Extract from The Guardian
The PM’s fallback strategy is to focus on Labor and scaremonger – and this week’s scare is negative gearing
What do you do when you can’t explain why you are proud of what your
party has achieved in government, but not so proud of it that you felt
the need to keep in place the man in charge of it all?
Scott Morrison and the government have been wrestling with this issue ever since dumping Malcolm Turnbull as prime minister.
Since then figures have been released showing solid economic growth,
falling unemployment and a shrinking budget deficit. What should be a
six-month tour of boasting until election day is now one of Morrison
being asked why he is here and not the bloke who apparently presided
over all these wonderful things.Scott Morrison and the government have been wrestling with this issue ever since dumping Malcolm Turnbull as prime minister.
Despite this being the most obvious of questions, Morrison has never once come close to giving a good answer. So terrible has he been that he has moved from trying to say it was all a bit of an accident that he had nothing to do with, to now just flat-out not responding.
This week one journalist asked him while he was at a press conference with LNP member Ken O’Dowd: “Last night at the pub I spoke to a Gladstone local who has been voting for Ken for years, loves Ken but says he can’t vote for him at the next election because of all the instability with the Coalition. What do you have to say to Ken about that?”
"Oh for the days when such questions could be battered away with a 'that’s an on-water matter' excuse"
Morrison answered, “I think the ABC should stop coming up to press conferences and repeating the lines of the Labor party every time I step up to the microphone.”
He is fast reaching a Donald Trump level of tetchiness. Oh for the days when such questions could be battered away with a “that’s an on-water matter” excuse.
So what to do? Well, you can search for something to boast of – which is why Morrison likes to keep bringing up strawberries, because his rushed laws against putting needles in them is really the only thing he has done. But the standard approach, and one grasped with great vigour by the government, is to focus on the opposition and sow fear.
And the fear this week has been about negative gearing.
Because the government knows negative gearing brings with it certain connotations – of wealthy rental owners buying properties in order to reduce their taxable income and to sell them later at a profit that will be taxed at half their income tax (funny that) – they have instead chosen to call it a “property tax”.
This week the fear campaign was given a boost by News Corp newspapers with frankly ludicrous headlines. The Daily Telegraph, for example, ran with “Bill’s tax plan to hit 374,000 people in NSW alone”. It was a sentiment that the treasurer, Josh Frydenberg, saw fit to echo in a tweet featuring on the front page.
It is, of course, not true.
The ALP’s negative gearing policy is grandfathered to exclude those already owning a rental property.
But why would the treasurer of the nation let facts get in the way? Not when he would have you believe our entire housing market is reliant on a tax dodge – hardly something that behoves great economic stability.
And let’s be honest, negative gearing is a tax dodge.
In 1987, when the Hawke government decided to reinstate negative gearing, the cabinet papers suggested that it should be reinstated because when it was dumped in 1985 “it was anticipated that other tax shelters would be closed … which for various reasons have not been.”
Tax shelter/tax dodge, take your pick, but in no way is limiting it a “property tax”.
And neither is limiting the ability to reduce your taxable income about to destroy the housing market. But don’t tell the treasurer that. In the most recent parliamentary sitting week he argued that “as a result of Labor’s new property tax, not only will rents go up, not only will jobs go down, but the value of the family home, the number one asset, will be hit”.
He really should have a quiet chat with the Reserve Bank, which in 2016 suggested that “any change which discourages negative gearing may be a good thing from a financial stability perspective.”
That doesn’t quite mesh with Frydenberg’s belief that the ALP’s policy will “punish over 350,000 people who negative gear in NSW and everyone in Australia with equity in their home”.
Fortunately we also know this will not happen because it didn’t happen the last time negative gearing was abolished.
But on this score Liberal party politicians love to massage reality.
Joe Hockey, when he was treasurer, ran with the line that in the 1980s when negative gearing was abolished, “you saw a surge in rents”. And indeed there was – in Perth and Sydney but nowhere else – in fact in Adelaide and Brisbane, the rental price fell in real terms.
The reason rents went up in Sydney and Perth was because the supply of rental properties was low in those cities and not in the others. As the cabinet papers in 1987 noted, the rent increases had little to do with negative gearing but “the evidence suggests that local influences rather than tax measures dominate in metropolitan markets”.
Given the recent surge in apartment building in Sydney, Melbourne and Brisbane, this is unlikely to be an issue now.
And anyway, opposition to negative gearing is mostly done for political rather than economic reasons.
Joe Hockey in his final speech in parliament adopted a different tune to the one he sang while treasurer, arguing that “negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property”.
Which brings us to the ALP’s policy which “will limit negative gearing to new housing”.
As we come to the end of the year, murmurs and rumours about the timing of the next election will become ever louder. And unless the prime minister works out an answer to why he is in the job, expect the volume of fear about the ALP’s policies to be turned up.
Don’t let reality be drowned out by the noise, and don’t confuse volume with truth.
• Greg Jericho is a Guardian Australia columnist
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