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.