It’s Not Just The Gearing That’s Negative!!

Rossleigh

4 months ago

Oh no, it wasn’t the government who asked for Treasury to look into the possibilities around changing the tax benefits of negative gearing and capital gains. It was actually David Pocock and Jacqui Lambie, but let’s not let the facts get in the way when there’s such good news on inflation…

All right, you got me! I know that there’s never any good economic news and you can always expect the media to double that when there’s a Labor government, but the fact is the inflation rate came in at 2.7%. This is one those Schrodinger’s Cat things where the cat is both alive and dead. The reduction in the inflation rate is no thanks to Labor AND it’s only within the RBA target range because of Labor’s energy price relief.

The Fin – which is what we capitalists call “The Australian Financial Review” – had an interesting article talking about negative gearing and how it was popular when Labor took it to the election in 2016 but it cost them victory in 2019 when it was unpopular.

I know I’ve made the point often, but retrospectivity is almost as useful as hindsight when analysing the past and trying to wrap things up into a single narrative. As with the infamous 2004 Latham handshake being the turning point where Australia realised what an aggressive tosser he was, it’s always convenient to pretend that everyone in the whole country came to the same conclusion about the same issue at the same time and it was all down to that one thing and nothing else. Yes, it’s like a football game where we analyse the mistake in the dying minute and blame the umpire, the player who took the shot instead of passing it, the player who passed it instead of taking the shot or the other thing that would have ensured victory. However, this overlooks that there were thousands of other decisions, all of which had some effect on the outcome.

Did negative gearing really cost Labor the election, or was it the franking credits? Or was it that fetching photo of Jane Hume with that very attractive “Back In Black” mug that foreshadowed how we’d all be mugs for believing that Josh would actually deliver a surplus. Whatever it was, I promise you it wasn’t a single thing and whether Labor could take a policy on negative gearing to the next election without losing is one of those things we may never know because I doubt that Albanese will take the risk. I mean, it’s usually the Opposition who adopt a small target strategy where we don’t know what they’ll do in government, but Labor seems to think that it’s a good idea because it got them elected and why change a winning formula.

Still, the whole negative gearing kerfuffle is symptomatic of all that’s wrong with politics in this country. If we think back to many of the recent political arguments they concern a whole range of things that most people wouldn’t argue about. For example, the whole marriage equality thing took ages even though all the polls suggested that most people had no problem with it for two basic reasons: it seemed fair enough to let consenting adults decide whether they wanted to marry or not and, apart from that, it didn’t really affect them personally so why object? Yes, some people did seem to suggest that people would be marrying their pets next but, as I said at the time, if you can find a dog who can give informed consent and sign the papers, I’ll back that marriage too.

And let’s not forget that most people wanted something done about climate change but it took ages for the major parties to agree to net zero by 2050, with the Coalition only agreeing to it on the grounds that they didn’t have to actually do anything about it.

So as we potentially move on to a debate about negative gearing, we’ll have The Greens saying this was all our idea and it’s about time Labor caught up, only to have some with a long memory pointing out that Labor DID take a policy on it to the 2019 election where The Greens were more concerned about “Stopping Labor’s Adani Mine”. With The Greens and Labor fighting over whose idea it was and whether any policy proposed goes far enough, we have the wonderful Coalition of the Unwilling grabbing their chance to mount a scare campaign about how any change to negative gearing would lead to an increase in rents because all the mum and dad landlords will sell up causing a shortage of rental properties because they’ll be bought by people wanting to live rather than those wanting to make a profit… or rather those wanting to make a loss because that’s the whole idea of negative gearing. You lose now to take it off your tax and then you make a capital gain when you sell, but you get a discount on that capital gain because that’s only fair because you’ve been providing a place for someone to call home.

So rather than an argument about the pros and cons of making changes and a reasoned examination of what might actually work, we have The Greens insisting that it needs to be changed, Labor not prepared to openly say that they’re considering anything at the moment and the Liberals saying they’d welcome an election fought on negative gearing because that would enable them to be negative without actually coming up with any solutions.

To quote Michael Sukkar, “If someone’s allowed to negative gear their share portfolio, a mum or dad should not denied the same opportunity with owning an investment property.”

Mm, does this mean that while we can’t deny “mums and dads”, all those childless people can be discriminated against?

P.S. After I finished, I saw this on X. It does make one want to ask, if the Greens are as powerful as Max suggests, then why have they waited so long? (Yes, yes, I know!)