Rival forecasts showing a dire outcome for renters from the government’s tax changes are being dismissed by Labor as the work of “vested interests”.
Health Minister Mark Butler said it was hardly surprising the real estate lobby would defend the status quo after property industry groups released modelling claiming the impact of the tax package would be worse for rent prices and housing supply than Treasury forecasts.
The modelling, conducted by economic consultancies Qaive and Tulipwood and released jointly by the Real Estate Institute, Master Builders, and the Property Council, showed the budget would cause 8,700 fewer new homes to be built over the next four years.
Rents would be $9 a week higher, Australia’s economy would be $864 million smaller and there would be 3800 fewer construction jobs than would otherwise be the case, the analysis found.
The modelling took into account changes to negative gearing and the capital gains tax discount, as well as $2 billion to fund enabling infrastructure and boost construction productivity, included in the budget.
According to Opposition housing spokesman Andrew Bragg, the modelling confirmed suppressing housing supply in a housing crisis was a deliberate design feature of Labor’s budget.
The outcomes were significantly more pessimistic than Treasury’s modelling, which found rents would only increase by $2 a week and housing supply would be 30,000 higher over a decade.
Much of the variance can be explained by different assumptions about the enabling infrastructure fund, which the property industry’s modelling found would only result in 5,300 new homes over four years compared to Treasury’s expectation of 26,000.
Mr Butler said the government would back the modelling of Treasury officials, who were employed by the public to work in the public interest and “not in the interest of vested interests”.
“I’m not sure people will be particularly shocked that the real estate industry, for example, is very happy with the status quo,” he explained.
“What a surprise that they’ve got some modelling that indicates the government should do absolutely nothing.”
Mr Butler cited forecasts from independent think tank the Grattan Institute, which estimated the changes would result in an increase in median rents of just $1 per week.
Negative gearing arrangements would be grandfathered for existing investors, which meant there was no basis for them to increase rents, Mr Butler said.
In a post-budget address on Thursday, Treasury secretary Jenny Wilkinson said the reforms would reverse a decade of declines in home-ownership rates.
“Over the next decade, owner‑occupiers are projected to own around 75,000 more homes than they would have otherwise,” she told the Australian Business Economists lunch in Sydney.
“This reallocation of housing stock, which improves opportunities for first-home buyers, is a result of reduced investor demand in the existing housing market.”
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