"Rechtub", what I was saying on the ABC yesterday morning was that there was a risk that if the impasse over the Budget continued, business might come to the view that the present Parliament was no more capable of managing the nation's finances than the previous one, and that that could in turn result in a deterioration in business confidence, with adverse consequences for employment and investment.

I wasn't advocating for the passage of any specific measures in the Budget. It's not the failure to pass specific measures that risks endangering business confidence, it's the inability (so far) of the Parliament to pass a package of measures that puts the budget 'on a credible path back to surplus' (in the Prime Minister's words).

In the interview I recorded for 'AM' I said that one of the options open to the Government was to recast the Budget in order to achieve the same 'bottom line' objectives with a different combination of spending cuts and revenue measures. Although I didn't say it yesterday, I would certainly support the abolition of negative gearing as making a useful contribution to reducing the budget deficit.

I agree that 'negative gearing' DOES encourage investment. Unfortunately, the investment it encourages - which is, overwhelmingly, the purchase of existing housing - does nothing to increase the supply of housing, but serves merely to inflate the price of exisiting housing and thus worsening affordability conditions for would-be home buyers.

To the points made by "suseonline" and "individual", if negatively-geared investors didn't buy dwellings, then those dwellings would be bought by people who are currently unable to compete with negatively-geared investors. The supply of rental housing might drop - but so would the demand for it, and by an equal amount. So what's the problem?

Anyone who believes that expotential growth can go on forever in a
finite world is either a madman or an economist.
Kenneth Boulding

There is a solution to the problems for the younger generation introduced by negative gearing.

Every house or unit could be treated as a separate investment entity. Interest deductibility after the first two years could be limited to the net rental income. There could also be a limit on the number of housing units an investor could participate in.

It is ridiculous that Nick Xenophon can own nine houses or units. Senators are supposed to serve their constituents not be their landlord.

While on the subject of rip offs why not comments on franked dividends.

Shareholders enjoy the benefits of having a company they invested in treated by the law as a separate entity. If it is a separate entity in law why is it not a separate entity for tax purposes.

Neglecting surcharges, an investor deriving all income from franked dividends and receiving $100,000 per year from that source receives a tax refund of over $2,000.

My calculation is as follows;
For an income of $100,000 from franked dividends the franking is $42,857.Taxation has to be calculated on $142857. That calculation is:-
Tax liability = $17547 + 0.37 x (142857 -80,000) = $40,440. Deduct the franking credit and the taxpayer receives a refund of $2053.

What is fair about that compared to someone who earns their income by actually working to produce something worthwhile.

Sorry my calculation contained a subtraction error.
The refund is $2417.

Wow! pretty impressive rehctub.

You write a letter to Saul Eslake. And the man himself drops in to answer it. You have some real sway,eh?

Individual, there are many people who will never be able to afford to buy homes, so rental properties will always be needed.

I doubt the Government would allow negative gearing if not for the need for rental properties ...otherwise they would have to build more state housing.