Indeed, it is so unfair and sad that in Australia, true and reasonable work expenses for ordinary people are not recognised as tax deductions - first and foremost travel-expenses to and from work.

It could be argued: "but what if an employee takes a limousine or a helicopter to work?", so there should indeed be a test for reasonableness - is a helicopter reasonably necessary for the purpose of getting to work in the morning? Ordinary Australians, however, do not get a cent of a deduction for their car/bus/train commuting expenses.

Similarly, is it reasonable to borrow money which isn't yours in order to invest? This is bad behaviour! One should only invest what they have honestly earned, rather than try to become rich through financial manipulations of other people's money.

While bad behaviour should never be made illegal, it should not be rewarded and encouraged either!

Borrowing other people's money is not a reasonable "expense" and the resulting interest-payments should not be recognised as a tax deduction.

Negative gearing and everything the Author compares it with is an impost on the budget bottom line, no matter how cleverly he defends it; or repaints or quite cleverly camouflages it.
Certainly, he can't genuinely defend the housing bubble and the sheer unaffordibilty it also creates!
We need to replace all that, with a single stand alone unavoidable expenditure tax! [Started at 18%, an effective rate of 11%, given the inherent savings!]
Which is the only way we'll ever get some of the biggest tax avoiders, to actually pay a fair share, and then only on profit earned right here!
Fair all around, and would likely add another 100 billion to the annual budget bottom line and forever end the structural deficit/destiny of demography!
Moreover, the tax rate alone can be varied microscopically, to alone control all inflation or stagnation, and indeed, far more rapidly, than interest rate changes; which could then be adjusted downwards and then left at historic lows, to virtually turbo boost the non mining economy.
The other side of this coin, is publicly supplied, very low cost energy,[like say cheaper than coal thorium] which rolled out with accompanying micro grids, would more than halve the current cost of industrial energy, and indeed, cheaper than hydro!
Ultra cheap energy, which together with the world's lowest real tax rate, would have the high tech industries, and many self funded/health insured retirees, queuing to relocate here.
And if one wanted to boost the housing market with real, population neutral, regional/rural demand, that's exactly the way to go!
Those that can't survive and pay their fair share, need to be split up, down sized; or, wound up and replaced with those who can!
Namely, numerous new co-ops.
Which is still private enterprise, bereft of the usual cost adding parasites; and indeed, the only PRIVATE ENTERPRISE model, so inherently efficient, as to survive the Great Depression, virtually intact!
And indeed, the only business model, that just can't ever get to big to fail.
The owners are never ever that silly or stupidly led!
Rhrosty.

It is difficult to take this attempt to justify negative gearing seriously.

To borrow in order to invest in something productive is worthwhile, and should be encouraged.

But to borrow where the costs exceed the benefits is neither productive nor worthwhile. It does not benefit society and should be discouraged.

At present, the latter approach is being promoted simply by offering the investor the opportunity through negative gearing to transfer the loss to the taxpayer. Taxpayers who would otherwise pay tax on their high incomes are allowed to lower their income and tax by making an investment which may not be rational. Saving tax, and avoiding one’s responsibility to society, is the rationale for the investment; not the inherent merits of the project.

The better approach is to quarantine the allowable deductions from an investment in any income year to a maximum of the investment income in that year, with the rest being able to be carried forward as a cost of capital, against which any future capital gains could be offset. That way, people are forced to risk their own capital in the investment, not the Government’s (through the taxpayer's contribution to tax revenue).

Banning negative gearing in housing is not a knee jerk response but a long overdue removal of yet another lurk for the rich.

Heard a story once. Don't know if it's true.

Two mates were each going to buy a house. They decided that each would buy his mates block & build his mates house. They then lived in the houses for a year. then swopped houses. Each going to the place & home they wanted in the first place. They charged each other rent & claimed expenses as you do in Negative Gearing. They paid off their houses & got all the benefits of NG.

Now there's a bloody good idea.

Why does negative gearing get a bad rap?

Because it's bad & only caters for the greed mongers. It does nothing of any benefit for decent people. After so many years of proof that it is simply just a rort, people still need to ask if its bad ? Gawd !

Rental housing is a business like any other. There is a tradition of negative stereotyping owners. It is a variant of the leftist class war stuff.

'White Shoe' entrepreneurs who spruik windfall profits attract undeserved criticism to the thousands of small business owners (rental housing) as well.

Rental housing is not a lucrative, desirable business to be in. It is high risk. When asked, there are very few tenants who would invest in rentals themselves if they had the money. Maybe the tenants know better than those aspirational mums and dads who are hoping to provide for children's education or for their retirement.

Honestly now, what sort of business is it if your only hope of realising a gain one day - a lifetime into the future - is to sell the business?

Up to then every flea upon flea is making a meal out of the owners, all levels of government who regard rental housing as their own milch cow (all revenue and owners carry the risks) and especially real estate agents who have a monopoly on paid property management.