On the Liberal party and housing affordability

Martin Gordon writes: Re. “Libs eat their young to protect an intergenerational theft racket” (Wednesday). 

I had not had the benefit of reading Harry Stutchbury’s article in Fairfax as I was overseas. But I found Adam Schwab’s defence of Harry’s comments very positive. I have great sympathy with Stutchbury’s argument. I have a seniors and means testing policy background and have proposed that the principal place of residence be included in the assets test. I don’t agree with the abolition of negative gearing as it would undermine the principal of allowing deductions for expenses in earning income (I happen to have had a tax background).

But agree with the likes of Chris Richardson that the discounting of capital gain tax be eliminated (or only subject to indexation). I have also proposed scaling back the value of tax concessions for superannuation which are massively regressive. Currently they amount to about $50B a year, and overwhelmingly accrue to the top end of the income distribution, who would not have qualified for age pensions anyway.

Do I expect any of this to happen anytime soon? Probably not, as the ALP set up the vast bulk of the superannuation tax concession framework (and resisted fiercely the small changes made by the Turnbull Government last year). As well in the past the ALP has supported removing assets and income testing (in the Whitlam period). Do I expect a grand bargain on this area, probably not. When vested interest is involved, some really stupid stuff can be hard to get rid of.

Edward Zakrzewski writes: Re. “Libs eat their young to protect an intergenerational theft racket” (Wednesday). 

In this article, Adam Schwab says “Governments distort housing by giving a CGT exemption on a principle residence (which acts as the greatest form of intergenerational theft)”.

Surely, if there were a GST on a principle residence, the seller would not have enough money to purchase an equivalent dwelling and would have to borrow an extra amount equal to the GST paid (great for banks).  This would make it very difficult to say move from one part of Sydney to another.

The powers that be should never have allowed house prices to escalate to the extent they have.

Peter Fray

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