An Open Letter to Australian LandlordsPosted: February 20, 2016
It’s time to admit it. You’ve been on a pretty good wicket with negative gearing. I don’t want to hear you complaining about Labor’s changes because let’s face it; you’re taking the piss to expect Australian tax payers to keep subsidising your lifestyles.
I’m hoping most of you will keep quiet and continue to fly under the tax office radar since Labor’s grandparenting their proposed changes, and you’ll therefore be able to keep using your accumulated wealth as a tax-dodge strategy. I’ve got nothing against you doing this, because it has been totally legal. But what I have got something against is the idea of you complaining about changes to end the legality of what really constitutes a massive rort causing structural wealth inequality that is bad for our entire society. You heard me. Wealth inequality is bad for all of us and that’s why it’s time you came to terms with the fact that this policy is going to change and that you should just be pleased you will continue to get away with it because you were lucky enough to start doing it before everyone realised how unfairly your wealth was accumulating. And realise we have!
We have a Prime Minister who claims it’s never been a more exciting time to be Australian. But what he really meant was that it’s never been a more exciting time than in the past 30 years to be a property-investing-Australian. Rolling equity into more and more wealth. Making money by literally just sitting on your arse, watching the rent go into your account, and the property value go up, and then using this wealth to reduce how much tax you pay. Scott Morrison showed off his economic-illiteracy this week by claiming property investors mostly earn less than $80,000 a year, when we all know the only reason the tax office has you in the ‘earning less than $80,000 a year’ bucket is because you use negative gearing to reduce your taxable income down to less than $80,000. We all know you have a tax accountant showing you how to legally reduce your taxable income to a fraction of what average workers have to pay, who own a fraction of the wealth that you own.
I am not going to sit back and accept your scare-campaign to fight these changes, because we’ve all had enough of the rich using fear to stop everyone else getting a fair deal. The mining tax fear campaign was based on lies. The carbon price fear campaign was vested interests paying to fix the result. One of Australia’s largest beneficiaries of Australia’s property speculation boom, real estate agent turned mogul John McGrath, apparently isn’t doing stand-up comedy when he ‘warned of a WEALTH KILLER TAX’. Wealth killer? Get a grip John. For every established home sold to a first time owner-occupier, there is one less renter in the market and one less renter means one less property investment needed and at the end of this change, there is still one property, one family living in it, one family benefiting from the wealth that owning this property brings them and zero-net change in overall property wealth of the country. It’s just that the wealth is shared amongst more people, rather than being concentrated in the hands of a few. But you knew that didn’t you. Because that’s exactly what landlords are scared off. Property investors hate the idea of reducing wealth inequality because wealth inequality has been so beneficial to them. At the expense of everyone else. Well everyone else is sick of it. The party’s over. Quit your whining.
I am proud of Australia when we can have mature discussions about problems that need fixing, when we can talk about the best way to fix them. Landlords will still exist under Labor’s plans, but you will have to build new homes and if that sounds like too much effort to you, then fine, don’t do it. Becoming wealthy and building wealth, in a productive, growing economy, shouldn’t be as easy as turning up to an auction and signing a cheque. Wealth should be built through hard work, through ingenuity, through patience, innovation, entrepreneurialism, risk-taking, careful management of income and savings, doing something you love, having a career, creating jobs. Imagine how beneficial to the economy it would be if you all invested in new and established businesses rather than another negatively-geared investment property?
Professional landlords who build personal wealth by owning so many investment properties that they don’t even bother with negative gearing because they don’t have an actual job, and instead just gather rents, are the very definition of rent-seekers – the term used to describe those who take from the pie but don’t grow it. A smart country doesn’t encourage such unproductive behaviour. A smart country doesn’t stand for vested-interests fighting against smart policies and a smart country therefore gets rid of the scare-campaign Liberal government run by vested-interests who don’t want to see their privileged inequity addressed.
Labor is brave to take on the threat of another Liberal scare campaign to fight for the little guy. Landlords are not the little guys in this fight. The young family who rent your fourth investment property, who have been asking you for 6 months to fix the air-conditioning unit, which you refuse to do until your accountant confirms you can reduce your tax by doing it, who move houses every time your financial advisor tells you to sell and speculate on bigger profits elsewhere, who can’t even put a hook in the wall to hang a family portrait without your permission, who have been saving for five years for a deposit, but the longer they save, the quicker house prices rise beyond their reach, who compete on an unequal playing field with you at auctions, who just want a house for their family to get attached to, who aren’t interested in how much equity will return them when they sell, who just want a place to call home, are the little guys. I am proud to get behind Labor to fight this good fight for the little guys. I hope you can see it’s a fight you’ll lose.