Rent freeze would fix Canberra's increasingly unaffordable rental market, says Greens' Jo Clay

@devils_advocate
Given the hysteria of your defence of negative gearing, a reasonable assumption on my part, nevertheless I will amend my comment …
So perhaps drop the “they’re doing a community service” sanctimony and just admit they are sucking on the public teat to help finance their investments rather than truly generating investment income. And the leeching continues even when they sell the investment and they get these huge capital gains concessions.

Lmao

The only “hysteria” here is from low income earners who don’t seem to realise that landlords who are running their properties at a loss are funding those losses from their own pocket

It is the landlords subsidising the tenants, not the government subsidising landlords. I would have thought people would be grateful that landlords are willing to incur losses for the purposes of picking up where the state and territory governments have failed to provide public housing.

My reaction to the inevitable asset inequality and landlord/serfdom that will arise from abolishing negative gearing is more detached amusement than hysteria.

@devils_advocate
“landlords who are running their properties at a loss are funding those losses from their own pocket”
Were that the case then I would probably suggest they get a community service award. Reality is their losses, on an appreciating asset, are being funded by the other tax payers – which as I said is even further funded by the tax payer when they dispose of the asset.
But keep on perpetuating your 18th Century “landlord/serfdom” scaremongering … I’m sure you’ll find a lot of leeching negative gearers to swallow your tripe.

“Reality is their losses, on an appreciating asset, are being funded by the other tax payers.”

Nope. Wrong again. The landlord’s losses on residential investment properties are being funded out of their own pocket, from their other earnings whether that be from PAYG income or other, positive cashflow properties.

Feel free to keep attempting to obfuscate this fact to push whatever agenda you have though.

devils_advocate, anyone who invests with an intention or foreknowledge of a net loss is an idiot. Some investors might reasonably fall into that class in the end, but not by plan, and not for want of potential tax advantage.

Your deceit that landlords are in some manner generously supporting tenants rather than investing for long run tax-advantaged profit displays either staggering ignorance or a clear wish that nobody notice.

The “tax advantage” comes from having incurred a loss, yes you forgo the tax liability but you also forgo the income.

So the point stands that landlords who run at a loss are subsidising their tenants.

They may make a capital gain at some point down the road, and that gain may or may not exceed the losses they incurred along the way, and that gain is itself subject to some rate of tax (albeit concessional). So a contingent gain at best.

From the governments perspective, private landlords are providing housing at a subsidised price, and in the event they somehow profit then the government gets a healthy slice of that action too.

The audacity of low income earners to complain about this scenario is astounding.

I invest for profit, devils_advocate, so what do you do? For loss?

You really are trying to have a lend.

Specific tax advantages arise from offsetting short term losses against unrelated employment income, and most significantly from tax concessions on capital gains. It’s quite simple, and can be read in charts of the rocketing divergence of house prices from income since 1998.

If the CGT concession were killed, housing investment for personal profit would immediately become less attractive, leading to slower price growth, more affordable house prices, and thus lower rents still produce a financial dividend for non-silly investors.

I can reassure those audacious low income earners they are right to recognise that your arguments are fraudulently self-serving.

This is next level from Devils Advocate.

Not only are property investors generously providing housing for tenants, they are apparently so altruistic they are subsidising them too.

But of course, only if you ignore the reality of the upward impacts on property prices and rents caused by property investors and the tax advantages they receive.

There is no tenant subsidy, investors charge market rates. And they do so because of their financial assessment of the value and likelihood of that future capital gain being well in excess of any immediate, tax preferenced loss. You can’t just ignore this as its inherently linked to the market as a whole.

The mental gymnastics are hilarious, you should have a stand up comedy show.

“The audacity of low income earners to complain about this scenario is astounding.”

Haven’t seen any low income earners complaining here, pretty audacious assumption I would think.

Particularly for someone who started this thread complaining about JS assuming he was a property investor.

@devils_advocate
“ Feel free to keep attempting to obfuscate this fact to push whatever agenda you have though.”
My agenda is simple. I’m sick and tired of dud landlords using other tax payers to supplement their “supposed investment income” and then tax payers further supporting their leeching through ridiculously generous capital gains concessions.
Your feeble attempts to make them into magnanimous donors of ‘subsidised housing’ would be risible if it were not so pathetic.
What’s your agenda if you are not one of these dud landlords?

There were no assumptions by me. I know that the people complaining are low income earners because they have conceded as much, in that they acknowledge this is the reason they don’t know about the special levies, surcharges and excess contributions taxes that drive marginal income tax rates above 45%.

The sense of entitlement to other people’s money is astounding.

I don’t endorse the concept of loss-making investments but if it benefits renters they could at least not complain about it, even if they can’t be grateful.

@devils_advocate
” I know that the people complaining are low income earners because they have conceded as much, in that they acknowledge this is the reason they don’t know about the special levies, surcharges and excess contributions taxes that drive marginal income tax rates above 45%.”
As one of those “people complaining” I can assure you, d_a, you are totaly off the mark. I am neither a low income earner nor a renter. Far from it, while retired now, I own my home and I spent many of my years in the workforce paying a substantial amount of PAYG tax at the highest marginal rate.
So having ‘paid my tax dues’ I understand fully that the only people with a sense of entitlement are those dud landlords sucking on the public teat, to compensate for their inability to turn an investment into a profit.
As for “special levies, surcharges and excess contributions taxes”? Perhaps you can explain how which of these public imposts, dud landlords pay that profit making landlors and other PAYG earners don’t pay?

I wrote:
“anyone who invests with an intention or foreknowledge of a net loss is an idiot. Some investors might reasonably fall into that class in the end, but not by plan, and not for want of potential tax advantage.”

devils_advocate wrote:
“I don’t endorse the concept of loss-making investments…”

Observe that devils_advocate skips the word I used, “net” (or nett for older readers). All investment is outlay for return, by definition. The only questions here are tax advantage and devils_advocate’s shallow pretence that this is some noble benefit to others, the earth is flat and the sun will rise over the south pole tomorrow.

Entirely irrelevant either way. If the speculation pays off and the investor makes a profit the government wins by taxing the capital gain.

If not, the housing market received a subsidised rental. Also a win for society.

Of course the beneficiaries of the transfer system will find something to complain about, but what’s new

@devils_advocate
“… the housing market received a subsidised rental …” – yeah subsidised by the government, you muppet

The beneficiaries of “the transfer system” are precisely the property owners to whom wealth is transferred through under-taxation of capital gains.

As I wrote earlier, and is undisputed, “It’s quite simple, and can be read in charts of the rocketing divergence of house prices from income since 1998.”

Even speculators and dud investors with whom you seem most familiar price to market.

Keep trying devils_advocate. It helps your argument look more desperate and sillier every time you write. Do you imagine most other readers do not see through your dissembling?

Continuing to repeat something doesn’t make it true.

Housing investment does not provide subsidised rental properties, it does the opposite, increasing the costs of housing across the board because of the constrained nature of the market.

And not being a beneficiary of the transfer system, I still think it’s a woeful idea to give such preferential tax treatment to property investment.

It simply sucks too much capital into an unproductive sector of the economy, reducing opportunities for higher overall economic growth if the investment funds were directed elsewhere.

But of course every time this is mentioned, the property investment spivs sucking on the proverbial teat, squeal like stuck pigs and make up stories about generous benevolent investors.

Imagine if low income earners spent half as much time securing the bag as they did counting the money in other people’s pockets

@devils_advocate
Imagine if high income earners paid tax according to their means rather than engaging in tax avoidance (conveniently called ‘tax minimisation’) schemes and sponging off other PAYG paying citizens.

Very easy way to discourage tax minimisation, which is to stop charging punitive rates of income tax (including punitive withdrawal of benefits) and encouraging people to be productive.

Good to see you have effectively conceded all argued points even vaguely relevant, devils_advocate, leaving you grasping to support yourself by implicitly demeaning opponents in your own eyes.

“Imagine if”…some wealthy people not only recognised the structural imbalances in society but willingly voted to rectify them at their own (minor) expense.

On taxes, in my long experience earning more has yet to send me broke. Is your problem risky speculation or dud investing? If neither, why do you spend so much time supporting them?

20 replies deep and the hysterical greens supporters can’t decide whether they are
a) upset by landlords running a loss in providing housing (screeching about negative gearing) or
b) getting a positive return on their investment (in which case they are obviously exploiting tenants, and therefore more screeching required)

Logic not even once

@devils_advocate
I see you’ve given up trying to justify dud landlords being able to use the public purse to counterbalance their inability to turn a profit on their investment. Instead you’ve decided your defence of these leeches is to fabricate pigeon holes for those who oppose you.

a) These dud landlords are not “running a loss in providing housing”, they are running a loss in trying to increase their wealth, and are using the government to supplement their wealth by partially underwriting that loss – the provision of housing is an aside; and
b) Who has raised an objection to landlords “getting a positive return on their investment” in this thread? I, for one, would be happy to see all landlords being able to positively gear their investments (and not needing to suck on the public teat via negative gearing). As long as they don’t find some other scheme to avoid paying their proportionate share towards the public purse as other ordinary PAYG tax payers do.

You label the progressive PAYG tax system “punitive rates of income tax”. As byline said, and I concur fully, “On taxes, in my long experience earning more has yet to send me broke.”

Again, I draw your attention to the quote from Oliver Wendell Holmes: ‘Taxes are the price we pay for civilized (sic) society.’ What say you to that?

Framing the debate as one about whether taxes are necessary at all, is the very definition of a strawman argument.

Moreover it precludes a realistic discussion of tax which taxes into account efficiency, incentives, behaviours and unintended consequences.

Of course the latter is intellectually challenging and requires the acceptance of hard truths, such as the relative value of different people’s labour etc, so easier to just continue screeching I suppose.

It’s funny that in the attempts to frame property investors as some sort of benevolent heroes, Devils Advocate has raised a good point around the overall mix of taxation and where efficiencies could be gained.

The government could, for example, lower the “punitive” levels of income taxation if their revenue base was more balanced and efficient.

Which is exactly why the current level of incentives and concessions to property investors (amongst others) should be reduced, because of the poor economic outcomes they promote overall.

Australia’s high reliance on income taxes is an obvious problem. There’s also some obvious solutions of how that revenue could be replaced.

The responses of any of the three people here, standing alone, suffice to rebut devils_advocate’s positions entirely, so devils_advocate keeps injecting crass assumptions in hope of justifying his beliefs (to himself). Wrong as usual.

The black knight in Monty Python claimed to be relevant while armless and legless. Unlike the black knight, devils_advocate has also lost his head.

Only the have nots will complain the loudest. The silent majority who have invested wisely support the current tax system on property as evidenced by the election we had on negative gearing. Keep on whinging! Regardless of the tax settings those without the financial sense to invest wisely will always have something to crow about.

@devils_advocate
You are correct, the issue is not whether or not taxes are necessary. The issue is the fact that, as I commented when referencing that quote, people like you advocate for civilisation at a discounted price – especially for dud landlords and other tax minimising leeches.

If everybody paid their taxes according to their means rather than their ability to pay someone to help them get around their obligations, perhaps the tax system would be better for all.

chewy14 has rightly argued on many occasions for across the board tax reform – indexarion of income tax brackets being an obvious area of positive reform. Unfortunately governments of all flavours don’t want to do this because of the short term windfall it brings. And an overhaul of the tax system would require bipartisan support – not going to happen.

And let’s not even go there with the “relative value of different people’s labour etc”. I’m sure most Australians would place much higher importance on the value of community service workers, such as nurses, child, aged care and emergency service workers, as opposed to some of the much higher paid white collar workers – advisors on tax minimising, such as accountants and financial advisors, quickly come to mind.

JS the labour market determines the relative “importance” of jobs in Australia not your personal opinion. When an immigrant with no language skills can step in and do an equivalent job of a nurse, aged and child carer it proves they are not “more important” that the lawyers and accountants of this world. It’d be cool if our cleaning maids all came with PhDs but makes no difference if they job description is just to clean the toilet!

I see Sam Oak has stepped in where devils_advocate is already deep in it.

These determinedly ignorant attempts at self-aggrandisement presumably do something for their egos, for it does nothing to compensate for their lack of argument.

Still, if Sam Oak believes (without hypocrisy) in payment by value, he will support reform of current tax concessions which reward unproductive investment of excess capital in existing housing stock. I’ll wait.

@Sam Oak
‘the labour market determines the relative “importance” of jobs in Australia’
That could be the issue with current labour shortages in the community service areas I mentioned, Sam. I don’t hear anyone bemoaning the “shortage” of lawyers and accountants in Australia and calling for action to address this shortage – could that be because the former are overworked and underpaid, whereas the latter are … well the less said the better.

lol@ people think you need an “argument” to support the observation that labour markets allocate wages based on the relative demand for different types of labour.

Yes some types of labour are worth more than others.

@devils_advocate
“ Yes some types of labour are worth more than others.”
I certainly agree, as I’ve stated above, that some workers are “valued” by the community more than others.
We can agree to disagree on the appropriateness of their wages.
Nevertheless once the market determines their salary, the (progressive tax) system determines the appropriate level of proportionate PAYG tax they pay. Unless they are dud landlords and investors who “use the system” to suck on the public teat and leech on other tax payers. Nobody would care how much people earn, if they paid tax according to their actual income, rather than according to their inability to turn a profit on a totally unrelated investment, and expect others to fund their loss through the public purse.

https://www.smh.com.au/property/news/very-broken-housing-system-more-high-income-earners-stuck-in-rent-trap-20240220-p5f6es.html

Ironic to read this article today showing the research that increasing numbers of high income earners are now being forced to rent due to the ridiculous state of the housing market.

And having those higher income earners renting further increases rents due to the higher demand of people with greater disposable incomes.

Just a situation that is woeful for anyone who cares about efficient allocation of capital and the performance of the economy as a whole.

devils_advocate now demonstrates that he no longer even knows what the subject is, resorting to platitudes, though I can understand he would like it to be something other than he first claimed, and repeatedly failed to justify to any of his interlocutors.

Chewy that is a ridiculously poor research article. Of course if you keep your definition of “high income earner” at a fixed amount the proportion renting goes up. It’s called wage inflation! Come back to me with genuine analysis showing the top quintile are doing it tough. Because they aren’t! A $200k a year gross salary today is maybe just enough to be considered average in Australia and equivalent to $100k pre-COVID when the government chose to pay people to sit at home and do nothing for 2 years!

@byline
“ devils_advocate now demonstrates that he no longer even knows what the subject is, resorting to platitudes, though I can understand he would like it to be something other than he first claimed, and repeatedly failed to justify to any of his interlocutors.”

Hah! If you can’t see the connection between
-asset yields (rents) that have become detached from asset values
-bandaid (but apparent populist) solutions to policy problems that will cause more problems than they solve
-underlying issues with punitive tax and transfer systems that encourage loss making activity to speculate on asset price growth (even in the face of negative yields- a la Dutch tulip bulbs) and
-overall unwillingness to understand how tax rates overall drive incentives to be productive, including minimisation

It’s not my job to draw you a crayon picture

Also using words like “interlocutor” to attempt to elevate the status of poorly informed ideological screeching does nothing to bolster the underlying “argument” (which is based on view of how the greens would like people to behave, rather than how they actually behave)

Sam Oak,
We aren’t talking about the top quintile “doing it tough”, so not sure what you’re on about.

And you clearly didn’t actually go and read the research because it shows the fundamental shift in people accessing private rentals across income ranges.

The results clearly show a structural shift with increasing amounts of higher income earners renting outside of any wage inflation impacts. If your claim was correct, the lower income amounts would see a proportionate reduction as overall incomes increase due to inflation. But none of the results show anything like that.

It clearly outlines problems with the housing market where supply issues and incentivised investor demand have ramped up prices such that fewer and fewer people can afford to purchase their own home.

Which as I said leads to inefficient capital allocation and reduced overall economic growth.

It’s truly funny to see people talk about people needing to work smarter/harder so they too can be well off, whilst at the same time saying they need specific government incentives and concessions to prop up their investments in areas that hurt Australia’s overall economic performance.

Surely you don’t need the government to subsidise your investment decisions Sam Oak? You’re a smart and savvy investor, you’ll just keep on being the most winningest winner that ever won, no matter what right?

“ Surely you don’t need the government to subsidise your investment decisions Sam Oak? You’re a smart and savvy investor, you’ll just keep on being the most winningest winner that ever won, no matter what right?”

As I and many others have explained to you on countless occasions there is no “subsidisation” of investments. Everything gets taxed whether that is capital gains or rental incomes. A CGT discount is not a “subsidy” it is just a reduced rate of taxation to incentivise the provision of a housing service to a lower income family in no position to buy a house currently. Raise taxes on property and you are throttling the supply of rental properties and drastically increasing rents!

Time for a longer response.

Connections:
– “yields detached from asset values”

Precisely. If yields are low then more expected gain is in capital or there is no return on investment. We see massive divergence in house prices from income since 1998 when the GST concession was introduced, as I commented twice earlier and continues to be undisputed, because it can’t be. That acceleration in asset values over incomes directly affects rents (reduced yields) as well as purchase affordability. Hence, low rents, negative cashflows in some cases, capital gain concessionally taxed in a structural imbalance within society, diverting investment away from productive activity into land and its accoutrements.

Thank you for raising a point which cuts to pieces your own claims.

– “underlying issues with punitive tax and transfer systems that encourage loss making activity to speculate on asset price growth”

Your affinity for speculation and dud investment is your problem not mine. If taxation on capital is punitive then sane investors disinvest. It is precisely the tax incentive through capital gains tax concessions and to a lesser degree from negative gearing which inflate the asset price; not some 17th century infatuation with colourful plants. Data about housing shows massive divergence of prices from income since 1998 when the GST concession was introduced, a tax incentive for speculative investment as discussed above.

Thank you for again raising a point which cuts to pieces your own claims.

– “overall unwillingness to understand how tax rates overall drive incentives to be productive, including minimisation.”

I really had to stop laughing to respond to this one. You said tax minimisation is productive activity.

You know nothing about my background and circumstances simply because I do not divulge them. Doing so usually speaks to someone’s lack of confidence in their position by making an unsubstantiable (and insubstantial) claim to authority. When you have finished with the dictionary, read up on economics.

The lack of comprehension on display would be hilarious did it not speak to the parlour state of the education system.

Classic illustration of misrepresenting the argument and then railing against the straw man.

Nowhere did I discuss punitive rates of tax on CAPITAL. In any case if you knew how the tax system works you’d understand that the rate of tax on capital is a direct function of the marginal rate paid on income.

But you clearly don’t understand any of that, nor the linkages between punitive INCOME tax rates, distortionary tax policies which favour one asset class over another,
and incentives which INCLUDE the full range of incentives (either to work hard and be productive; or engage in tax minimisation, both of which are incentives driven by tax policies)

And again, it’s not my job to explain the fundamentals of income tax policy or economics (either neoclassical or behavioral) to you – although it is enlightening to understand how the average punter thinks (or doesn’t, as the case may be)

Sam Oak,
I’m beginning to question your self claimed investment genius skills.

Hilariously in your strange reply, you’ve literally provided the dictionary definition of a subsidy in claiming the CGT discount isn’t one.

Perhaps if you actually mentioned the original intent of not taxing inflation, you wouldn’t make yourself look so silly.

And as has been explained to you many times, the incentives given to property investors do not provide significant increases to housing supply, so your point is flat wrong regardless.

Particularly so when if you had actually read my last comment and the linked research, it shows that the proportion of people needing to rent because of affordability issues, partly driven by investor demand increasing prices across the board. Instead of providing rental properties for truly low income families who can’t afford to purchase, investors are actually forcing higher income people into renting rather than being able to purchase.

For a supposed “community service”, you’re doing a woeful job of it.

“speak to the parlour state of the education system”.
Indeed. Try ‘parlous’.

I did not assert you “discuss punitive rates of tax on CAPITAL”. On the contrary, I assert (and have shown) you seek consistently to avoid the implications of structural imbalance arising from capital gains tax concessions. That distortionary tax policy favouring unbuilt asset trading over income and new investment is shown in property prices and rents over time. It is not doing favours.

In your final paragraphs your betray your lack of grounded confidence again. While you make desperate claims about yourself and others, I and others simply demonstrate with facts undisputed.

The spellcheck is the most valuable contribution to the thread thus far! Well done.

@Incidental Tourist
As I read it, the report, to which you provided the link, was commissioned by the ACT government in 2019 and covers the period 2012 – 2019. Publication of the report was delayed due to COVID … so unfortunately it’s old news. Perhaps both the report (at the time) and the article are correct?

It’s correct if you divide average rent per average income. It means if someone rented 3r house in 2012 say for $400 with the average territory income of $65K and then in 2019 the same house would be rented at $600 they can’t afford it and moved to 1 br apartment for the same price. As the average territory income in 2019 has risen to say $75K it means average rent per average income per tenant has fallen. With the proliferation of tiny apartments and shared housing indeed the average rent per average income would fall.

@JustSaying “Correct” save for hidden density per rental in their report. They appear drawing conclusion from using average ratio of average rent per average income. Say if one person rented a 2br unit for $300 in 2012 and then in 2019 two people share the same unit renting it for say $450 then the combined “average” income per rental more than doubles (wages grew) and the rent to income ratio falls. The same “improvement” happens when people downsize to smaller / cheaper dwellings. There are many more tiny apartments today than in 2012. Unfortunately many rentals will disappear as a result of the reckless rent freeze. Remaining tenants will have to squeeze in even more. And unlucky those who won’t fit in, will have to wait for public housing if they live long enough to see it.

Is there a recent report on the management of public housing?

You must not read much. This has been covered in detail, and most recently in City Weekly by John Stanhope and colleague.

The greens will say they’ll support all those. however the end of the day Labor always gets to decide and the greens are only a backup party and not a party in their own right.

Else they could just form goverenment with the librerals and be in charge.
At this rate the ACT greens look closer to liberals than labor does.

Advocating reduction in land taxes, the economic value of land rents, (and replaced with what? stamp duty?) is economic illiteracy.

Other than that, I agree about the effects of freezes and the need for governments to do their own social work, for which of course they need to raise money through efficient and equitable taxation.

They might like to stop their spending on things we don’t need instead of raising extra taxes. Rates and land taxes in the ACT are many times higher than in Sydney. It is actually cheaper to live in Sydney than here, despite the cost of housing there as everything else is cheaper there from land taxes and rates to dentists, doctors and food.

“cheaper”? Sydney is about ten times the size of Canberra, with huge variations in wealth, and even here there is price differentiation. Like for like you are talking nonsense again. Try buying a house within a short, easy drive to Sydney CBD although if you live further out you might find trains avoid congestion.

No mention of stamp duty? No mention that other States are looking at or following Canberra’s example on the economically fairer shift to efficient land taxes instead? No, they don’t suit your tirade.