ALP Policy Will Cut Building: Report

Posted on 24/10/2018  
ALP Policy Will Cut Building: Report

Labor’s policies on negative gearing and capital gains tax will not increase the supply of new housing or create new jobs in the building industry, according to new independent economic modelling by Cadence Economics.

Its report says that if Labor’s policies are implemented it will mean: 

- Up to 42,000 fewer new dwellings being built across the country.
- Up to 32,000 fewer full-time jobs.
- Up to $11.8 billion less building activity.
- Up to $210 million less renovation building activity.

Master Builders Australia says the research shows that Labor’s policy on negative gearing and CGT fails its own test.

“Master Builders calls on the ALP to rethink its policies in the light of this new research and a changed housing market,” says Denita Wawn, CEO of Master Builders Australia.

“Australia cannot afford for housing supply, building activity and employment to go backwards.”

Cadence Economics was commissioned to test Labor’s claims that its policy (to restrict negative gearing to investments in new housing and halve the capital gains tax discount to 25% on all properties) would increase the supply of new housing and employment in the building industry. 

The results of the modelling show that within five years of Labor’s property tax policy being implemented the construction of new housing would fall in all states and territories and employment would fall over the same period.

“Labor has previously stated their policies would boost new dwelling construction by thousands of new homes each year,” Wawn says.

“But the independent modelling by Cadence Economics shows that Labor’s policy would mean up to 42,000 fewer new homes would be built over the five years following the implementation of Labor’s policies, resulting in a reduction in the value of residential building activity of between $2.8 billion and $11.8 billion. Home renovations would also be hit by an expected reduction of between $50 million to $210 million in activity over a five year period.”

The analysis suggests that this would mean a fall in employment - expected to be between 7,200 and 32,000 fewer jobs across the country.

“The context of Labor’s policies, namely an ‘overheated’ housing market, no longer exists bringing into question the need for reforms to curb investor activity,” Wawn says.

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