Labor dumps Bill Shorten's negative gearing policy

The ALP has dumped the controversial tax policies it took to the 2016 and 2019 elections.

Opposition Leader Anthony Albanese announced the retreat while campaigning in Queensland yesterday.

He advised the Labor caucus had agreed to dump the negative gearing and capital gains tax policies it had under Bill Shorten's leadership.

The tax measures would have likely affected homeowners, investors and property prices. They had been pitched as policies to improve housing affordability.

The policies unsettled property investment especially in the months prior to the May 2019 election.

“They’re big decisions, but this is the right decision that we’re making today,” the shadow treasurer, Jim Chalmers said.

The decision was taken by the shadow cabinet on Monday morning, and then put to an online meeting of the caucus.

Labor initially proposed cutting negative gearing concessions in February 2016, which became one of the major policy differences with the Turnbull Government at the 2016 election.

Then Prime Minister Scott Morrison attacked Labor when it stuck with the policy in the 2019 election.

Danielle Wood, the chief executive of the economic think tank the Grattan Institute, condemned the policy shift.

“If you can’t sell a popular policy on negative gearing (majority support at the time of the last election), when house prices are rising rapidly and the budget is in massive structural deficit, then what hope does Australia have for any difficult reform?”

The Greens leader Adam Bandt blasted Labor’s retreat as “the sell-out of the century”.

The Real Estate Institute of Australia (REIA) welcomed the Leader of the Opposition’s announcement that Labor will support the status quo for negative gearing and capital gains tax should they form government.

REIA President, Adrian Kelly noted ATO data shows that that the majority – just over 70 per cent – of investors own just one investment property.

“Continuing to support successful tax settings that encourage investment and has assisted investors throughout the COVID-19 pandemic is most welcome in a time of great uncertainty.

“We also do not want CGT to become overly punitive and disincentivise and discourage households from rightsizing."