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Negative gearing reform 'absolutely essential', says Pitcher Partners

Pitcher Partners has thrown their support behind the ongoing debate on negative gearing, claiming that reform has the potential to encourage investment in sectors of the economy that generate jobs and growth.

Negative gearing reform 'absolutely essential', says Pitcher Partners
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"Negative gearing reform is absolutely essential," said Martin Fowler, wealth management partner at Pitcher Partners Sydney.

Mr Fowler noted that in its current state, negative gearing has caused a large mis-allocation of resources "to a sector which is relatively unproductive".

"While essential for shelter, houses are passive assets," he claimed.

According to Mr Fowler, a by-product of the current negative gearing policy has led to inflated housing prices and high household debt, which in turn constrains consumption and puts at the risk the growth potential of the economy.

"The Turnbull government has an opportunity to structure their negative gearing reforms in a way that refers back to their innovation reform piece. They should be encouraging investment away from passive assets like housing and into start-ups and innovative businesses.

"Reducing the incentive to invest in existing properties should hopefully divert investment instead into growth- and employment-generating businesses," Mr Fowler added.

Mr Fowler voiced his support at the opposition policy of restricting negative gearing to new properties.

“The detail of any policy that deals with negative gearing needs to be carefully considered because negative gearing covers not just investments in property but also investments in companies.

“Abolishing negative gearing altogether therefore could have adverse consequences for business investment which is essential for sustainable growth. We would not support this move," he said.

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