Chairman of leading Australasian network Ray White Group Brian White said that tax changes under the Hawke government in the mid-80s, similar to those recently proposed by Labor on negative gearing and CGT, were so “devastating” that they forced the Labor government to reverse its policy a short time later.
“It was the worst time for property owners since the credit crunch of the Whitlam era, with so many Australians significantly affected in the worst possible way,” Mr White said.
“The outcome was so bad, Labor themselves had to revert their own decision after just 18 months.”
The chairman’s comments come in the wake of recently released documents which contained Treasury advice to the government warning of a “softening” effect on property prices as the predicted impact of Labor’s restrictive changes to housing policy.
At the time, Mr White rallied the industry to oppose any changes to negative gearing policy, a hot-button issue during the 2016 election campaign.
And now he is warning policymakers: Don’t forget the past.
Mr White said that historical trends are “even more important” than modelling.
“[The Hawke government’s] changes were introduced when the property market had been quite strong, so there’s no telling how a second attempt would play out in a market that’s already softening,” the chairman said.
“The Australian Labor Party should know better than anyone how badly these type of changes would affect our country’s economy, given this all occurred during their term of government.”
Mr White also said that a stable property market is fundamental to a strong economy.
“Based on the data we reviewed at the time of the election, more than 10 per cent of all taxpayers from all walks of life use negative gearing, but when property prices fall, it also affects the 67 per cent of Australians who own their own home, not forgetting the 18 million Australians who have a stake in property through their super funds.
“What is clear is that implementing radical policies in this arena doesn’t work and causes more harm than good. We have to learn from previous mistakes and that is the essence of good policy.”