How our politicians play in investment property 

Australia’s federal politicians are among the nation’s most aggressive real estate investors,

with government and opposition frontbenchers directly owning at least 110 properties in

addition to their family homes, according to disclosures in the register of pecuniary interests.

The total number of properties owned by parliamentarians could be much higher, as

companies wholly owned by MPs are not required to declare property holdings.

The Australian’s analysis of MPs’ property holdings comes as negative gearing concessions

and capital gains discounts move to the centre of political wrangling over the direction of

tax reform.

Nearly two million taxpayers have declared an interest in investment property, according to

the Australian Taxation Office’s most recent figures, with 1.26 million making use of the

negative gearing tax concessions.

Parliamentarians have also bought into the residential property investment boom. Data

compiled by Deakin University researchers suggests MPs could own more than 500

properties in total, worth several hundred million dollars. These investments range from

holiday apartment rentals to more complex arrangements including trusts, with a mix of

investments negatively and positively geared.

Two of the biggest property owners in federal parliament are Nationals MPs David Gillespie

and Barry O’Sullivan, who owns 42 properties.

Mr Gillespie has declared an interest in 18 properties, including 15 units in Port Macquarie,

in his electorate, although he said just one was negatively geared.

He warned against viewing negative gearing as a “cash cow” to compensate for too much

government spending. “It will put rents up, it punishes people who are renting and it

punishes mum-and-dad investors who like the concept of investing in bricks and mortar

rather than other investment vehicles,” he said.

Most of Mr Gillespie’s investments are in one apartment development in Port Macquarie,

where the median rent is $330 a week according to CoreLogic RP Data figures. Another, in

Sydney’s eastern suburb of Randwick, was purchased for more than $600,000 in 2001, and

was on the rental market for $700 per week in 2012.

Senator O’Sullivan, who owns most of his properties through investment companies,

warned that changes to negative gearing would risk putting up rents. However, the

Queenslander said none of his properties was negatively geared and he paid company tax of

30c in the dollar on the profits of sales he made as a developer. “The impact on the economy

if you didn’t have negative gearing would be enormous,” he said.

“If you didn’t have negative gearing, a lot of investment wouldn’t occur and then you’d end

up with a crisis.”

GRAPHIC: Politicians’ properties

Labor parliamentarians appear to have fewer direct investments, although NSW senator Deb

O’Neill and frontbenchers Shayne Neumann and Mark Dreyfus disclose numerous directly

held residential properties. “I have zero residential properties that are rented out,” Perth

Labor MP Alannah MacTiernan said. “I have a house in Albany that I’m restoring; a onebedroom

flat in Canberra to stay in and a house in Perth.”

Negative gearing has become a key election battleground after Labor announced that from

July next year it would limit tax concessions on investment properties to new houses and cut

capital gains tax discounts from 50 to 25 per cent on investments held for more than 12

months.

Scott Morrison has attacked Labor’s plan, but left the door open for the Coalition to tackle

“inadequacies” in negative gearing arrangements.

“For most middle-income people it is the one chance they have got to build some wealth,”

the Treasurer told 2GB radio yesterday. “If you are a small business, if you are a policeman

or woman, or a nurse or a teacher — this is your opportunity and on the weekend he (Labor

Treasury spokesman Chris Bowen) just smashed them.”

Mr Bowen said it was lawyers and surgeons who received the greatest benefit from negative

gearing and accused the government of wanting to “protect vested interests”.

Clive Palmer declared residential property in Sofia, Bulgaria — the homeland of his wife,

Anna — but has not disclosed how many properties he owns in Australia.

Malcolm Turnbull owns residential property in New York, also disclosing an investment

property owned by his wife Lucy in the blue-ribbon Sydney suburb of Paddington,

purchased two years ago for $2.8 million.

The Gold Coast is a popular investment destination, with both Mr Neumann and Liberal MP

Karen Andrews, who disclosed 10 residential properties, owning apartments in Palm Beach.

While the register of interests does not reveal whether MPs use negative gearing, any

change to the CGT discount will have an impact investments across the board. The base

salary for a federal backbencher is just under $200,000, placing MPs within the highest

income brackets.

More than 20 per cent of taxpayers with that level of taxable income use the negative

gearing concessions.

Nearly nine in 10 taxpayers have taxable incomes below $100,000, according to the Grattan

Institute, with only 8 per cent of low-income earners taking up the concession.

Grattan chief executive John Daly said it was unsurprising that politicians, along with other

high earners, used negative gearing.

Property Council chief executive Ken Morrison said it was people “from all walks of life

who turned to property investment to build their future security”.

The latest breakdown from the Australian Taxation Office, for the 2013 financial year,

shows individuals with a taxable income over $80,001 claimed an average net loss of

$12,037, while the average across all income tax brackets was $9800.

Additional reporting: Jared Owens