Image above by Images Money.

The following is an anonymous submission, number 32, to the 2014 Senate Economics Committee inquiry on affordable housing.

The lack of transparency in the housing market is something I have experienced first hand, working as a real estate agent representative for a few months a few years ago. I raised the issue in my submission to the above inquiry (submission number 9), however, as you will see below, this anonymous submission goes into more detail than I was able to do. At the end of this post I will see what draft policy changes can be made due to this submission.

Image above by Alex.

The Australian Financial Review (aka the AFR) raised the negative gearing issue on 24 February 2014, when they published an opinion piece by Bob Officer titled, “Removing negative gearing would be a mistake”, link here. Bob Officer is professor emeritus, University of Melbourne. According to his CV, he finished in the top 5% of his MBA class at the University of Chicago and he also holds a PHD from the same university.

For clarity, let’s go through his opinion piece by randomly selecting those paragraphs where he is trying to make a point.

Image above by Wonderlane.

Macrobusiness posted an article today titled “All taxes come out of rents”, link here. For some reason, I became unable to comment on my third response to an exchange with @Rumplestatskin. Two emails to Macrobusiness and a few exchanges on twitter simply resulted in stone cold silence. Hence I will post the exchange below and add my last reply that, for some reason, would not find its way onto their post.

Image above by Woodleywonderworks.

Australian Government inquiries usually lead to reports that are ignored. Will this affordable housing inquiry be any different? Only time will tell.

Below is my submission to the Senate Standing Committee on Economics for the affordable housing inquiry, which became submission number 9 out of a total of  185.

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The purpose of this submission is to argue that a Liberal Government should not dismiss the idea of affordable housing.

Q1: I have a $600,000 mortgage on my own home and I also own three investment properties with a total market value of $1,500,000. Why would I even consider the removal of negative gearing?

The responsible way to move toward affordable housing in Australia is to do the right thing by you, the mortgage payer and landlord, as well as do the right thing by the six and a half million renters who report to their landlords each month.

Q2: Why would any Government seriously pursue reform on housing affordability as opposed to throwing around a few handouts here and there, when a large proportion of voters either own a home or are trying to pay off their $1.36 trillion dollar mortgage to the Australian banks (1).

Firstly, Australian homeowners and residential property investors are not paying off their mortgage to the banks.

They are simply increasing their mortgage by billions of dollars each year and using that extra debt to bid up the price of their own homes.

During 2012 Australians increased their total mortgage loan size by $50.5 billion dollars (1).

Image above by Jim Fischer.

The Australian newspaper’s Henry Ergas wrote an opinion piece yesterday arguing that lower income renters would pay the price if there were any changes to negative gearing in Australia.

He starts the piece with his goal, which is to destroy the statement made by Saul Eslake that negative gearing is simply a handout from workers to speculators:

Saul Eslake…claims..that negative gearing provides a “large subsidy from people who are working and saving to people who are borrowing and speculating”. Recurring every time property markets arise from their slumbers, this contention is not one to be tossed aside lightly: rather, it should be thrown with great force.

Image above by DoodleDeMoon.

From the About Us page at SmartCompany:

SmartCompany is a completely free news, information and resource site for Australia’s entrepreneurs, small and medium business owners and business managers to help keep them ahead of their competition.

A great way to help Australian entrepreneurs and business owners is to abolish negative gearing. Since SmartCompany believes otherwise, let’s rumble.