This is my thoughts, I welcome your opinions and thoughts.
My letter.
Dear Mr Shorten.
I fear you have under estimated the possible fallout from your proposed changes to negative gearing.
Firstly, by forcing tax savvy investors into the new housing market, you will put additional pressure on first home buyers, in the form of increased competition, with the likelihood being increased prices, which may well put home ownership for FHB back on the wish list.
You then have the situation whereby those who buy new homes who are upgrading, may well back off due to a lack of potential buyers for their existing homes, simply because few investors will remain in this market given the removal of NG.
Of cause there is also the risk of banks tightening their lending criteria, due mainly to the lack of investors in the 'used market', as these investors currently pick up the bargains often resulting from forced sales.
You must remember, we are fast approaching 'D Day' for our car industries, and the closures, combined with a potential property deflation as a result of your policy, may well send our economy on an uncontrollable downward spiral, one I seriously doubt we can afford.
I feel you need to fully think this through before acting on this very sensitive issue.
While I agree NG needs to be looked at, you must not cut it off at the knees.

Well done Mr Shorten and Mr Morrison.

Tax breaks on investment properties and superannuation
are costing the budget nearly $40 billion a year with
none of the benefits going to younger home
buyers. It's the younger people are the ones who remain
locked out of the game according to new research.
It is overwhelmingly older, wealthy people who access
the breaks to buy and sell properties, and to park incomes
at discounted tax rates.

Level the
playing fields for younger people. Give them their first home
a chance.

Dear Foxy,

I agree with you regarding negative gearing, but your post might imply that being older is not right, that older people are bad. Older people need to be wealthier because they no longer have all the years ahead to save for the winter of their life, lest they then fall as financial burden on the young.

The government is also intending to make changes to negtive gearing. The idea of negative gearing seems to be that it takes some pressure off governments to provide public housing for low income renters. As far as I am concerned, landlords own and rent out houses to make money; they are not charities, so they should not be getting tax breaks. I'm with Shorten on this one.

TTBN, prior to NG, in the early 80's, properties would rent for 10% of their value annually, whereas now, due to NG, they usually rent for between 2 - 5 % of market value. If we remove NG one of two things will happen, either investors will stop providing affordable housing for renters, or rents will increase. Or perhaps both.

Foxy, if we remove NG from used housing, what effects do you think that will have on new house prices and, do you think this will make buying a first home easier, or harder?

Y, I have been a user of NG in the past, still am. I accept there needs to be changes, however my thoughts are that we should have laws that make investments having to be self funded within say ten years.
The abusers of NG are those who use the equity in one property/investment to fund the acquisition of another, another, then another, whereby they own ten properties, all with a L2V ratio of 80%
I doubt this was ever the intention for NG when it was introduced.

Having said this, my point is that can we afford to rock the boat with this issue because as it stands, public housing can not cope with demand, so investors fill the void. So if we limit the choices for investors, who by the way also upgrade, what effect will this have on rents and availability of rentals. Remembering that many investors buy older houses, rent them out, which provides cheaper housing, while obtaining DA's for the likes of multiple units which in turn provide multiple dwellings for renters. If we remove NG from this type of investment, as labor want to, who is going to buy the old house, await the often lengthy and very expensive approvals, then build the units.
There is far more at stake than just tax breaks here folks.

It seems both Liberal and Labor are intent on changing these laws.
I know several older couples who have an investment property they 'bought' by borrowing the whole sum of money from the bank and then only paying back the interest. None were well off, and indeed had not even finished paying off their first mortgage. Yes they had tax breaks, but it certainly wasn't making them rich!

Labor knocked off negative gearing in the mid '80's, but it wasn't successful apparently, and they reinstated the scheme in 1987. There were different outside circumstances then though, with huge interest rates for home loans, and stock market problems, so I don't know if things would be different if they tried it again?

What would worry me is that if this came in, would there still be enough private rentals of older, cheaper homes available for people who can't afford mortgages? The average person would not buy an older rental property without tax breaks, so the new housing market would flourish, but lower income people wouldn't be able to afford to rent these places.
Would the government build lots of state housing homes for these people to rent?
I doubt it.

I always despair of Left whingers having sudden smart ideas, because invariably they haven't considered the unintended consequences.

Negative gearing is not just available for property, but every single type of investment. The principle is that you can write off your expenses against your profits. A person investing in property gets income from rental and from capital gains, against which he can write off interest property tax etc. The same principle is applied to starting a business, buying shares etc.

As the consequences, there are multiple examples given to anyone doing first year economics where this has been tried.

Encouraging investment in property might push up prices a little (most cost increases are not due to negative gearing) but encourages construction of homes that others rent. Similarly, restricting investment in property reduces prices slightly but reduces available rental properties drastically. As the rental market in the cities is already tight, the reduction in rental properties will dramatically hurt the middle and lower income earners the most.

The investors will not pay more tax, as they will simply invest elsewhere and those that will be the worst affected will be the lowest incomes and those entering the job market who are in no position to buy a property who will either find it impossible to find a place to rent, or be unable to afford anything that is available.

To sum up the results:
tax revenue - minimal increase
house prices - minimal decrease
rental property availability - large decrease
rental property prices - large increase.
Wealthy investors - gradual change in portfolio
home owners - little to no effect
lower income renter - large cost of living increase.

rehctub, I really don't think your concerns are valid.

The reduction in the ratio of rental price to market value has a lot more to do with the reduction in interest rates than negative gearing.

Under Shorten's plan, housing would become more affordable (or at the very least, not become less affordable as quickly). People would still invest in houses, but investors would gain a preference for new houses (which should increase the supply). And though the cost of land for new houses may rise in response, there would be more existing houses available for FHBs so they'd be slightly better off.

Tony Albanese should be the leader of the ALP. Definitely not Shorten.

In 1985 the Hawke government got rid of negative gearing.

It took them 2 years to realise the error and reverse it.

But they were quick learners in those days. If it happens this time I wonder how long it'll take before everyone realises that ideology and class greed are never as good as practicality.

Dear mhaze. '........ ideology and class greed are never as good as practicality.' I've never considered it in those terms. And as a sociologist I doubt if I ever will.

Dear Rehctub,

The way to increase new home construction and affordability, which would in turn also reduce rents, is to remove those draconic regulations as to where homes can be built, what they must contain, who can build them, with what materials, etc. etc.

Government doesn't like it because they benefit from the taxes that come with high house prices.

That's on the supply side. On the demand side, though it is for the longer term, reducing the incentive to procreate will also reduce the demand for new homes.

The demand for new homes need reducing to stabilise the building costs.
Take investers out of the used house market, and allow the market to find its own supply and demand.
There will always be houses available for rent, The market will be far better off, without investment inflation.
Negative gearing needs wiping out across the board. It creates a false market and is negative investment.

Y, you are forgetting that FHB can only obtain a grant for a new home, so few will be able to afford a used one and in any case I doubt the banks would be so keen to lend without a larger deposit and, as many second home buyers cash in on their first home, who is going to buy the first one?

I touched on older houses being purchased, then rented while the process of multi unit development is undertaken.

The advantage of NG gearing here is that it allows investors/developers to write off some of their holding costs during the often lengthy process. The pain being worth the gain as one dwelling often turns into twenty or so.

This will all be placed at risk. Are you sure you want this?

Shadow, you say the investors "will simply invest elsewhere". But just where do you think they will invest instead? There don't seem to be many good investment opportunities around at the moment.

I think a more likely outcome will be:
tax revenue - minimal increase
house prices - minimal decrease
rental property availability - minimal decrease [as more new rental properties will offset the effects of fewer old ones]
rental property prices - minimal increase
Wealthy investors - gradual change in portfolio
home owners - little to no effect
lower income renter - minimal cost of living increase or decrease [depending on how much new development there is in their suburb]

In a more general sense, it is good to reduce the amount of money going into land speculation (as that adds to the cost of production but does very little to increase productivity). Restricting negative gearing is not the best way to do this; imposing a broad based land tax is. But neither will restricting negative gearing have the harmful effects that you, rehctub and mhaze predict.

___________________________________________________________________________________

rehctub, the FHB grant is a very costly scheme thats main effect is to increase the price of housing (probably more so than negative gearing). The banks will lend as long as they think they can make a profit.

___________________________________________________________________________________

Yuyutsu, I agree the restrictions on the size of houses should be abolished. However allowing houses to be built from flammable materials in bushfire prone areas is inviting tragedy.

Reducing the incentive to procreate will not necessarily have any effect on the demand – it depends on the immigration rate. And why do you see increasing demand as a problem rather than an opportunity?

Yuyutsu, "On the demand side, though it is for the longer term, reducing the incentive to procreate will also reduce the demand for new homes"

If you are directing your remark at young Australian couples, you will have the instant, enthusiastic support of the culturally cringing leftist 'Progressives' for that. They are all for the high immigration that has for many years been putting pressure on housing, infrastructure, hospitals, welfare and on energy and water supply.

The leftist 'Progressives' and Labour in action in the UK and it is the same here,

How Labour threw open doors to mass migration in secret plot to make a multicultural UK

Labour threw open the doors to mass migration in a deliberate policy to change the social make-up of the UK, secret papers suggest.

A draft report from the Cabinet Office shows that ministers wanted to ‘maximise the contribution’ of migrants to their ‘social objectives’.
The number of foreigners allowed in the UK increased by as much as 50 per cent in the wake of the report, written in 2000.

Labour has always justified immigration on economic grounds and denied it was using it to foster multiculturalism.

But suspicions of a secret agenda rose when Andrew Neather, a former government adviser and speech writer for Tony Blair, Jack Straw and David Blunkett, said the aim of Labour’s immigration strategy was to ‘rub the Right’s nose in diversity and render their arguments out of date’."

http://tinyurl.com/ye7gjck

At the pleading of the scientific community and its scares (is that all it was?) about sustainability, the Australian population dramatically converted to Zero Population Growth (ZPG) way back in the Seventies somewhere and maintained it since.

Not so the migrants who come from the various undeveloped sh*tholes of the world importing their toxic political systems and medieval religions and violence. They just don't believe their women are properly occupied unless they are dropping a bunch of kids for the taxpayer to support.

The leftists' diversity tail (the 'diversity-Australia-has-to-have') constantly wags the immigration policy dog.

Immigration policy is the big sleeper for the coming federal election.

'Negative gearing' is a misleading term invented by 'white shoe' Real Estate salesmen and other spruikers eg frauds selling property 'investment' seminars, to flog property 'investment' dreams to trusting but numerically challenged mums and dads investors.

L'il Willie Shorten (Would YOU buy a used car from that man?) is waging Class War, attacking the fictitious, laughable, negative stereotype of the grasping landlord who makes millions out of real estate.

Of course Shorten and his crew. old warhorses left over from the failed Galah'd government (the multiskilled Galah'd played Class War and Gender War politics too) need continual distractions.

Shorten is an idea-free, policy-free zone. There is also THAT problem, Labor's cozy arrangement with the CFMEU and others, that still needs to be addressed.

Dear Rehctub,

I was not thinking of banks: if people were not restricted and required to put a whole house-plan in advance, then they could build a room here and a room there with whatever materials they have, possibly with their own hands, add concrete floors when they can afford, then live in their shack for free while they save for more and better rooms later. Or they could do so in the back-yard of a relative's existing house as they save to build their own.

If the problem is land, then spaces are plenty in the country - only the government does not allow building more than one house per title.

Just imagine - life with neither landlords nor banks!

---

Dear Aidan,

First sorry, I was planning to respond to you on the other thread, but I was travelling and never got around to it and now that thread is closed.

Only a fool would build their home with flammable materials, that is unless they only plan to have it temporarily, for a short while while they save to build a bigger and better permanent home and won't shed too many tears if it burns down. So long as they understand the risk, that should be OK.

Similar to procreation, immigration should not be encouraged as it's not a good thing to have more people on earth and consume more resources. However, unlike others in this forum, I believe that even though we don't want them, we have no right to deny them entry to this continent. Immigrants should either build their own homes (in person or with the money they bring), rent caravans or hotel rooms or stay out in the cold: both they and babies may come if they like for we have no right to prevent them, but nobody here owes them anything.

Increasing demand means increasing prices and reducing affordability. If people were born at or below the rate they die, then young people could simply move to their grandparents' homes, that is if they haven't been living there already, caring for them.

It's not ok for someone to set up a fire trap that will burn others down, nor is it ok to live in a construction site.
The laws are set up to protect your neighbours from your wilful danger.

I brought a new 3 bedroom unit back in the mid 1990's. I doubt whether to this day I have made any money out of it despite it being negative geared. The first tennant was a single mum who somehow allowed her 2 year old to draw all over the walls, spill paint etc. Brand new unit trashed (albeit not to badly) within a year. With no incentive for investors and a chronic lack of Government housing I smell a diaster. The law is already in strong favour for druggies, bad tennants and rent defaulters. Low income earners will be the losers with a lack of housing. Mr Rudd/Turnbull best time in history to be alive seems totally paralysed. He seems incapable of making a decision except to backstab his elected leader.

Negative gearing is increasing the price cheap homes so young couples are forced to rent.
The baby boomers used to save a deposit of $1,000 within one year.
Then purchase a home for $10,000.This home today is valued at $600,000.
Baby boomers invented negative gearing so they could buy another home reduce tax and get a poor young couple to pay it off.
The baby boomers reduce the top rate of tax on their income and the taxation Department miss out on this tax.
Negative gearing has allowed these baby boomers and their wealthy kids
to accumulate numerous properties.
Lucky parents can gift to their children a fully paid home.Then these lucky kids start another negative gearing cycle.
I visited an outer Melbourne display home centre and found most of the advertising was directed to negative gearing.
Young couples are unable to save a deposit large enough to purchase
a home today and face a life time of renting.
As for low income people on negative gearing their investment property.Show me who they are,possibly small shop owners who understate their income.
Negative gearing must end now.
Australia used to be the country of the fair go.........not today.

'Then purchase a home for $10,000.This home today is valued at $600,000.'

BROCK you really seem to have a victim/entitlement mentality. Move to most Regions and you can get a home for 200-300 thousand. I am a baby boomer and the cheapest home i was ever able to buy was around 80000 in the 1980's. Wages were much lower then and wives generally took up the responsibilty of looking after their children instead of expecting the tax payer to fork out for childcare. Seems to me you are happy to be the perpetual victim. My son at 25 has worked hard and owns his own home. My daughter the same. The biggest crime of the baby boomers was to bring up spoilt brats who think they are entitled to everything and are hard done by. Try starting with a small unit or a caravan and do something called saving. A little sacrifice seems like a filthy word to the 'entitlement'generation who envy others who have worked hard to enjoy the benefits. Went on a cruise for the first time at 53 only to be surrounded by all these hard up 20-30 year olds.

Mr Opinion, as a sociologist does not believe this is part of left social warfare. He is obviously a lefty, & is one of the reasons we don't believe sociology is a real science.

If you set up, or buy any business, a retail shop, a service station, or a manufacturing industry, the interest on your borrowings to run the business are all tax deductible. What the hell is so different about borrowing for the business of housing rental, that it should be treated any differently? It is so obviously a "get them rich bastards we have to pay rent too", that any other interpretation is ridiculous.

I can't understand anyone being in housing rental. The returns are so miserable, & the risks so high, it is just not worth it. Take the tax deductibility of borrowings away, & rents will have to double to make any sense of doing it. If you want to own rental property, at least have enough to own commercial property. Commercial tenants have a vested interest in keeping it looking nice.

As for those with multiple properties. Negative gearing only works, if you are reducing your tax payments on other profitable business, or on PAYE tax on wages. Most people run out of any advantage fairly quickly with 2 or 3 properties. Anyone with a tax bill to gain from negative gearing of even a few properties, will have many more lucrative areas to invest their obviously larger sums of money.

Time to grow up, & stop the envy folks.

Dear Brock,

It is not right to accuse all baby-boomers of using negative gearing: at least some of them do have a conscience and a back-bone and wouldn't agree to be in debt, living off what is not theirs, even if it happens to be profitable due to tax loopholes. So much for contempt of old people - you will also be old one day!

Dear Hasbeen,

<<If you set up, or buy any business, a retail shop, a service station, or a manufacturing industry, the interest on your borrowings to run the business are all tax deductible.>>

Yes and this is exactly what is wrong with negative gearing. One should not be rewarded for living beyond their means.

Hasbeen has already touched on some of the reasons why the major investment houses wouldn't touch rental housing with a very long stick, namely high risks and low returns.

However, where high risk is concerned, another is REGULATORY risk. - Continual interference in the market by governments and their QANGOS and always resulting in disruption and unforeseen negative consequences.

While I respect the fact that some say NG should be scrapped altogether, my question to them is why?
You cant just not like something for no reason, because its quite obvious you don't use this tax break yourselves.
The other question you should seriously ask yourselves, is where do you think the houses for renters will come from if investors don't invest in housing? Remember, if an investor owns three houses/units, that's at least three that are renters. So I ask again, where will these people live?
Someone also mentioned NG being applied to both interest payments and capital gain. That's simply not true, because you don't pay CCT until you realize a profit. However, NG does cover for all expenses, as well as holding costs during periods of non income.
Finally, how many multiple unit complexes do you think would exist, housing many renters, if not for the tax breaks NG has provided and, do you think this common investment strategy, resulting in thousands of rental units will continue should NG be abolished for used houses being bought for redevelopment.
I should make it clear that Im not arguing with you, just pointing out some facts to be considered.

rehctub, the very obvious reason why many people believe negative gearing should be scrapped altogether is that it enables people to avoid paying the full rate of tax on the money they earn. Which means everyone else has to pay more tax.

However, as Alan Kohler pointed out on ABC News, homeowners (being exempted from land tax) get a much bigger tax break.

Your question "where do you think the houses for renters will come from if investors don't invest in housing?" is based on a false premise; already a third of housing investors aren't negative gearing. Even if negative gearing were abolished, it's likely there would still be many people investing in housing, though the price of it would go down (also making it more affordable to buy so there'd be less need for rentals).

There's also the option of public sector housing corporations, which would be better value to taxpayers than relying on tax breaks (except of course to those taxpayers taking advantage of the tax breaks).

One wonders then Aiden, if this NG is so useless, why has it not been knocked on the head long ago?

I am with Rehctub here. I would worry that available cheaper rental properties would become more difficult to find, as did happen in Perth and Sydney when Labor axed it in 1985.

Suseonline, whether or not it's useless, governments have been keen to be seen as pro investment.

Were cheaper rental properties really harder to find in Perth? ISTR hearing an analysis claiming the effects in Perth were completely different to in Sydney.

Aiden, one of the most common developments of recent times has been the acquisition of an older home, on a larger lot, which is then redeveloped into multiple units/townhouses ect, all made possible and affordable through the use of NG.

The result being that instead of one older, low yielding rental, there are now multiple new dwellings housing multiple tenants which has gone a long way towards addressing our much recognised under supply of housing.

Are you suggesting this is not a good idea?

You also say many older houses are not negatively geared, and you are right, however, most older rentals purchased post 83 were in fact negatively geared and only through inflationary increases in rents have they become positively geared, which brings me to my point of making laws that state that in order to have a property NG, that property must return to profit (positively geared) within a time frame, say ten years.

This will effectively stop investors rorting the system whereby they keep funding new investments with equity, to the point whereby they own ten investments with a L2V ratio of 80%.

This is where NG has become out of control.

Public housing.
Public housing should perhaps be public/private JV where the land, is publicly owned with private dwellings, ALL in the form of relocatables so they can be moved to areas of high demand should the need arise.

We also need to put a stop to the single mother with four kids to three fathers getting preference over whole families as this puts a huge strain on that sector.

Wish for what you may Aiden, but negative gearing is here to stay because without it our economy will crumble.

Government does not want to be responsible for planning, developing and managing low income and welfare housing. None of that is stuff that politicians and public bureaucrats do well. There are stacks of embarrassing cases over years.

That is without mentioning the billions expended on aboriginal housing, where in view of the taxpayer money spent you'd confidently expect to see whole cities of buildings and facilities, but the actual result is something very different indeed.

Canberra doesn't even get it right in Canberra, where taxpayer dollars flow like water.

It is typical of that policy free zone Shorten and his cohorts recycled from the failed Rudd and Galah'd governments, that they would be distracting the tabloids and chattering (instant) experts with Class Warfare. Honestly now, since when did they give a rat's rear for low income and welfare recipients anyhow? What about those 'Struggle Streets'? As previous Labor leader Latham correctly pointed out, Shorten and Labor have been preoccupied with gay marriage instead.

<FORMER Labor leader Mark Latham has slammed his party’s “obsession” with gay marriage saying it should focus on the nation’s “Struggle Streets” instead.

He told 3AW radio Bill Shorten’s private members bill to push for changes to the marriage act to allow same-sex couples to tie the knot, to be introduced into parliament on Monday, was nothing more than a symbolic gesture.

He said the biggest social issue facing Austalia was unemployment, drug use and homelessness in suburbs such as Mt Druitt which was the focus of the SBS documentary, Struggle Street.

“If you are interested in equality and social justice in Australia then what was the really big event in the month of May,” he said. “We had the Struggle Street documentary which revealed that in the nation’s public housing estate, most notably in Mt Druit people live in conditions that you wouldn’t wish upon your dogs. Absolute chaos, despair and hopelessness in their lives.

“And surely, you would have expected a serious national response from the party of social justice?

“We didn’t hear anything.

“They’re obsessed, instead, by gay marriage.”>
http://tinyurl.com/zf5twyh

Aidan,

Don't take my word, just look up examples from Aus and other countries, whenever a government tries to dip into the pocket of Landlords, the result is that rents go up.

There are plenty of investment opportunities, and each one competes with each other for capital. The consequences of reducing returns on any investment opportunity is that capital will leave until such time as the returns equal other opportunities. For rental properties a loss in tax concessions, or increased land tax will result in fewer rental properties and increased rents.

If anyone is serious about reducing house prices then governments need to seriously improve the ability of people to build affordable houses within a reasonable commute of employment.

Yes SM and this is the point so many here miss, that housing is not the be all of investments and, once locked in, you cant convert to cash quickly as in with other forms.

My tip is that should the changes occur as per bills wish, rents will skyrocket due to huge shortages, new prices will hunt FHB out of the market resulting in more wanna be renters, and banks may review their lending strategies. All of which has the potential to plunge us into deep recession.
So I say to Bill and his followers, be careful what you wish for, unless you are 65 plus, own your own home and have no kids.

At the end of the day, investors, like myself, invest in housing because we choose to, not because we have to. Take away the incentives and you then expect landlords to become charities. WSont happen

It appears that Labor's negative gearing tax is yet another labor policy that is big in spin, but lacking in substance. The estimated take is less than $600m over 4 years.

This is not even as productive as the cocked up mining tax.

Aiden, I was living and renting in Perth at that time, and believe me it was hard to find a rental. I believe it was worse in Sydney.
They reinstated negative gearing for a reason, and it must have been a good reason to go back on their own policy.

The quicker they replace Shorten with Albanese the better.

It isn't just Shorten who has been on cruise mode and enjoying the easy life, his whole shadow front bench are damned lazy and not worth the very high salaries and international travel they enjoy.

NO policies to speak of. No action to boot the union heavies, the CFMEU and others out of Labor. Just idiotic time-wasting obstructionism and bastardry in Parliament. All jeers and challenges to the Speaker.

They need a jolly good boot to their behinds and some real work to do.

This is what happens where the Labor members, the rank and file, are treated as cattle and the career politicians like Shorten and his mates in the unions are running the show.

The aspirational mums&dads investors in rental property are there because federal government from both sides of politics do NOT want to support Australians in their Autumn years.

It is deliberately skewed, bent, economics, that doesn't see those Mums&Dads providers of the welfare and low income shelter as contributing massively to the public good and to the GDP.

They are very largely low income earners themselves. Their earnings from the rental properties they invest in is very poor indeed and its is very high risk. It is only through losing their free time to work on properties themselves and through compromising their own quality of life that they remain shakily on top of their outgoings, but NEVER comfortable. They have been sold dreams, but the truth is that they are being forced by government to provide for their own age.

tbc

Shadow,
$600m over the first four years (and probably rising after that) is still a significant amount of money. And Labor aren't planning to completely axe negative gearing. I don't think making a lot of money's their main objective; rather they want to encourage more new housing to be constructed.

Of course there's plenty of investment opportunities, but few lucrative ones right now.

The proportion of people owning their own homes is falling, partly due to house prices rising because buy to let is such a good investment. If it wasn't for the NG tax break, fewer people would rent but more would own their own homes instead.

As for land tax, rather than just raising the rate I favour phasing out the exemption for owner occupiers. This would remove the current tax disadvantage, probably resulting in more rental properties.

______________________________________________________________________________________

rehctub, do you know the details of what Shorten's proposing? I'd expect redevelopments on larger lots would count as new build. If they don't, I suggest you contact your MP (or if your MP's a Lib, contact the Labor Party) to suggest changing it so they do.

If this change does result in fewer rental properties available (which seems unlikely), surely the lack of investors buying would put downward pressure on house prices, making them more affordable to FHBs?

As for public housing, government unwillingness to fund it has resulted in a very limited supply of it, with availability restricted to those who need it most. But it need not be like that. I expect there are many different options, but off the top of my head I can think of three completely different historical models:
1) Very widely available public housing, with renting off the local authority seen as a practical alternative to buying your own home.
2) Actively using public housing as a tool to reduce the cost of living. Giving tenants the opportunity to eventually buy their house.
3) Using it as a social tool to keep communities together despite rapidly rising house prices. Priority goes to those with a family connection to the local area.

As for other forms of investment, ordinary folk are being served very poorly by the greedy, unprincipled SOBs in the finance industry and most small time investors have some life experience or that of their close friends of the sharks in shares and management funds.

Once again, federal governments do NOT want to be in the business of providing, managing and maintaining low income and welfare housing.
They have had their fingers burned over and over again. Now there is the spillover from too many law graduates, a new push of voracious rental lawyers who are busily building an industry for themselves. In an industry where the rules are advantageous for the uncaring and 'professional'* tenants to abuse the system.

*professional tenant - the rising number of tenants who know their way around the system, take advantage of the advocacy services for tenants and make a tidy income out of avoiding their responsibilities, especially the payment of rent and continually lodge nuisance and compensation claims against owners and property managers to shake them down.

It is a sad fact that government is most reluctant itself to be managing welfare housing under the tenant friendly regulations and tribunals it has foisted on the private sector (on those mums&dads 'investors').

As for the cost of housing, all three tiers of government treat housing as a milch cow for taxes and for user pays. Sit down folks and figure the cumulative effect of the the governmental taxes, fees and charges on property developments and the overheads for developers in dealing with them.

On top of that, governments such as the Rudd and Galah'd(+Greens sidekicks) have for decades set new records for immigration and all requiring housing and increased infrastructure (increases the taxes on property owners).

'Negative Gearing'? Just another hare for the tabloids to chase and sensationalise. L'il Shorten and his over-paid, always 'over there' (enjoying international travel) pear shaped colleagues are a waste of their seats in Parliament. A better Opposition is desperately needed, the present one sucks big time.

Aiden, as usual we have only been provided with the end result wish, not the detail, so we will have to wait and see, however, buying an old house, submitting plans, awaiting approvals ect can be a lengthy process, so I doubt these would be exempted in this case as they are a new home. I say this because gaining approval doesn't guarantee the project proceeds.

Aidan,

$600m over 4 years might rise to $250m p.a. combine that with the crack down on international corporations and you might get $1bn p.a. Considering that Labor is promising that it will cover their Gonski and NDIS costs that are flagged to reach $25bn p.a. you can see the problem.

What you also haven't considered is that this extra cash is going to come from tenants that can't afford to buy houses.

Aidan, "As for public housing.. I expect there are many different options"

However, do a little research and you will find plenty of sad, embarrassing, experience by government that those suggestions (the jargon may vary) and more have been tried umpteen times before. Bureaucrats, and bureaucrats in QANGOS are no different just more expensive and less accountable, cannot manage housing development or management of tenants.

The billions of taxpayers' dollars expended on aboriginal housing and those indigenous controlled agencies have resulted in sweet bugger all housing, for example.

The federal government's own auditor, the ANAO, has produced finding after finding of gross wastage of public moneys and the ANAO has made recommendation after recommendation and published best practice guides (often tuned down for dummies!) and all to no avail.

Now Shorten, the man who cannot even shirt-front the CFMEU and other union bosses who are telling him what to do and was himself part of the failed Rudd and Galah'd (+treacherous Greens) governments, is seeking carte blanche to stuff up the private rental industry.

Rather than NG why not allow losses to be written of against future capital gains? This might produce an incentive to sell, with losses expiring upon death and not passed on to the next generation.

Changes to NG are fine as long as the same rules apply to all asset classes. The incentive to build new housing, as a public goal, would be to allow NG against current income rather than future CG.

IMO there is nothing to excite anybody to invest in residential housing with massive stamp-duty, annual rates and land-taxes, maintenance and insurance that apply to no other asset class. Then there is the liquidity problem when you need to cash up, and tenancy laws that cripple commercial viability. I stupidly became a landlord 10 years ago, dumbest thing I ever did with zero capital gain and the Govt's hand out if I do happen to make one, with no indexation of cost base. I'm sure others made better property investment decisions, but my point is that nothing is risk free. NG did not much mitigate my poor investment decision and is not the path to riches the Enviati imagines.

NG is some incentive, but something greater is called for to meet the public housing deficit when half the population seems intent on feeding off the public teat, and is prepared to vote for it. The welfare state has risen to where it's pointless for some families to put in effort towards self-sufficiency with all that is on offer. Living this Nirvana surely cannot continue, but I digress.

On land-tax, I'll wager it will eventually be levied on all property to pay for public housing, not just investors, as revenue sources such as royalties in the mining states dry up.

Luciferase, many on this site, and in fact in government miss your point that there are many forms of investment other than housing and, if they leave these unchanged this will decimate the housing industry. After all, who, investor or otherwise is going to invest in something that will find it hard to hold its value.

The sad part of all this is that the billions wasted from 07 to 13, along with whats been wasted since, although a big chunk of this was unavoidable, has to be repaid, and taxes look like the only avenue.

its a very dangerous game they are playing.

I should also state that I have not had a reply to my letter to Mr Shorten.