Spender’s plan would mean property losses could be used only to offset taxable income on other capital investments or be carried forward to tax paid on capital gains when they are sold.
She said the current tax system acted as an incentive for people to sink money into property, but was a disincentive for someone who wanted to boost their skills or work. Moving to a dual-income system would limit the attractiveness of negative gearing and trusts.
“We’re taxing young people when they aren’t getting high pay, and they’re facing high costs such as buying a home or childcare. It’s actively working against young people,” she told this masthead.
“We’re not incentivising people to be the best that they can be, but how much they can put into property. We can’t keep doing that.”
Any move on negative gearing would affect many of the residents of Spender’s eastern Sydney electorate of Wentworth, the nation’s wealthiest area.
It would also prove politically contentious. In the 2022-23 financial year, 1.1 million people made a net loss on their property investment, with a similar number either breaking even or recording a profit. The number of negatively geared investors is expected to grow due to the rise in mortgage interest rates that began in 2023.
While tax will be a key debating point at the roundtable, Treasurer Jim Chalmers has signalled an assault on red tape across the three days of discussion.
Prime Minister Anthony Albanese has signalled the government is unlikely to support changes to the GST or property taxes.Credit: Alex Ellinghausen
The Business Council of Australia will on Friday release new research arguing the huge productivity enhancing benefits from a reduction in regulation.
Council chief executive Bran Black said over-regulation cost Australia $110 billion per year, making it a “complex a country in which to do business”.
“In Victoria, a café owner needs 36 separate licences and approvals before they can pour the first coffee, while a tradie on the Gold Coast needs to pay hundreds of dollars in permits just to fix a tap over the NSW border, this is the regulation we need to fix,” Black said.
The proposed changes including harmonising licensing schemes for tradespeople and getting rid of duplicate state and federal approval processes for houses and energy projects, the latter of which is known to be on the government’s agenda.
The group, which represents the nation’s largest businesses, also wants trading hours in different states to be made the same, and a quicker rollout of artificial intelligence in the economy.
Chalmers said the government was keen to cut red tape where it could responsibly do so.
While Chalmers would receive bipartisan support for reducing regulation, the Coalition on Friday will declare it cannot support any tax hikes.
In a speech referencing a song from Willy Wonka and the Chocolate Factory, shadow treasurer Ted O’Brien will label Chalmers the “Candy Man” and argue the government lacked the will to rein in spending.
“There is little nutrition in the Candy Man’s treats, for he is making Australians poorer and our economy weaker,” he will say in a speech to the Liberal-aligned Menzies Research Centre.
“From recent media reports, it looks like the roundtable has been engineered to rubber stamp a doubling down on Labor’s failed tax and spend strategy.”
Spender’s proposal and the call for less red tape emerged as the Reserve Bank released research showing that a fall in competition across the economy since the early 2000s had directly contributed to Australia’s slowdown in productivity that is costing every person up to $3000.
RBA economists Jonathan Hambur and Owen Freestone found that if competition were around the level it was at the turn of the century, overall productivity would be 1 to 3 per cent higher, and the economy up to $80 billion larger due to a better allocation of business resources.
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“This shows that declining competition has been a significant drag on productivity, and therefore GDP and incomes,” they found.
“These are important findings. They suggest that declining competition in the Australian economy can account for a significant portion of the slowdown in productivity growth, and therefore growth in incomes and living standards.”
The authors said the cost of the drop in competition was likely to be higher once the ability of companies to mark up their prices was considered.
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