Former Victorian Liberal Party president Michael Kroger said renters will be the hardest hit if the Labor government curtails negative gearing.
The warning comes as the government prepares its upcoming federal budget. The debate over negative gearing is central to Australian housing policy, as changes to tax deductions for investors can directly influence the supply of available rental properties and overall market pricing.
Speaking during an interview with host Paul Murray on Sky News Australia, Kroger said that reducing tax deductions for property investors would limit their ability to purchase homes. This restriction, he said, would inevitably increase pressure on the rental market.
"Not everybody can afford to buy a home, so what it means is all the renters get screwed," Kroger said.
Kroger highlighted the difficulty many face when trying to transition from renting to owning. He said that some individuals may only have 50 per cent [1] of the necessary funds, even with the help of deposit assistance and a mortgage.
"They might only have 50 per cent with deposit assistance and a mortgage, they might be nowhere near buying a place," Kroger said.
The proposed reforms aim to limit the tax advantages available to those who buy investment properties for less than the cost of maintaining them. However, critics like Kroger said that such a crackdown removes the incentive for investors to provide rental stock, potentially driving up costs for those who cannot afford to enter the property market.
“"Not everybody can afford to buy a home, so what it means is all the renters get screwed."”
The tension between curbing property speculation and maintaining rental supply is a recurring theme in Australian fiscal policy. If the government reduces negative gearing incentives, it may lower the barrier for first-home buyers by reducing investor competition, but it risks a short-term decrease in rental availability as investors pull back from the market.
