LIKE their famous mining tax, Labor’s proposed change to negative gearing promises big, but raises very little revenue. It could also have some very nasty consequences for everyday mum and dad investors just trying to get ahead.

If Labor want to strengthen the budget they need to support savings rather than just keep pushing for higher taxes.

In our midyear budget update we identified billions in additional savings to strengthen the budget. This comes on top of more than $80 billion in savings already put forward by the government.

The less than $600 million their changes will raise over four years, not $30 billion, does not even pay the monthly interest bill on the debt Labor gave us, let alone the higher spending they have planned.

The first priority for any revenue derived from changing any taxes should be to ­reduce taxes on those who are earning in our economy to support jobs and growth.

That is the government’s plan. Labor cannot afford this plan because they refuse to deal with spending.

media_camera Australian Labor Party Leader Bill Shorten. Picture: Brook Mitchell/Getty Images

Labor’s higher taxes are about chasing their even higher levels of spending, not delivering tax relief for Australians who work to earn a living.

Labor’s alternative is to tax and spend. So far Labor have identified about $8 billion in higher taxes but just $380 million in savings.

Yet they continue to oppose more than $13 billion in savings from the government, and have announced almost $14 billion in new spending since May while planning to reverse $30 billion in other savings the government has successfully passed through the parliament, which they opposed.

This is how Labor got us into this mess when they were in government and they have learned nothing since.

Labor’s changes also have potentially negative impacts on the market for new housing, forcing new housing prices up for first-home buyers and those renting new homes.

Investors accessing negative gearing will now have only one option in the housing market and if you’re a first-home buyer looking to buy a new home, you’ll be competing with all of them.

Supply would have to respond to any surge in prices but this could take years, given the delays in our planning and ­approvals systems. As a result, prices and rents would rise.

Our banking regulators at APRA have already taken steps to level the playing field for home buyers, with investors now paying higher interest rates. The Reserve Bank governor acknowledged last Friday this had provided a positive impact in taking the heat out of surging property markets.

type_quote_start Labor’s higher taxes are about chasing their even higher levels of spending, not delivering tax relief for Australians who work to earn a living. type_quote_end

The big challenge remains ensuring that our planning and approvals systems enable more housing to be built and that we ensure there is sufficient housing stock available for the 30 per cent of households who are renting — not just new dwellings but across the board.

We need more options here, not fewer.

And for the mums and dads, nurses, teachers, police, small business owners and others on ordinary incomes who wish to use negative gearing in the future to give themselves a go at building wealth for their retirement, they will have to compete with more wealthy investors for a much smaller pool of housing stock, crowding them out of the opportunity they have right now.

Labor’s proposal therefore runs the risk that more wealthy investors will continue to enjoy the same tax incentive benefits they get now, while more modest mums and dads will be forced out.

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.

However, any consideration must ensure the opportunity for ordinary investors is protected. Any consideration that the government makes will also be the outcome of careful analysis designed to ensure that we can support lower taxes, not indulge higher spending.

* Scott Morrison is the Federal Treasurer