In an article from Australian Broker Online, it states that a property investment expert is urging the government not to cut negative gearing, after welfare group ACOSS asked for it to be cut.

ACOSS told journalists it was advising the government to consider the cuts to tackle rising homelessness. Paul Bieg, director of Big Property Investors, told Australian Broker Online ACOSS assertions were misguided. “I feel they should seek further advice on this “idea” as in my opinion, removing negative gearing would actually make the rising poverty & homeless numbers worse, not better,” he said. “Property values and rentals are based on supply & demand: always have been, always will.” “Removing one of the main incentives to purchase will result in less sales & construction. Australia already has a housing shortage so making it worse will not have the effect the ACOSS is looking for, less sales & construction also means less work for Australians,” he said.

The Hawke government in 1986 -1988 withdrew the negative gearing policy and rents increased as investors withdrew from the market. Rental income is a supply and demand situation and if there are less places to rent, then rent will go up.

If the government withdraws the negative gearing policy the government will need to invest massive amount of funds they do not have into the public housing or the homeless rate will rise even more.

I say to ACOSS, beware of what you wish for…….. 

John Whitten can be contacted on 0749722081 or 0410433919. You can also email him at jwhitten@ihl.net.au or look him up on the net www.ihl.net.au. John Whitten is a credit representative (CRN 399796) of BLASSA Pty Ltd (Australian Credit Licence No 391237).