Bozo Joe Hockey lies again on super, negative gearing

By Leith van Onselen

After admitting in May that superannuation reform was inevitable in the interests of budget sustainability, Treasurer Joe Hockey has once again ruled-out ever changing superannuation tax settings. From Money Management:

Addressing a PWC Tax Reform Forum, Hockey said that not only was the Government going to stick to its promise not to “engage in adverse or unexpected changes to superannuation in our first term of government” but also stated “we have no plans to increase superannuation taxes into the future”.

“During a period of low global interest rates, which can have a significant impact on superannuation balances — plus the volatility in the world economy — why would a government want to increase taxes on super?”…

“Stability in tax policy is important, and even more important where individuals rely on the long term stability of the rules around retirement savings,” he said. “What self-funded retirees and part pensioners need now, more than ever ,is stability not more tinkering with the system.”

“Superannuation is not the government’s money; it is the money that belongs to the Australian people — and the Australian people deserve better than to have governments continually mucking around with the rules or treating their savings as a piggy bank,” Hockey said.

Funny how such concerns did not bother Joe Hockey when the Government passed legislation last year increasing the tax on superannuation paid by low income workers.

That’s right, the abolition of the Low Income Superannuation Contribution (LISC) means that low-income earners now pay more tax on their compulsory super contributions than they do on their ordinary wages.

Adding to the hypocrisy, Bozo Joe has once again ruled-out reforming negative gearing, repeating the lie that it is primarily middle income earners that benefit from the tax break as well as repeating the myth that abolishing negative gearing would push up rents. From The Australian:

Mr Hockey said there was a lot of misinformation about negative gearing.

There was more than double the number of people earning less than $80,000 who owned a negatively geared property than those earning more, he said.

“This is a way for people on medium incomes or even lower incomes to be able to get into the property market,” Mr Hockey told 2UE radio on Thursday…

“So if you were to end negative gearing, you would actually see an increase … in rents … in a number of cities,” Mr Hockey said.

I have previously debunked the myths about middle income earners benefiting most from negative gearing and its impact on rents, which you can read here.

Nevertheless, here’s what the RBA said on the former in its submission to the House of Representative’s Inquiry into Home Ownership:

Tax data also show that the incidence of property investment and the incidence of geared property investment… increase with income…

ScreenHunter_8352 Jul. 15 16.48

While the incidence of property investment increases with the level of income, the Household, Income and Labour Dynamics in Australia (HILDA) Survey also suggests that most investor households are in the top two income quintiles. These households hold nearly 80 per cent of all investor housing debt…

ScreenHunter_8353 Jul. 15 16.50

That’s right, the top 40% of income earners hold nearly 80% of all investor mortgage debt. Put that in your pipe and smoke it, Bozzo Joe.

It appears that as far as the Abbott Government is concerned, “ending the age of entitlement” only applies when you are poor, with tax breaks favouring the rich off limits to reform.

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Comments

  1. Terror Australis

    “we have no plans to increase superannuation taxes into the future”.
    isn’t QUITE the same as
    “we will never increase superannuation taxes”.

    Juuuust enough wriggle room for a post-election change of heart.
    Sounds like a “non-core” promise to me.

  2. Here lies Joseph Hockey
    Promised brave economic reform
    Delivered gutless crony capitalism

      • [email protected]MEMBER

        nope

      • “Surprised he has lasted this long as Treasurer..Yes I am”

        I’m not. Abbott’s position within the party room is now so weak that he can’t dump Hockey (and by implication Hockey’s supporters) without immediately being dumped himself.

  3. Needed: debunk landing page

    Preformatted text for CMS
    Image packs

    Make it easy for journos.

  4. Mining BoganMEMBER

    Someone asked quite an involved question yesterday that made Bozo very uncomfortable. That was what made him start waffling. Unfortunately it was muffled so I couldn’t make it out. It was clear that this person was putting a submission in about tax reform.

    Does anyone know who that was and what was asked?

  5. “This is a way for people on medium incomes, or even lower incomes, to be able to get into the property market in a way that they may not be able to.”

    It’s political speak but I kind of agree with what he said here in the sense that higher income earners will find it easier to save a large deposit, but negative gearing makes it easier to use a small deposit and claim the losses against other income (which those on medium and lower incomes may need to do). They can even use a tax variation form to claim back the deduction throughout the year instead of waiting for the refund after EOFY.

    • To get Negative Gearing you have to be losing money, right? So what’s Joe saying:
      ” I want people who are on low income to lose what meagre surplus they may have to participate in a speculative property market”
      Sounds eerily Sub-Prime to me…..and we wonder why retail spending is looking fragile, to boot!

      • Agree, don’t think it’s a particularly smart thing to encourage, low and middle income earners to leverage up and buy expensive property.

      • Government sanctioned investing!

        This type of stupidity is barely removed from what we have seen in the Chinese equity markets. Except the leverage in the Aussie property bubble is a factor higher, losses are shared with the state and liquidity will be akin to the suspended parts of the market.

        Encourage people to buy non-productive assets to the point they can’t afford to actually live in their investment.

        Tax the bejesus out of anyone with the temerity to operate a successful business with the potential to employ people and maybe, shock horror, generate earnings from offshore.

        All funded by Megabank

    • flyingfoxMEMBER

      Well if the property market was not so expensive thanks to NG and CGT, they wouldn’t need to take such measures.

      Edit: Encouraging people to buy investment properties because they can’t afford to occupy themselves sounds like a recipe for disaster.

    • “It’s political speak but I kind of agree with what he said here…”

      Negative gearing likely pushes up prices meaning that it’s harder for these lower and middle income earners to invest in the first place as well as giving a greater benefit to those in higher tax brackets. So I don’t agree with what he’s saying at all.

    • And it is all a bit circular – if you took speculators and rent-seekers out of the established housing sector it would crash.

  6. SoMPLSBoyMEMBER

    The ‘T’ cannot produce a sensible budgetary commentary that identifies problems and intelligently seeks solutions because that is not his area of expertise. He’s just another ‘sled’ dog; captured and restrained in the trace responding to the shouts, whistles and occasional whip and club of the ‘musher’ who seeks to increase and amplify debt across this land. He knows that if he ‘pulls’ to his master’s satisfaction, there will be extra fish heads in tonight’s feed.

  7. coolnikMEMBER

    Leith, a suggestion: It will be good if you use words “Bozo Joe Hockey” in the headline every time you call him Bozo. It will show up nicely in google search.

  8. Okay, so how much longer do we have to put up with this government? It seems like no one thinks they are doing an average job, let alone a good job, but themselves. Can we have a go at that whole leadership spill again?

    • I can’t stand the Coalition’s values, their dogmatism, or their born to rule mindset, but I really can’t believe this is their A-Team. Is the cream rising to the top of our major parties, or the other stuff?

  9. ceteris paribusMEMBER

    Australia needs a revolution- a DEMOCRATIC revolution. The majority needs to start to vote in its own self interest rather than vote in the interests of private wealth and big corporations.
    Why do people vote against their own self-interest? Because politicians like Joe are right on (untruthful) message: “Super is your money”, “Labor will take your super savings”, “Your rent will go up without negative gearing” etc., etc.
    Democratic revolution will only take place with an informed electorate. Only community education will push back fear and ignorance.

    • DodgydamoMEMBER

      Even if people were informed and educated enough to realise it, they are practically compelled to vote against their own self interest by the two party duopoly preferential voting system. Unless you’re wealthy and/or of retirement age of course!
      Education is key, but sadly education standards seem to have been declining for my entire lifetime…

    • “The majority needs to start to vote in its own self interest rather than vote in the interests of private wealth and big corporations.”

      I kind of agree with the sentiment but I deliberately vote against my own personal self-interest. Our household is in the top 1% of earners but I support high income earners paying more tax (or more accurately having fewer deductions and loopholes) and think that I should get less benefit from superannuation tax deductions.

  10. Ha ha ha! You voted for it, Australia! The nation absolutely has the politicians it deserves.

      • I sure did, and if I didn’t care a whit for the future of Australia you’d see me disappear real quick. That’s the thing about people like me; nostalgic romantics who can’t let go. I really do want to see Australia improve and go from strength to strength, but it feels like the country is going through what the US went through from 2001 to about 2008, but without any major trigger event.

        My hope is that Australians feel the consequences of their bad decisions before it’s too late; so far all Australians have done is vote for ever-worse politicians who pursue awful policy based on either pure ideology or greed… Joe Hocky is about my number 3 exhibit (there are a couple of pollies worse than he).

  11. Piece of advice for all politicians.

    Keep up the great work sliding Australia into 3rd world status.
    Just fasten it up a bit so our people will be forced to fight back, and maybe (some would say, hopefully), have a REVOLUTION.

  12. I think I found this most interesting…

    “For investors with very low incomes, individuals aged 60 years or older comprised a larger share in 2012/13 than in 2003/04, as an increasing number of baby boomers owning investment properties entered retirement.(11)

    (11) – The increase in lower-income individuals aged 60 years and over was also partly driven by changes to taxation of superannuation in July 2007. Total income as recorded on the individual’s tax return fell for those aged 60 years and over, because some superannuation benefits that had previously been taxed became tax free and are therefore no longer recorded in total income.”

    from http://www.rba.gov.au/publications/submissions/inquiry-into-home-ownership/pdf/inquiry-into-home-ownership.pdf

  13. When a parent kneels down and stares into the beautiful adorable eyes of their children, and hears them talk, everything else disappears.

    When that same parent turns their attention to what is being done, or should I say, not being done in terms of the country in which their children are to grow, and live, by politicians and by a privileged generation, surely their thoughts turn to anger.

    Surely, there must be a growing mass of people become more angry and hostile by the day?

    If not, have you all killed yourselves through cynicism to the reality that is a dying Australia as we once knew it, but 457s know no different, so will just accept declining living standards over war?

    Yes….the growing irrelevant local youth….stealthily but surely being replaced by a growing replacement workforce of immigrants.

    Now call that racism. Some call it fact.

    • St JacquesMEMBER

      As I’ve been saying over and over for a while Steernorth, it’s betrayal, it’s a sell-out.

    • @Steernorth ‘I’m a boomer (only just) and I find what the politburo are doing to this country and our youth abhorrent – I am agitating as much as I can for there must be change.

  14. re. …”the growing irrelevant local youth….stealthily but surely being replaced by a growing replacement workforce of immigrants….”

    The important question here is:
    What are we going to DO about this unacceptable imbalance?

    • Hi raspberries.
      Great question,
      Here is a start.
      Ban foreign property investment in the residential market in Australia.
      Get rid of the FIRB – it is a tokenistic piece of shit that has never nor ever will do what it ought to.
      Jail the maggot pushers of the Ponzi real estate industry that are luring vulnerable FOMO youth in a market that is overpriced and destined to bust (we can only hope)
      Get the boomers to explain why, as a generation, they have, on the whole, devoured the property market with speculation, competing with would-have-been FHBers, outbidding them to their misery.
      Get the boomers to explain why they have done sweet FA for the future welfare of Australians when they are currently, the most powerful group in the country.
      Jail corrupt politicians.
      Make all those mongrel illegal property investments give the properties back.
      Can the FTA with China (communist, corrupt, opportunistic (think buyup of Aussie property at our kids expense/think bringing in their own temporary workers in Australia instead of giving our kids a go).
      Get the boomers to justify why they have the funds to invest in Australian businesses and industry, but instead, have only considered their consumerist selves by investing in a sector that should solely be for those wishing to own and live in a home.
      Challenge all these mental giants with a question. Do they see that putting the possibility out of the realms of possibility for future generations kills off aspirations, and enslavens generations to the mercy of landlords.
      Ask these idiots what purpose does it serve our country when people have no disposable income to inject into Aussie stuff when both rent and mortgages consume 90% of their incomes?
      Ask these people what it does to a nation when all they can do is work with no prospect of healthy saving ability.
      Get these pathetic self-serving politicians to explain why the F…. They have screwed our children over.
      I could go on, but NOONE CARES OR LISTENS…..OUR KIDS HAVE A RIGHT TO KILL US ALL OFF.

      • I hear you Steernorth and I agree that FIRB have done nothing. Why is FIRB not doing its job……MB comments often suggest alternative policeing e.g. ATO and others. I say firstly, ask Tony Abbott – Australia’s Prime Minister who is responsible atm, why is he allowing blatant breaching of our property acquisition regs by foreign buyers? Then ask Abbott what is he going to do to ensure that FIRB monitors, polices and prosecutes all whom are guilty of breaching our property ownership/buying regulations?
        Secondly, I say that negative gearing DEFINITELY needs to be canned on future residential property purchases, for both old and new builds for a period of time (as been done before) and perhaps reintroduced on a % basis for new builds at a later date.
        As for our youth not being able to purchase affordable homes….property is overpriced and I believe employment/job issues are a priority. This present Abbitsmissing govt has done squiddly-dot about job creation and future employment in Australia….err, for Australians. Abbot is hellbent on allowing 457ers and similar in to work in his mates businesses = cheap labour/lower wages for higher profit margins. In the end it is no good making payments on a house if you don’t have a reliable and ongoing fulltime job.
        I appreciate your comments Steernorth, thank you.

  15. Forrest GumpMEMBER

    Negative Gearing results in higher rents since landlords seeking to fill their empty investments do so by sourcing gold pocketed tenants. Empty rentals are advertised at above market rents when the first hit the market. The landlord receives no cash flow since the bar is far to high to snag a tenant. But hey…the landlord doesn’t care since he’s not after cash flow. He’s after a lower tax bracket and a capital gain. So the asking price can- and does-remain excessively high and only after a few months is the asking rent slowly dropped to snag the biggest fish.

    Don’t believe me? Have a look at the Perth rental market. Perth vacancies are now 150% higher than the GFC and asking rents are still 30% higher now. Rentals remain empty being advertised for 5 months or more advertised at above market rents until the lower tax bracket has kicked in from the losses. Only then the asking price is slightly reduced.

    And Joe says NG keeps rents low? Bullshit Joe.

  16. Some might say the following……

    THE MUPPET THAT IS HOCKEY
    THE PUPPET THAT IS ABBOTT
    THE RORT THAT IS BISHOP
    THE FRAUD THAT IS SHORT
    THE JOKE THAT IS LABOR
    THE HOAX THAT IS LIBERAL
    THE LAUGH THAT IS AUSTRALIA
    THE POOR THAT IS YOUTH
    THE NUMB THAT IS OLDER

    PLAIN AS DAY – LEAVE AUSTRALIA TO THE BOOMERS

  17. Hi rapberries,

    I wish i could do more than just comment :>).

    I think the answers dont lie with any politician or party currently serving. For what my little opinion s worth, i believe every last one of them is TARNISHED WITH THE SAME BRUSH. And that includes all Liberals, all Labor, and all the rest of them. They are all SELF-SERVING, and dont respect the office with which they occupy, and respect even leds the people for whom they are meant to represent. The most healthiest thing I see right now is the cyncism with which the public view al, of them, which has given rise to splinter groups and other parties. Having said that, the downside is that things are not getting done! So the way I see it, is that we seriously have to question the future validity of our entire constitution….since I dont see it working in the interests of the little people, or for the future of our kds.
    Personally, Im not against the “R” word. Take care of yourself. I HAVE NO RESPECT FOR ONE SERVING MEMBER IN POLITICS RIGHT NOW. They all play ball, sell themselves out, have no balls, and all of them, love the sound of their own voice, and treat the public like utter fools. TOTALLY IN FAVOR OF A NEW BREEDZ.

  18. There is no doubt that the relevance of the 2 major parties is in precarious waters (a good thing), especially when you challenge their efforts in advocating for generations other than boomers (just a fact).
    LABOR and LIBERAL will die a slow death. They are fast becoming part of history and IRRELEVANT in the minds of our youth. And rightly so. They have done jackshit to advocate for our kids. They have allowed Australia to slide in living standards, aided and abetted the gross distortion in truth of unemployment statstics with the ABS changes in reporting, and countless other rorts and treasonous activity that simply goes unnoticed due to vested interested edia groups, or at best, shallow insight into them. The whole system “used” to “somehow” work. Now, it simply is fuelling Australia’s demise, while these same bastards, lining their pockets, and will jetset off into wealthy retirement and leave a legacy of greed, and snippets of a once prosperous nation to our impverished children. Their mentoring effort willsimply be “it’s yours, there you go”. I for one, want to hand over to my kids a place better than i had it. But this mob is different. My greatest fear is that due o the turning of a blindeye by re maggots, the pathetic FIRB, government (why? Eg.nick Xenophon has 9+ properties, most/all have many), developers, allowing the selloff of established residences overseas illegal foreign investment, that the horse has bolted…..that the damage now is so great to the youth’s syche thst our kds will find it hard o ever get on their feet, and have the same quality of life that previous generations enjoyed. And for thst, I hate what has been done,and allowed to happen. And been allowed also to happen by boomer mum and dad investors who have not thought of the bigger picture and social ramifications of outbidding/denying FHBers a chance. Australans are only investing in fricking PROPERTY for gods sake!!! Nothing else. Businesses cannot survive without investment. It is the fastest way to fuel poverty and further engrain the divide between the haves and have nots. Right now, unbeknown to the average Aussie, the Chinese political weight and ingluence in our own Australian domestic affairs s GROWING. And we are just allwing it to grow. There will come a day unfortunately where we will not be able to stand dly by any longer.

  19. The only BOZO here is you Leith. Hockey is 100% correct not touching Superannuation and Negative Gearing. A huge chasm between the corrupt Labour goons and the sensible Libs. I know who Im voting for next election – and it isnt the party that want to rip off self funded retirees by taxing Super profits over $75K. Super belongs to the people that have used Super as their saving vehicle so as not to impact or impinge on the old age pension. Super does not belong To that frigging Union Corrupt goon Shorten and his Union cronies.