NSW Planning Minister Rob Stokes has doubled down on his criticism of negative gearing, rebuffing criticism from the Turnbull government and questioning why investors receive tax breaks for buying a sixth home when others cannot buy a first.
Dr Stokes' surprise intervention into national tax policy comes ahead of a potential showdown on social housing when Commonwealth and state governments meet next week.
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Negative gearing debate fires up
NSW Liberal Rob Stokes has broken ranks with federal colleagues by supporting calls to reform negative gearing. Courtesy ABC News 24.
His comments in a speech on Friday put him on a collision course with the federal Coalition counterparts, who fought Labor's proposed negative gearing reforms at the July election and have instead told states to boost the supply of new housing.
Asked about Dr Stokes' comments, Prime Minister Malcolm Turnbull said the government had no plans to reconsider its position on negative gearing, while Finance Minister Mathias Cormann essentially told his Liberal colleague Mr Stokes to stick to his knitting.
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"Rob Stokes should focus on his responsibilities as the state Planning Minister in NSW," he told Sky News. "He's in the driver's seat when it comes to improving planning regulations, zoning regulations, pursuing higher density housing."
Senator Cormann reiterated the view that abolishing negative gearing would drive up rents - an argument the Grattan Institute and others have dismissed as a "myth" - and said the government completely rejected any change to its policy.
"We made very emphatic commitments in this regard to the Australian people before the last election and we completely stand by those commitments," he said.
Treasurer Scott Morrison commended the NSW government on its efforts to boost housing supply - the state is forecast to experience the biggest housing boom in Sydney's history, and is also spending on infrastructure at record levels.
But Mr Morrison, who once warned of the "excesses" of negative gearing, said solutions that worked in parts of Sydney's overheated housing market may not be appropriate for the whole country.
"What might help in Pittwater may not help in Tasmania. In fact, it could actually have a negative impact because there is no-one single housing market," he said. He also questioned Dr Stokes' knowledge of the housing and investment market.
Asked about the reaction among his federal counterparts, Dr Stokes said he agreed with the Commonwealth's focus on boosting supply, but it was "not enough to by itself solve the challenges of housing affordability".
He said he did not agree with Labor's policy to quarantine negative gearing to new homes, but there was an nonetheless an "opportunity to look at tax breaks" for the wealthiest users of negative gearing.
"It's a great way of helping people get into the housing market, but when people are able to use it to buy a fourth, a fifth, a sixth house … one questions what the social benefit is of that tax break," he said.
Former Liberal minister Peter Reith also lashed out at Dr Stokes, saying that if he felt so strongly about negative gearing "why doesn't he join the Labor Party?".
Dr Stokes said: "I joined the party of Robert Menzies and Robert Menzies spoke often, and in fact built a constituency off the back of talking about home ownership, and the opportunities for ordinary Australian families to have access to the housing market. That's the party I belong to."
Labor seized on the speech, with senior frontbencher Anthony Albanese saying Dr Stokes had "belled the cat" on negative gearing, which was a centrepiece of Opposition Leader Bill Shorten's election pitch.
Shadow treasurer Chris Bowen said Dr Stokes' intervention was the latest in a long line of calls for negative gearing reform, and called on government ministers to "swallow their pride".
The comments ahead of Premier Mike Baird's National Press Club address in Canberra on Tuesday and a meeting of state and Commonwealth treasurers on Friday that will consider a long-awaited report on financing affordable housing.
Lucy Turnbull, the chief commissioner of the Greater Sydney Commission, also attended the event Dr Stokes spoke at but refused to take questions from reporters.
A Fairfax-Ipsos poll in March found 42 per cent of Australians opposed changes to negative gearing, 34 per cent were supportive and 24 per cent were undecided.
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