Prime Minister Malcolm Turnbull has announced an election promise to negatively gear Kirribilli House as an additional source of revenue for depleted government coffers. At a time when negative gearing is a hot-button election issue, the PM’s plan is likely to garner some criticism.
Negative gearing is typically used by investors to offset losses on mortgaged properties that they are still paying off. But Kirribilli House is already a wholly-owned Commonwealth asset, so in order to take advantage of the plan the Prime Minister intends to mortgage the property for its full value of $50 million and rent the luxurious waterside home to tenants.
“This is exactly the type of innovation our country needs,” Mr Turnbull said. “There’s never been a more exciting time to take a mortgage on a publicly owned property and then rent it back to people who once owned it anyway.”
The property could bring in a rental income of up to $20,000 per week which would be invested into health, education and defence. It’s not clear whether the lessee would be a single wealthy tenant, or, with minor renovations and some gyprock walls, become a share-house inhabited by hundreds of students from local universities.
Mr Turnbull says he is happy with his own living arrangements at his Point Piper mansion and is more than willing for tenants to rent out Kirribilli House. “I might even put the ad on Gumtree myself,” he said.
“This is a win-win. Not only do we get $50 million up front for the place, but we also get tens of thousands of dollars in rent payments every week. And the shortfall between that, and the mortgage can be claimed back on tax. This is negative gearing at its finest.”
Opposition Leader Bill Shorten is furious at the government’s plan, saying anyone with even a fundamental understanding of economics would realise the negative-gearing proposal would never work.
“Umm, the government doesn’t pay tax. The people do,” Mr Shorten said, shaking his head in disbelief. “If you don’t pay tax, you can’t negatively gear anything. All this means is that a bank will own one of our most prized pieces of real estate, and we’ll be the mugs paying it back for the next hundred years. And we’ll have to pick up the pieces after dodgy tenants move in, drill holes in the walls, smoke in the bedrooms and break the dishwasher.”
Clearly though, there is some self-interest in Mr Shorten’s thinking.
“If we win the election, Kirribilli House will stay in public hands,” Mr Shorten said. “Or more accurately in my hands, when I move in with my family on July 3.”