Treasurer Scott Morrison, who is a former head of research at the Property Council of Australia (PCA), has been embroiled in yet another smear campaign against Labor’s negative gearing policy, this time teaming up with close friend and senior figure in Australia’s property industry (and former head of the PCA), Greg Paramor, to request a so-called independent report to discredit Labor’s negative gearing policy with MacroPlan Dimasi’s Brian Haratsis.
Fairfax’s Peter Martin explains:
An email obtained by Fairfax Media shows Greg Paramor, the managing director of property company Folkestone, discussed the need for a study critiqueing Labor’s policy with Brian Haratsis, the executive chairman of advisory firm MacroPlan Dimasi. Mr Paramor, who is a friend of Mr Morrison and former president of the Australian Property Council, made the request after his encounter with the Treasurer.
“Greg recently had the opportunity to meet with The Hon. Scott Morrison to discuss negative gearing,” the email notes. “As a result of that meeting, Greg agreed to provide a report to the Treasurer – he asked Brian Haratsis to undertake a study on the impact of the proposed negative gearing changes.”
The email, sent from an unnamed person inside Mr Paramor’s company, was sent to senior industry figures last week.
It also asks for feedback as “the Treasurer is keen to get the report next week”.
Among the outlandish claims in the draft report circulated among industry figures are:
- Labor’s policy would remove 205,000 dwellings from the rental housing stock over a decade, adding to housing stress.
- Australian governments would need to provide an extra $3.3 billion per year for social housing and rent assistance should Labor’s policy became law, more than the $3.2 billion per year it would raise.
- The total economic cost of Labor’s policy would be $5 billion per year – arrived at by adding-up payments without subtracting receipts.
- Increased levels of social dysfunction and an increased carbon footprint (I know, WTF?).
Brian Haratsis admits that some of these claims are wrong and they will be either updated or removed in the final report. But it does show the lengths these vested interests will go in a bid to discredit Labor’s policy.
Quite frankly, the claim that dwellings would be removed from the rental stock, thereby leading to rental stress and the need for $3.3 billion per year for social housing and rental assistance doesn’t pass the laugh test.
As has been noted ad nauseum on this site, why exactly would rents rise when over 90% of investors purchase existing dwellings over new construction?
Thus, they are not adding to rental supply, but rather substituting homes for sale into homes for let.
Under Labor’s policy there would certainly be less “investment” (read transfer of ownership) in existing dwellings, but those homes would not magically disappear from the supply-demand equation. Rather, those homes would be purchased by an owner-occupier, thus reducing demand for rental properties by the same proportion as the fall in rental supply.
More importantly, because Labor’s policy would channel negative gearing towards new builds, dwelling construction would increase, as will the supply of rental accommodation. And this extra supply would lower rents, other things equal.
It would also be good for the economy and mirrors the Coalition’s ‘new homes only’ policy on foreign investment, which Liberal MP Kelly O’Dwyer championed as follows:
“Currently the framework seeks to channel foreign investment in residential real estate into new dwellings in order to increase the housing stock for Australians to build, buy or rent. Foreign investment is encouraged in new dwellings whether they be apartments, units or homes because in addition to creating more supply, it also creates more jobs for the building and construction sector – all of which helps to grow our economy”.
So using the Coalition’s own logic, wouldn’t Labor’s negative gearing policy also help “to grow our economy” and “create more supply” (a win-win)?
The Turnbull Government and its property industry backers are clearly getting very desperate.
