Treasurer Scott Morrison that Labor’s negative gearing overhaul might cause “some downward pressure” and could have “a relatively modest downward impact” on housing prices.
The Coalition had consistently claimed the plan would attack the housing market with a “chainsaw”, “axe” or “sledgehammer”.
The federal shadow treasurer Chris Bowen has seized on the New South Wales Treasury advice.
“Ms Berejiklian has stood by in silence while her Federal Liberal colleagues have conducted a pathetic scare campaign against Labor’s housing affordability policies,” Mr Bowen said.