"Dymphna Boholt and her colleagues are doing exactly what the tax system tells them to do." Exactly! But rather than abolish negative gearing, Australia's politicians cop out, preferring to set up a generational conflict between Gen Y who want to buy a home and the increasing number of investors who, smugly believing they are looking after their own future, also deny affordable home ownership to future generations. Do we have to wait for market crashes to fix all this incredible stupidity?

Yes, and that windfall belongs to the people.
We need some nation building projects, all of which can and should be built on resumed land.
If some of that land then becomes surplus to actual requirements, nudge, nudge, wink, wink, say no more.
Then it could be rezoned as urban and sold, perhaps to even raise enough capital repay all outlays for the project. All while making housing affordable once more.
Projects like say, a very rapid rail system down the eastern seaboard; or, an inland canal that opens up our arid interior, and provides a waterway for roll on roll of ferries, that facilitate our trade with our Asian neighbors!
A dual lane system as far as Lake Erie, would be able to utilize land, much of which is already below sea level.
Huge northern tides could then be controlled by simple lock gates to maintain constant water flow and movement, to move shipping in and out and constantly flush the system twice daily.
With the salt level quite dramatically lowered, some of the water could be harvested by wind or solar powered pumps, and circulated around inside membrane covered agpipes.
A number of plants have enough moisture pulling power, (better than pumps) to utilize some of this water.
If that plant production took place under glass, then the pristine evaporate could be used and reused time and again, for myriad purposes, some of which could be permanent human habitation, which currently only lacks water!
Moving shipping in this way dramatically shortens the route; and, in the most cost effective and energy efficient way!
Rhrosty

<< The bureaucrats' golden pen tick from farming to residential re-zoning creates overnight millionaires for those who own land in the right location>>?

Nah! Can’t be true, just ask Eddie Obeid and Ian Macdonald

Not sure your derision of deriving income passively is correct. When you retire (and a 'are receiving income that you don't have to work for') where exactly is this going to come from? You may say your superannuation, etc, but is this not income that has been generated under generous tax schemes, and that you have not lifted a finger for - all invested in property, stocks, etc to generate your income?
One of the major issues with housing affordability is the 'need' by young folk to have a 4 bedroom house with a double garage, swimming pool, media room, stainless steel kitchen appliances, stone benchtops, etc. This comes at a very high cost and can't be discounted in any housing affordability argument. I do get very sick of young people with cavernous houses, where they only live in 20% of the space, crying poor about their massive mortgage. What happened to living within your means and starting out in a tiny 1br or 2br apartment that costs less upfront, but would more than adequately account for their 'needs' rather than 'wants'.
I do however, agree with your being appalled at the property inventment evangelism that comes from the like of Dymphna Boholt.

I get so sick of envy.

I was debt free well over 20, & watched friends investing in real estate, using less equity than I had, but I was too cautious for that. I wanted an iron clad, gold plated guarantee before I would risk my hard earned.

Well some edged in a little & some leapt in way over their heads. Yes a couple got into difficulties & did not fare well. The ones who invested carefully are perhaps a little better off than I am today, but some of those who took the big chances are now very wealthy people.

I don't think they ever hurt anyone, or inadvertently caused anyone any hurt, but they profited from inflation, & can now enjoy the wealth their risk taking has brought them.

I could have done it & been rich, or the worry of being over committed at each downturn could have killed me. AS it is I'm happy, & happy for the risk takers that the risk taking paid off, it just wasn't for me.

I most definitely won't whinge that some who had a go did better than me. Good on them I say

One of my neighbors died a few years back. He was a soldier settler, with a square mile allotment, [640 acres] down Beaudesert way. It was nothing great, a bit of river flat, but mostly sandy country. The type of stuff that when cleared & improved will run a beast to about 7 acres.

He worked it all his life, paid it off, raised 3 kids, & as an old man had a reasonable home, a couple of aging cars, a property that stopped him getting the pension, with a lot of fences requiring repairs, but could not really earn him a living, & not much else.

He subdivided 200 acres of it, into 2.5 & 1.25 acre blocks. By the time he had put in the water treatment plant & reticulation, underground power, & phone, roads & paid about $100,000 per block to various levels of government, he did not become rich.

He & his wife got new cars, & each kid got a block with a house.

He said to me one day, this farming is a mugs game. You work all your life, & you can't earn enough to house your kids. You have to sell the place off to even help them.

He was a nice old bloke, & I miss him, but fortunately my 45 new neighbors on those little blocks are really good people, & an asset to the district. A few have joined the rural fire brigade & other organisations.

I can no longer train my eventers in those paddocks, but then I can no longer train eventers anyway.

Next time you see an old farm being subdivided, just remember, the sale might generate the only spare cash that owner ever had, & it was his after all.

We are the only nation on earth with negative gearing!
It costs the tax payer around 5 billions per.
Instead of negative gearing, we need to inculcate a mindset of positive gearing, that is no longer dependent on the taxpayer or the budget bottom line!
Look, one can buy investment houses in mining districts, for zero dollars down, and tenants that pay enough to manage the mortgage, the rates, management fee and a guaranteed return to the owner of around $67.00 a week?
While these houses might be "worth" $400,000.00 today, capital gains could jack the price up by around 400%, when the mortgage is fully paid off!
Moreover, this a capital gains component, remains largely untaxed?
If there was a indexed for inflation, capital gains tax component, that basically wiped out the unearned income, these money for nothing schemes would be less desirable!
All these schemes make housing for the average mug voter, less and less affordable!
Rents are now so high that the cost of a bedsitter, in places like Sydney, are now higher than the pension.
It really is unacceptable that somebody's mum or dad, having worked, struggled and strived all their lives, has to face the twilight of their years, as charity dependent homeless oldies.
Perhaps if some of these alluded to investors, had to spend a year or two, walking in those very shoes, they might see the value of actually earning their own money, from the honest sweat of their own brows, rather than that of blood sucking parasites!
[And then we wonder why there is this enormous infrastructure shortfall in this country!]
And no, I don't include Soldier settlers in that description, given they more than anyone, have earned what they eventually end up with!
Rhrosty.

Rhrosty, sometimes you do cut & post rubbish.

If I borrow money for any business, be it for machinery, premises, stock, consumables, or even to pay the wages, the interest on those borrowings are tax deductible.

I can borrow to buy shares, & the interest is tax deductible.

Borrowing to fund a premises to rent, industrial or domestic is no different to any other investment, & should be treated the same way.

In fact, with domestic rental being such a lousy investment today, the government should perhaps be offering free psychoanalysis to those fool enough to do it.

This doesn't apply in the US, where rents are high enough to pay off a house bought on minimum deposit, with a little return to the investor as well. As they are generating a profit, the profits are taxable, as will profits on Oz rentals, once income exceeds outgoings.

Karl,
Design the issue out,we designed it in.

No more wishful thinking and lies.

Great to read your article !

It only takes 10-15 minutes every 3 years ,to use the preferential system and number on the Senate ballot paper the 110 candidates below the line .
Not a big ask compared to having half one's face or testicles blown-off in Afghanistan.

By doing this , you can send the only message to the major parties, that they respect .

Every major problem we face from housing, university funding, child neglect, jails, environment, manufacturing collapse, casualization of the workforce, selling public assets, massive public/private borrowings, traffic chaos, growing poverty, social security blow-outs.....(.very happy to dialogue the back stories on all this)...is made catastrophically worse by one design blunder..................POPULATION GROWTH .

By preferencing the Stable Population Party first, then your major party second ( after that, just do the numbering because it won't matter ), we have a chance to turn the place around.

The positive message is that we have designed the mess in, so we can design it out .

Very best Karl ,

Ralph

Hi Ralph

Population growth might be an issue, especially with Australia's high growth rate. But until there is accepted data like infrastructure cost per capita, the claimed effects can only be speculated. What is less in doubt is the huge increases in the controls and restrictions upon landowners to develop property. It may be the case that the resulting restriction of supply is far more significant with respect to housing costs.

This headline "Supply is code for windfall gains" is misleading and not in the public interest and only suits those who game the housing market without building anything but profits off the back of supply constraints. A fools paradise indeed..