Finance Finance News The jig’s up for Coalition’s negative gearing lies – and apologists in the media

The jig’s up for Coalition’s negative gearing lies – and apologists in the media

PM Malcolm Turnbull and Treasurer Scott Morrison fiercely campaigned to keep negative gearing in 2016.
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When the Australian people are being lied to, you’d hope that the bulk of the mainstream media would swing into action to expose the liars.

But that did not happen during the Coalition’s phoney defence of negative gearing and capital gains tax discounts before the last election.

Prime Minister Malcolm Turnbull and Treasurer Scott Morrison encountered mild push-back from journalists at best as they ran a scare campaign against making any change to two of the most unjust, and unjustified, tax lurks going.

The PM said winding back those two tax write-offs would “take a sledgehammer” to property prices because “a third of demand” would disappear from the market if reforms proposed by Labor came to pass.

Well this week the deceitfulness of those claims is being fully exposed via a freedom of information request by the ABC.

Not only were Mr Turnbull and Mr Morrison contradicting eminent economists such as Saul Eslake and John Daley on the matter; not only were they contradicting the Liberal NSW planning minister Rob Stokes; but they were contradicting their own advice, prepared by the Department of Treasury.

That advice, now posted online for all to read, explains why Labor’s proposal for a non-retrospective ban on negative gearing of established dwellings, plus a halving of the capital gains tax discount, would have no effect on share prices, no effect on commercial property prices, and “in the long term … could have a relatively modest downward impact on [residential] property prices”.

So much for one-third of buyers fleeing the property market.

The two questions that need answering, is why were Mr Turnbull and Mr Morrison making such obviously false claims, and why were those claims not torn apart by the Canberra press gallery?

The answer to the first question is straightforward. They were either responding to an ideological commitment from the right-wing of their own party room that tax is somehow optional for asset-rich Australians, or they were following the advice of party strategists who could not see them re-winning government if wealthier Australians did not hear them loudly condemning Labor’s plans.

Historians will not doubt tell us which of those it was in years to come.

The answer to the second question is more complicated.

Journalists were not brazenly siding with the banks who had profited so much from the negatively-geared property investment mania, and they were not simply playing partisan politics in favour of a Liberal-led government.

Rather, the get-rich-quick culture of the then 16-year-old property boom, and the gradually normalised claim that tax avoidance is somehow a basic human right, has infected Canberra policy makers and fourth-estate critics alike.

That’s why in 2016 it was so refreshing to hear NSW planning minister Rob Stokes lay out the moral case against these tax write-offs.

He said at the time: “We should not be content to live in a society where it’s easy for one person to reduce their taxable contribution to schools, hospitals and other critical government services – through generous federal tax exemptions and the ownership of multiple properties – while a generation of working Australians find it increasingly difficult to buy one property to call home.”

While he told the truth, his federal colleagues were telling lies.

They lied on behalf of the 10 per cent of Australians who profit from the tax write-offs, and against the interests of the other 90 per cent.

Perhaps now that the nation’s best-equipped economic modellers have highlighted the benefits of these reforms – around $6 billion a year returned to the budget bottom line – the news media will finally call these laws out for what they are.

They are grossly unfair. They have helped pump up the Australian housing bubble. And they have redistributed tens of billions of dollars from poorer to wealthier Australians.

As interest rates start to rise around the world, and the interest-payment write-offs of property investors start to bite even harder into the federal budget, these laws need urgent reform.

A news media that vigorously holds the defenders of these laws to account would be a good start.

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