"Cuckoo among super nest eggs"

Editorial, NSW Daily Telegraph, 15 February 2005

WORRIED by the galloping excesses which easy credit and a vast array of consumer choice appear to have engendered, successive governments have tried increasingly to restore the concept of thrift as a virtue.

And property investment as a means of forced savings, and preparing for self-funded retirement, has been given the big tick. So hundreds of thousands of Australians, using the benefits of negative gearing and claiming the interest on their property investment loans as tax deductions, have become small-time landlords.

In NSW many of them now might well be questioning the wisdom of their investment strategy. For the Carr Government's land tax grab has made the equation a whole less attractive. Last year, then-treasurer Michael Egan ruled that all investment properties -- regardless of value -- would attract land tax, thereby abolishing the former $317,000 threshold.

Following our report yesterday on this issue, the offices of The Daily Telegraph were swamped with stories from people who had been caught in this insidious trap.

The experience of Bexley resident, 72-year-old Ron Grasso is typical. By dint of frugality, Ron accumulated enough during his working life to buy a small rental property which he lets out for $220 a week -- money he lives on in retirement. But now he's been hit with a land tax bill of $457. He puts the picture tersely.

"I'm saving the government a fortune [by not having to pay me a retirement pension] and this how they pay me back," he said.

One possible outcome is that people such as Ron Grasso will sell up, spend the proceeds, then ask for the pension to which they are entitled. Another is that the next generation of potential property investors will simply abandon the field -- a lose/lose proposition.

The talk is that Mr Carr is thinking carefully about how to untangle this mess.

Abolishing land tax -- or at least, reimposing a realistic threshold -- should be up for discussion.

Further Information

For further information contact:

• Simon Singer
• David Singer