To gear or not to gear, that is the question.

It is only 12 weeks until Malcolm Turnbull’s first federal budget.



While oppositions have, since John Howard’s years, rolled themselves into a tiny ball and kept their policies in the vault ahead of elections, Labor has flipped its policy lid.



The opposition leader, Bill Shorten, announced some big and potentially risky policies, including the plan this weekend to allow negative gearing for only new housing and cuts to capital gains tax concessions. Labor claims it would provide a fairer tax system and greater housing affordability.



The former prime minister, Tony Abbott, categorically ruled out changes to negative gearing and championed the cause of the property owner under the Coalition. In June 2015 when asked about a potential housing bubble in Sydney, he said:



“As someone who, along with the bank, owns a house in Sydney I do hope our housing prices are increasing. I want housing to be affordable, but nevertheless I also want house prices to be modestly increasing. The best way to make housing more affordable is to keep interest rates low and stable and that is exactly what is happening.”

Under the Turnbull regime, everything is on the table. But within the leadership transition from Abbott to Turnbull, there have been a number of changes.

16 April 2015

Asked whether he could rule out changes to negative gearing, Abbott said: “Yes.”

24 April 2015

Joe Hockey argues against negative gearing.

“If you change negative gearing, then there are significant flow-on consequences for people that rent homes, and that needs to be properly considered. A lot of Australians have invested their hard-earned money in real estate, and in doing so they have offset the losses of that real estate against their primary income, in order to give themselves and their children some financial security.



“At the same time, there is a very strong argument that if you were to abolish negative gearing, you would see a significant increase in rents. For a lot of people, a massive increase in rents is so unaffordable.”



11 July 2015

Tony Abbott:



“Another thing that we are not going to do, we are not going to fiddle with negative gearing because the last time a Labor government fiddled with negative gearing it destroyed the rental market in most of our major cities.”



23 September 2015

The new treasurer, Scott Morrison, leaves his options open in a press conference.



Q: Your predecessor had a habit of ruling out a number of potential tax changes, capital gains tax, super tax, negative gearing and even GST without agreement with the states. Are all those things back on the table now?



MORRISON: I’m not going to get into those games, just like the prime minister is not going to get into those games.



6 October 2015

Turnbull also leaves his options open in a 3AW interview with Neil Mitchell.



MITCHELL: But everything is on the table – superannuation, negative gearing, capital gains, tax – everything. The GST. Everything is on the table.



TURNBULL: Everything is on the table. That’s right.



21 October 2015

Then the outgoing former treasurer, Joe Hockey, contradicts his earlier statements in his valedictory speech, arguing for negative gearing and a paring back of superannuation .



JOE HOCKEY: In particular, tax concessions on superannuation should be carefully pared back. In that framework, negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property.



7 February 2016

Turnbull confirms on ABC’s Insiders that the government is looking at negative gearing.



BARRIE CASSIDY: And one you didn’t mention is negative gearing, but I assume that’s still on the table, you might do something around negative gearing?



TURNBULL: Barrie, everything is being looked at. I don’t want to be taking anything off the table.



8 February 2016

Morrison sounds less keen than Turnbull one day later.



Q: Negative gearing appears to be on the table. You have had some comments to make before how you feel as though it is of benefit, it’s not something that just high-income earners benefit from.



MORRISON: Negative gearing has been and continues to be a real opportunity for middle-income-earning Australians. Nurses and doctors and whether it is a policeman or others, these are people working every day and trying to get ahead, they’re not the problem. We need to look at all aspects of how our tax system works but what we are not about, we are not about taxing and spending. That’s not what we are about. We are not about raising taxes to support higher spending. That’s Labor’s approach.

10 February 2016

Morrison underlines the point in question time two days later but with a qualifier, hinting at tweaks to the system for “excessive” claims.

“I have been very clear about my view on negative gearing. The truth is that negative gearing is used in the overwhelming majority of cases by nurses, by police officers, by teachers – by ordinary hard-working Australians.



“They are the vast majority of people who are engaged in buying that property to give them the opportunity to grow and build and support their wealth and, in many cases, it is really the only good chance they have got. This side of the house has always supported people who are prepared to have that sort of a go. We have always supported them to do that.



“If there are inadequacies in that system, if there are areas where the system is being abused or if there are areas in the system where they are excessive and there is a way to channel that sort of high-end investment into other areas, well, of course, the government would look at those things. Why wouldn’t the government look at those things?



14 February 2016

In an opinion piece for News, Morrison goes general.

“I have always believed that negative gearing gives hard-working Australians a chance to build some wealth they would not otherwise get.

“The government is keeping an open mind on this issue as we prepare this year’s budget.”