Volatility in the market is how the asset class thrive.  Throw in some hocus pocus and you can invent a benefit scheme or two, wrap it up in confusing terminology then slap the word tax on it, and the everyday punter thinks we are taxing the rich to right a wrong.  John Howard introduced the Capital Gains Tax discount as a means to shift social housing to the private investors.  Well equity firms, banks, the asset class.  

"Investors" implies the average punter can also play the game, but the game only benefits the high rollers not the Mums and Dads.  If you bet on the Rabbits to win the Grand Final and they don't, does the government step in and bail you out?  But if you own a property and lose 'potential' value, you can write off your losses with Negative Gearing "Tax".

You see the Capital Gains Benefit goes hand in hand with the Negative Gearing Benefit - the CGB artificially inflates the house values, improving the gains from an empty property, reducing the availability of said property from the market thereby reducing supply, pushing up house values.  Scientists call this a positive feedback loop.  Rebel Economists call this a Ponzi scheme.

Yes, there will be a pop but not in the way the asset class would have you believe.

Here is a headline from the Rupert Rags, on Ruperts RealEstate.com.au - "45k homes to vanish as prices tipped to fall in $3bn tax fallout".

You don't even have to read the article to spot the first bullshit.  When demand is already exceedingly high, explain to me how if prices fall, will that result in a loss of supply?  Imagine if GST was removed for 1 month - what do you think is going to happen to the retail industry?  Or if petrol prices were "tipped to fall" what do you think is going to happen?

Shit doesn't 'disappear' simply because a tax is removed, unless of course it's actually not a tax and I'm actually correct in calling it a benefit.  Wait until we get into the detail.

Lets start with the so-called "professional experts" who produced the report - Master Builders Australia, Housing Industry Australia, Property Council of Australia and Real Estate Institute of Australia.  The are all *industry lobby groups* not economists.  They all benefit from rising housing prices, high investor activity, high construction volumes and maintaining the benefit schemes.

None of the following claims come from independent analysis:
- Removing negative gearing would reduce new housing starts by 45,524 dwellings
- Removing CGT discounts would reduce new housing starts by 33,353 dwellings
- Combined, the impact would be ~46,000 fewer homes built
- GDP would fall by $3.1 billion
- Prices would fall “in the short run”
- Rents would rise by up to 2.4% by 2030
- Construction jobs would fall by 4,288 per year

IT'S ALL BULLSHIT.  Toilet paper is more useful than this article.

Investors don't create housing supply, builders and developers do.  Investors buy existing homes.

Removing negative gearing reduces construction - bullshit.  No evidence to support this claim.  NZ removed investor interest deductibility → construction continued.  UK has no negative gearing → construction continues.  Canada has no negative gearing → construction continues.

Prices falling is bad - also bullshit.   (welcome to the free market bitches - sorry I just really hate that phrase being the excuse for why we can have nice things, but somehow the asset class shouldn't also live in the same free market that affects everyday punters?  The workers produce, not the asset class.)

The only group harmed by falling prices are the investors themselves.  My home will still be standing after the tax is removed.  But remember if prices fall - they ALL fall.  So even though you might be thinking of selling soon, it won't affect your new property purchase power as it too will also be cheaper...

Rents will rise because supply falls - well firstly supply won't be affected at all simply because a benefit scheme is removed.  Actually I think Rents will decrease because vacant properties that were once beneficial to be tenant free, will now flood the market.  And investors won't flee the market because that'll take a loss, so they will be forced to follow market demand to ensure their property is always has a tenant.  With greater supply renters have greater choice.

Also note Australia has for decades had huge money laundering issue in property.  So‑called “tranche 2” gatekeepers — lawyers, accountants, real estate agents, property developers, and dealers in precious metals/gems — were exempted from Anti‑Money Laundering and Counter‑Terrorism Financing (AML/CTF) regime.  Another John Howard scheme.

And the good news come 1 July is they will now be regulated by law to report suspicious activity.  You can thank the IMF world bank for applying the necessary pressure on our government to simply do the right thing that they should have done in the 90's.  Resulting in property not being used to cleanly park and exit, again artificially raising housing prices in a high demand market.

Housing will return to the market because no one is tipping the scales.  The next generation will be able to afford a home and have the choice to leave near to their parents.  Parents don't have to be a bank.  Banks and investors will go back to investing in business, which will make Australia productive, which is better for the economy than inflating house prices.  And then we can share the wealth across the working class, because we won't be subsidising the asset class.

$13B will return to the Australian people by removing just these two benefit schemes alone.   Seriously this is a no brainer.  Labors half-arsed idea of reducing the discount to 30% still remains a benefit scheme.

Let's vote to get corruption out of politics.  If you haven't already, could you please sign my petition to change one word from 'may' to 'must' for NACC Public Hearings.  Cheers.