Josh Frydenberg has seized on property industry modelling that suggests Labor’s negative gearing and capital gains tax changes could backfire to demand Bill Shorten not bank $32 billion in savings he has pinned to the policy.

The Treasurer said the research by the Property Investment Professionals of Australia found the changes could have a major impact because investors would change their behaviour and stay out of the market.

He said the findings were a “warning shot for Labor and a reminder of why it needs to urgently backflip on its punishing housing tax . Make no mistake, as Australians enter the ballot box later this year, they will know that a vote for Labor is a vote for its housing taxes – a vote that will drive down the value of their home or increase the cost of their rent.” PIPA chairman Peter Koulizos said investors already paid almost four times in capital gains tax compared with what they received in negative gearing benefits over a 10-year period “so the government is already ahead financially”.

PIPA, which represents agents, brokers and investment firms, said there would be “drastically fewer” investors in the market under Labor’s policy, making its costings a “flight to fancy”.

PIPA will today circulate costings showing that a 15 per cent reduction in investment activity would reduce capital gains tax income by $31.6bn, while a 10 per cent reduction in activity would hit the budget by $21bn.

A 5 per cent cull to investor activity would reduce capital gains income by $10bn.

Mr Koulizos admitted the calculations did not take into account extra income that would be earned from investors who bought established property under Labor’s axing of concessions.

He also acknowledged that there was no certainty the policy would hit investment activity by up to 15 per cent. “Modelling requires assumptions. Whether it is 2 per cent or 20 per cent, nobody knows for sure,” he said.

The Opposition Leader has vowed to axe negative gearing and halve capital gains tax concessions for investments in new homes, raising $32bn in a decade, according to costings by the Parliamentary Budget Office.

Opposition Treasury spokesman Chris Bowen dismissed the research. “There’s nothing to indicate it’s even based on a modelling of Labor’s policies,” he said. “Mr Koulizos was at Josh Frydenberg’s ‘attack Labor’s housing affordability’ summit a few weeks ago.

“Josh Frydenberg is keen to deflect from his Treasury calling out the Liberal Party’s lies on the true impacts of Labor’s reforms on the housing market.” Peak industry bodies the Property Council of Australia and Master Builders Association have also attacked Labor’s plan.

Greg Brown, The Australian, Page 4, 6 March 2019