By Nick Chugg
The negative gearing and rental assistance scam!
Another failure of government logic, from both the LNP and Labor.
If you are a mortgagee and trying to pay off your homes mortgage you do not get rent assistance from the government. Which generally means that if you are a homeowner with a mortgage, receiving social security, you will be unable to pay your mortgage and have to sell your house! Further contributing to the problems of a lack of rental properties in Australia.
While the banks and the negative-gearing investors will further benefit from your poverty and property. If a social security recipient tries to get someone in to rent and help with their mortgage it counts as income and as such will reduce the amount of social security that person receives, if the rent received is more than the interest paid on their loan.
(Rent Assistance is generally not payable to a person who:
- pays rent to a government housing authority (such as a housing commission);
- owns or is buying the home in which they live (except for mobile and relocatable homes);
- lives in a Commonwealth funded place in a nursing home or other aged care facility;
- has a partner who receives Rent Assistance with their Family Tax Benefit;
- is an allowee and has a partner receiving Rent Assistance with a pension; or
- is a single person without children who lives in their parent’s home and is aged under 25 years (or under 21 years if on a Disability Support Pension).
- Special rules also apply to couples who do not live together, for anyone who has to live away from their usual home in order to give or receive care, and single people sharing accommodation).
However, if you have an investment property (or three) and you have tenants who receive social security, then the government will give your tenant rent assistance to help pay off your investment. As the majority of people on social security rent, rental assistance is in effect indirectly going to to house investors and people who are negative gearing. So not only do housing investors get massive tax deductions on their investment properties, they also get government assistance to ensure the rents on their investments are being paid.
Generally people who have investment properties already have a home, as they need to use their house as collateral to be able to buy investment properties.
Rent assistance varies between $80 and $135 per person depending on their circumstances. As the government does not release budget figure solely for the cost of rent assistance, I will make an estimate that ~80 – 90% of the people on social security receive some form of rent assistance, at ~$100 per person. I will exclude pensioners to simplify matters.
As the LNP refuses to provide budgetary figures for the breakdown of costs for Youth Allowance, Austudy and Abstudy a little more estimation from demographic data is required. With around 800,000 people being unemployed, 1.2 million underemployed and with approximately another 1 million receiving some for assistance for study we are looking at roughly 2.5 million people receiving some form of rental assistance. This comes to around $12 Billion dollars per year of rent assistance that goes directly to people with investment – rental – properties.
Combine this with the budget impact of negative gearing costing $2+ billion this year alone.
This equate to over $14 billion in tax subsidies and indirect payments from the government to people who own investment properties and already own their own home!
We know on average that our politician have ~ 2 negatively geared investment properties each!
These government policies clearly benefit people who already have a home and investment properties – portfolios – our politicians, the well-off and the rich!
It is blatantly obvious that our politicians can no longer be trusted to make any decisions in the best interests of all Australians. Our politicians are inherently conflicted by their greed, political donations – bribes – and their power. With the majority of them owning investment properties none of this unequal, biased, legislation is likely to change either.
In particular the new programs and specification set by the recent LNP government will only further entrench poverty and inequality, increase homelessness and create a two-tiered society of haves and have-nots – landlords and serfs.
Notes and references:
The majority of the new $4.3 billion allocated for the rental affordability scheme will go to private investors. Even though the high costs of private rentals have poor outcomes, particularly for pensioners. (Pension Review Report; Budget 2017 charts new social and affordable housing agenda).
Private investors will reap the majority of government spending on housing affordability program.
A new National Housing and Homelessness Agreement (NHHA) to deliver more affordable housing and build more homes, only meets one out of four benchmarks set.