Grattan schools Kelly O’Liar on negative gearing

By Leith van Onselen

Late last month, after former Treasurer Joe Hockey’s admission to Parliament that negative gearing should be restricted to newly built dwellings only “so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property”, Assistant Treasurer Kelly O’Dwyer repeated the lie that negative gearing is utilised mostly by “average Australians” before playing down the prospects of reform:

…there’s obviously a lot of discussion about negative gearing and a lot of people say that only wealthy Australians take advantage of negative gearing.”

“When you look at the facts that’s not the case, average income earners are largely the people who do get to take advantage of negative gearing.”

“Nurses, police men and women on an average wage, for instance investing in a property, most of them hold only one property which adds to the housing stock that’s available for [other] people as well.”

Over the weekend, the Grattan Institute’s John Daley laid waste to Kelly O’Dwyer’s claim, releasing research showing that negative gearing disproportionately benefits Australians in high-paying occupations. From The Canberra Times:

…anaesthetists, surgeons, finance managers, mining engineers, and lawyers, are far more likely to negatively gear their properties than so-called ‘battlers’…

According to Tax Office data, nearly 30 per cent of anaesthetists negatively gear their properties, compared to just 3.6 per cent of cleaners.

Surgeons (27.7 per cent), finance managers (23.4 per cent), mining engineers (22.2 per cent), and lawyers (22.1 per cent) are also far more likely to use the strategy than people in lesser-paying jobs, the data shows.

Sales assistants (3.7 per cent), hairdressers (5 per cent), nurses (9.6 per cent) and teachers (12 per cent) are much less likely than surgeons and lawyers to use negative gearing…

Data shows the average tax benefit that surgeons received from negatively geared property was $4161 in 2012-13, followed by anaesthetists ($3353), lawyers ($1788), mining engineers ($1336) and finance managers ($1247).

But cleaners only received an average tax benefit of $41, while sales assistants ($42), hairdressers ($167), nurses ($254) and teachers ($327) fared little better.

Of course, the RBA has already trashed Kelly O’Dwyer’s claim. In its submission to the home ownership inquiry, the RBA showed that nearly 80% of investment property debt is held by the top 40% of income earners:

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

The Australia Institute (TAI), using NATSEM data, has also shown that nearly one third (34%) of the benefits of negative gearing were captured by the top 10% of income earners and nearly one-half (49.8%) by the top 20% of earners:

ScreenHunter_7244 Apr. 28 13.45

Finally, the Australian Bureau of Statistics’ (ABS) latest housing occupancy and cost data, released last month, showed that the top 20% of income earners accounted for 39% of all housing investors by number (chart from Greg Jericho):

ScreenHunter_9889 Oct. 22 11.58

Let’s hope Grattan has once and for all put an end to the lies and the Turnbull Government gets on with reforming negative gearing, or at least unwinding its partner-in-crime, the capital gains tax discount.

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Leith van Onselen
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Comments

  1. Did anybody believe that the current mob, beholded to finance and property developers, wouldn’t lie to sustain the property ponzi?

    • Surgeons, anaesthetists, politicians, bankers, lawyers, mining engineers and the rest of the battlers and negatively-geared cleaners out there….let them all NG their little hearts.
      NG for new-builds only.
      Problem solved.

  2. “nearly one third (34%) of the benefits of negative gearing were captured by the top 10% of income earners”

    How much of the tax do they pay? Do you expect a progressive tax system where those on higher incomes don’t also receive a larger benefit back on their deductions than someone paying tax at a lower tier?

    • What is more interesting is that huge majority (>90%) of those “10% of income earners” are still poor people who need mortgage to be able to “invest”.

      despite being labeled as “wealthy” investors, these people are still poor enough to be exploited by the banks owned by true rich

      • The banks are owned by shareholders and plenty of blue-collar super funds hold those shares – even the large chunks owned by foreigners are often held by off shore pension funds.

        The wealthy are indeed those high paid employees of the banks and the employees and owners of the associated parasite industries that feed on the FIRE sector.

      • lol …

        do you really think someone who is working 60+ hours a week as CEO of a large bank and making $5mil is rich ?
        You are not aware that he/she is much closer to a 60+ hours a week miner making $100k than a wealthy person who without any work makes $5mil a week?

      • doctorX,

        You must know a lot of very wealthy whingers who have no idea how good they have it.

        There is a world of difference between working a 60 hour week for $100K and even $200K let alone anything near $500K.

        Yet your sobs or for the poor souls pulling down $5M for 60+ hours until they retire at 50 and become gentleman farmers and cruise line regulars.

        Having said that I am not fussed about negative gearing as it is simply a symptom of the real problem. Debt ponzinomics and the first user pays all gouger model. Fix those and no one will be interested in losing money for capital gains little better than inflation.

      • do you really think someone who is working 60+ hours a week as CEO of a large bank and making $5mil is rich ?
        You are not aware that he/she is much closer to a 60+ hours a week miner making $100k than a wealthy person who without any work makes $5mil a week?

        A bank CEO on $millions per year could quite easily take that income for a few years and then never work again, while maintaining a quite comfortable lifestyle.

        A miner on $100k could not.

        They are worlds apart.

      • do you really think someone who is working 60+ hours a week as CEO of a large bank and making $5mil is rich?
        YES! And CEO of a bank makes ~$8mil, not $5mil. That’s 24 (or 15 if you think they make ~$5mil) times the salary of surgeons. Also the CEOs are doing such a top job with lending standard /sarc.

      • Firstly, almost none becomes CEO paid millions before turning 50 unless he/she is coming from a wealth family so most of them are not going to retire much before 60 or 65 (same age as many low paid folks). Secondly, millions of high paid occupation people worked for decades 60+ hours a week, shitty jobs for a fraction of that money before even getting into position of dreaming about $5m (so they wasted their precious time for a promise that doesn’t become true for 99.9% of them).

        And finally, there is almost nothing that $5m can buy and $100k cannot that makes life of a $5m CEO any substantially better, except better car, bigger house, fancier clothing and more expensive and often crappier food

        Ultimately, even after retirement that $5m can only buy him bigger or more fancier farm and a higher class cabin on the same cruise ship compared to low paid occupation person

        you clearly don’t know many CEO and how ordinary their lives are compared to ordinary people who make much less …

      • Firstly, almost none becomes CEO paid millions before turning 50 unless he/she is coming from a wealth family so most of them are not going to retire much before 60 or 65 (same age as many low paid folks). Secondly, millions of high paid occupation people worked for decades 60+ hours a week, shitty jobs for a fraction of that money before even getting into position of dreaming about $5m (so they wasted their precious time for a promise that doesn’t become true for 99.9% of them).

        I have no idea what point you are trying to make here.

        Plenty of relatively young people (say, 40s and 50s) in the finance industry can find themselves on incomes measured in millions.

        And finally, there is almost nothing that $5m can buy and $100k cannot that makes life of a $5m CEO any substantially better, except better car, bigger house, fancier clothing and more expensive and often crappier food

        Yes there is. A secure future.

        Five years of, say, a couple of million a year should allow someone to put away a nest egg of around five million dollars.

        Five years of, say, $100k a year would allow someone to put away a nest egg of maybe $100k. $150k if they live frugally.

        Compare how long you can live without working with five million dollars in the bank vs $100k, drawing down an annual payment of, say, $75k, then get back to us about the former not having a life that is “substantially better”.

        Ultimately, even after retirement that $5m can only buy him bigger or more fancier farm and a higher class cabin on the same cruise ship compared to low paid occupation person

        No.

        The low paid occupation person isn’t going on holidays and has to watch how much he spends.

        The multi-millionaire does not, unless he wants to live like a rock star.

        You obviously have enough in the bank that meeting your basic – and probably more than basic – expenses for the rest of your life is not a worry. Hence you perceive no benefit in having more other than being able to buy nicer toys. Good on you. However, most people do not, nor will they ever.

      • So what, Almost no doctor becomes a surgeon before they turn 35. Also I’m sure there are more C-level managers in Australia than there are surgeons, and at the minimum, the C-level managers are paid the same as a surgeon.

        Second, you say millions of people don’t become CEOs (or other C-levels). You can also say the same for doctors. Only the top 1% of school leavers get to opportunity to do medicine, and surgeons are even a smaller group on top of that.

        Finally, if you think the life style of a person (of the family members of they person has no time to enjoy it themselves) on $5mil is no different to some one on $100k+, you are delusional.

      • DoctorX , sorry, you are dead wrong.

        As someone on the low 100s, wife stay at home looking after first kid, median mortgage, let’s say I can tell you that life would be much much grander on 5Mil/60hrs a week.

        I work 36-40hrs. So let’s load my time up by 50%, and multiply my wage (and super) by 50x.

        I could afford gardeners, mowers, a decent tractor and massive slashing deck (and someone to slash) and retire in a few years in a brand newly built home as I whip the Cruiser up to the golf club or surf break or coffee shop post bike ride every day and laugh at the lumpentariats’ struggles.

        Your comment is way off the mark, sorry.

      • you don’t get the point do you?

        Sure CEO can save more so when he/she retires at 60 or 65 and than be only in a position to spend more on better cars, bigger homes, fancier clothing and more expensive food than someone with small super on age pension.

        What you don’t get is that both of them wasted most of precious time (limited time we have on this world) working for others to be rewarded with marginally different lifestyles. CEO hates (and has been hating through his career) Monday’s probably even more than a miner, he equally hated his job, boss, clients, … he/she wasted not only 60+ hours he spent at work but most of their “free” time thinking about job, traveling or doing work when at home. Thanks to nature of his job, CEO probably missed large parts of family life, social life, community …. he needed to spend large sums of money trying to compensate for that.

        The fact that CEO may retire few years earlier doesn’t really change much in fact that at that stage he is likely to be old, with health issues, fewer friends, not very close to family or community … so faster and bigger cars, horses may be only way to compensate for the difference.

        I was comparing CEO to someone making living wage not poor people who struggle with basic needs and only relative to difference between CEO and a true wealthy person.

        So lifestyle difference between CEOs making $5m and ordinary lower paid worker making $80k or $100k is just marginal in relative terms to difference between a wealthy person who is born into wealth, inherited hundreds of millions and passively makes millions a week is staggering. Wealthy people can do what the want, pursue any interests they have at almost any stage of their lives, and more importantly have an option of not doing something if they don’t want.

        I still stand by my initial statement that lifestyle difference between CEO making $5m and an $100k paid miner is trivial (reflected only in better or more expensive stuff) compared to difference between the CEO and truly wealthy person who doesn’t need to work and your comments only proved my point..

      • Living in Sydney or Melbourne, $100k is scraping by if you have kids, with almost no chance of ever owning own home unless significant help from parents, and difficulty experienced in raising kids even if using state schools.

        At $5mill or even $300k, owning a house is no drama, probably no or little drama to have a second home at the beach and/or snow, no drama associated with unexpected expense and can afford the majority of private schools if that’s what you want. Can also afford to have nice holidays with in pretty much any location, compared to, well not being able to take a holiday unless someone else pays for some aspect (e.g. stay with friends so accomodation is free and meals are relatively cheap/ free).

        The difference is simply profound. I get that there is a dimishing returns aspect to additional income, but I’d argue that the curve for someone with kids only flattens somewhere north of $150k, maybe even north of $200k.

      • I agree that for young people $100k in Sydney is not a living wage.

        When I made comparison I was thinking of CEO and someone at similar age making $100k

        the whole point of my post was to emphasize on the fact that truly rich always turn lower classes on each other to avoid being scrutinized. If we have tax discussion with not only top 10% in mind but rather top 1% and top 0.1% the outcome would clearly be different.
        This way a doctor specialist with his own business who makes $500k is paying tax at higher rate than a rich person making $100m from passive investments (even if he/she pays all the taxes).

      • Doc X’s point has some merit, to survive as a C-suite exec is a big and exacting time commitment (you can’t just show up otherwise there are bigger and hungrier and more desperate sharks), and real wealth is money and time – not money or time.

        Plenty of wry smiles at the marina watching rich retirees trying to get their new 40 footer out of the pen and get the sails up in 10knots, terror watching them try and do it in 25kn.

        A lifetime of making money doesn’t make up for a lifetime of no experience.

      • I can sort of see the point doctorX is trying to make

        As a doctor who knows many other doctors who have incomes in the region of mid 6 figures, life is still a grind.
        500k is <300k after tax ($4,000 in negative gearing savings doesn't really make much of a difference to that).
        send 3 kids to private school that is 50,000
        once a year holiday with your family because you never get to see them is another 30,000
        take your wife out for dinner at least once or twice a week because you never get to see her is probably another 10,000/yr
        Housing is probably costing you a lot more than the miner if you have a mortgage which you probably do in mosman or killara or somewhere similar another 100,000/yr
        basic living costs (food, bills, car etc) add another 40,000/yr no different from the miner

        all of a sudden you have spent 230,000 of your 300,000

        Will he really have accumulated all that much wealth by the time he finally retires at 65, having missed his children growing up and probably divorced his first wife?

        And to attain this "great" lifestyle you have wasted your youth between 17 and 35 or so working 60+ hours a week, having to move state every year for your training program, on-call 1 in 3 working overnight and then starting again in the morning. Probably had to do some soul-destroying PhD as well in order to even get referrals

        I'm sure mid-level finance executives have a similarly all-consuming story except their work is more soulless leaving them perhaps even more emotionally bereft.

        Compare this with the rentier

        Capital always wins over labour

      • @ino
        you are more than welcome to try

        I just know so many depressed ones who, once reached the payout age, need help not to kill themself …

      • So you’re trying to say something about the 0.1% versus the 1%.
        There’s no dichotomy there, though – no reason, for example, why you can’t scrap NG AND introduce a wealth tax, which would claw back tax from both groups (I’m not promoting a wealth tax – just saying that whether or not NG is available makes no difference your ability to have one).

        The argument that is insinuated by K O’D when she refers to low income earners NGing, ad which is total rubbish, is that the continued existence of NG increases the upward mobility of people on less than the median income. So far no one has even attempted to support this argument with evidence, especially not the groups advancing it. Contrariwise, there seems to be good reason to think that the high house prices which have are in part due to NG, certainly prevent upward mobility of far more people than use NG, even people on incomes that seem high compared to the median.
        She also reckons that NG increases housing stock, which is also dubious given the strong preference for using it to buy established properties. I’d say that even if it you had NG for new builds only, it still wouldn’t add signficantly to housing stock, because it would be used to fund the developments preferred by developers which in recent times have not been developments that meet the population’s housing needs.

        It’s a tax rort which encourages malinvestment. Just get rid of it.

      • No it is not about the 0.1 vs the 1.0

        it is about people who earn income via their labour (whether it be corporate sell-out, surgeon or miner) vs people who earn income via rent extraction

        The former group has more in common with the average man on the street than the latter, despite the fact that they may make $1million a year

        The point is taxation is better directed at people with un-earned income (eg capital), than taxing labour

      • “I’m sure mid-level finance executives have a similarly all-consuming story except their work is more soulless leaving them perhaps even more emotionally bereft.”

        Lol. Ain’t that the truth, at least doctors have a inherent morality they can choose to follow (although it would appear these days many don’t), but being a beast of usury eats at your soul.

      • @ Coming
        once a year holiday with your family because you never get to see them is another 30,000
        take your wife out for dinner at least once or twice a week because you never get to see her is probably another 10,000/yr

        even if they save a lot of money by the time they are 65 it doesn’t help them recover life wasted trying to make that money. Once they stop working they become aware of that and half of them start trying to compensate by spending it on better cars, bigger homes, yachts, … and the other half on mental health remedies (not necessarily traditional medicine)
        People at age pension enjoy their retirement, in many cases, more than some retiring with 5 mil in super.

        You are even more right about wage vs. passive investments, but that somehow aligns with total wealth and time of acquiring it because one cannot create much wealth by working for wage no matter how high it is.

        BTW. your cost list is missing large chunks going on snuff and prostitutes

      • I get your point just fine, I just think it’s wrong.

        I will reiterate my earlier point.

        Someone who has hit a salary of $millions, can quite feasibly earn that for a relatively small number of years, then never work again – or work rarely and on their own terms – while living quite comfortably.

        Yes, it might take them until their 50s, or maybe even 60s to do this, but it is still their endgame.

        OTOH, workers even on good wages ($100k – more than most) will not have this outcome. They will still be working until retirement age, and will have to pay attention to their budget and lifestyle from retirement until death.

        Your contention was that the high income earner on $millions has more in common with the grunt worker than the “truly wealthy”. This is untrue, because the high income earner can retire years, quite possibly decades earlier, after which they will have a life nearly identical – by your measure of bigger & better toys being of minimal importance – to the “truly rich” person who was born into money.

        The only difference is it’s taken them thirty years to get there. Yep, the CEO goes to work every day, hates Mondays, and misses his kids just like the miner. But then he hits that point where his vastly higher ability to accumulate wealth makes the rest of his life as good as the rich kids of instagram (again, by your measure of bigger and better toys being of little differentiation).

        The grunt worker on $100k (or less – typical full time professionals will be earning more like 80-100), however, most likely NEVER gets there. He works until he can’t work anymore, then he lives fairly carefully until he dies, probably reliant on welfare in his final years.

        It seems you are trying to make a (very) roundabout argument in favour of taxing wealth. You do not need to be so obscure, I doubt there are many here outside of the “any tax is bad” crowd who would disagree this should be done.

      • wrong again “doctor” smithy

        You are discounting the fact that everyone gets to retire at 65 and go on a pension

        The surgeon/banker doesnt get on to the big money until at least 40, and needs at least another 10 years of accumulation to be able to retire

        So at most retires 15 years earlier

        Meanwhile they have wasted the prime 20 years of their life climbing the ladder

        The extra 15 years of retirement with a fat belly, dodgy back, early diabetes, maybe a heart attack isn’t comparable to 20 years in your physical prime of shagging dumb shazzas and getting drunk with your mates, or taking the wife and kids camping

        The rentier on the other hand has never done any work, and spends his days from 20 – 80 years of age on long lunches, having sex with his paramour(s), and doing europe with the wife

      • Doc X’s point has some merit, to survive as a C-suite exec is a big and exacting time commitment (you can’t just show up otherwise there are bigger and hungrier and more desperate sharks), and real wealth is money and time – not money or time.

        I’ve never seen a CxO who spends more time “on the job” than the more dedicated of his peons. I guarantee you the average punter on $60-80k is losing more quality of life through work time than your average CEO.


      • The point is taxation is better directed at people with un-earned income (eg capital), than taxing labour

        The whole point of NG is to reward people who put their money into un-productive capital. It exists solely to push the tax burden onto productive labour away from un-earned income.

      • You’re probably underestimating what these guys and gals give up DrS. Remember the builder or miner prepare to work 60+ hours a day is the C-suite (ie they become the exec) that’s why they do it…they don’t see the kids they have no hobbies etc their health is usually shot and most will be divorced or in poor relationships…

      • You are discounting the fact that everyone gets to retire at 65 and go on a pension

        No I’m not, firstly because they don’t, and secondly because there is a vast gulf of difference between someone reliant on the pension to survive, and someone for whom the pension is pocket change.

        The surgeon/banker doesnt get on to the big money until at least 40, and needs at least another 10 years of accumulation to be able to retire

        The original comparison made was not surgeons on $500k, it was bank CEOs on multiple millions. Don’t move the goal posts.

        Meanwhile they have wasted the prime 20 years of their life climbing the ladder

        Yes. Just like every other worker.

        The difference is NOW they get to live the life of Riley, while the lower income earners don’t. Ever.

        The extra 15 years of retirement with a fat belly, dodgy back, early diabetes, maybe a heart attack isn’t comparable to 20 years in your physical prime of shagging dumb shazzas and getting drunk with your mates, or taking the wife and kids camping

        You may be staggered to learn that these are lifestyle choices as open, or closed, to the typical grunt worker as they are to a surgeon.

        The rentier on the other hand has never done any work, and spends his days from 20 – 80 years of age on long lunches, having sex with his paramour(s), and doing europe with the wife

        Indeed. Which is the lifestyle multi-million earning investment banker hits in their 50s (or maybe 40s if they’re lucky) and the Mining Engineer, or even Dentist, probably never reaches.

      • You’re probably underestimating what these guys and gals give up DrS. Remember the builder or miner prepare to work 60+ hours a day is the C-suite (ie they become the exec) that’s why they do it…they don’t see the kids they have no hobbies etc their health is usually shot and most will be divorced or in poor relationships…

        I know plenty of people who aren’t CxOs, nor ever will be, who fit that description.

        Heck, next time the janitor comes through your office, ask them how many hours a week they work and how many jobs they have.

      • “I’ve never seen a CxO who spends more time “on the job” than the more dedicated of his peons. I guarantee you the average punter on $60-80k is losing more quality of life through work time than your average CEO.”

        I’d have to say my experience (mainly finance) is the opposite, I have barely seen a partner or C-exec that hasn’t spent their life in pursuit of that goal. It’s what makes them so nasty imho, they have traded away something that they can never get back.

      • The contract cleaners are kids that don’t speak English…

        I’m not disagreeing that life is tougher at the bottom, just pointing out that a lot of the benefit from these gigs is about social relativity. They feel good because they are doing the things that society says should make them feel good, but the reality is much more stark and cruel. The machine uses these people up on a promise and the reality, usually realised too late, is that the machine has nothing to give to compensate for what’s been taken.

      • my wife is psychologist/psychoanalyst and business is booming like never before (probably proportional to CEO remunerations)

      • They feel good because they are doing the things that society says should make them feel good, but the reality is much more stark and cruel. The machine uses these people up on a promise and the reality, usually realised too late, is that the machine has nothing to give to compensate for what’s been taken.

        I don’t disagree with that at all, and it is an aspect of being a multi-millionaire “earner” that is similar to be a regular worker.

        But it’s equally applicable to the average Joe who will never in their working life see the end of that rat race, nor in their retirement know the luxury of not having to worry about money.

        The person who hits a multi-million income, on the other hand, is well within sight of the finish line. They may CHOOSE not to cross over it and join the spectators watching the race, but that is a choice they have, that most do not.

        It’s the difference between Gail Kelly the ex-bank-CEO and Darryl the ex-mining-Engineer.

      • the difference is that Gail wasted 30 best years of her life climbing up to the CEO position and missing her kids upbringing while Darryl became engineer after uni and stayed there over the next 40 years while being able to have family life and fun. Now they are both in retirement and the only difference is that she was able and still is able buy bigger house, better car and more expensive food that doesn’t provide any guaranty for better retirement.

        As I said CEO making $5m (or $10m like her) is only able to buy more and more expensive stuff compared to mining engineer so both have very similar life style. Her wealth of $43m earned at the end of career make almost no difference when their entire lives are considered. He had better life in last 40 years while she may have better life in next 10 or so before she gets sick or dies.

        but she is not good example, she needed to run from triplets at home

      • If Darryl is/ was a mining engineer he spent significant chunks of time away from family going to the sorts of places where they have mines. Or, worse still, he put his family through the stress of relocating to such places several times during their childhood. All for what Mr Tinkler described as a ‘pathetic $100k’ – basically Darryl did it to pay the bills.

      • the difference is that Gail wasted 30 best years of her life climbing up to the CEO position and missing her kids upbringing while Darryl became engineer after uni and stayed there over the next 40 years while being able to have family life and fun.

        Nup, Darryl was FIFO and missed his kids growing up, too, because his wife divorced him before they turned ten. Not to mention in the decade before they “settled down” to have them in the first place he and his wife lived in four different countries.

        Now they are both in retirement and the only difference is that she was able and still is able buy bigger house, better car and more expensive food that doesn’t provide any guaranty for better retirement.

        Nope, the difference is Gail hasn’t had to worry about money for the last 10-15 years and never will have to again (unless she wants to live like a rock star) whereas Darryl has his netire life and will continue to have to for the rest of it. Oh, and she could have retired a decade sooner but chose not to.

        Her wealth of $43m earned at the end of career make almost no difference when their entire lives are considered.

        Of course it does. To even suggest otherwise is so absurd it’s hard to believe at this point you’re not just trolling.

      • Right – I think it’s time for a Logical Falacies Bingo: https://yourlogicalfallacyis.com

        Let’s see how many we can punch out on drX’s posts!

        He’s primarily using a Red Herring Fallacy (Look ! There are richer people over there so we should ignore these ones !) which is strangely not in the list.

      • Red herring fallacy? I’d have gone for ‘black and white’ i.e. even if ultra rich do not extensively use NG (and no one seems that they do) removing NG in no way limits the opportunity to do something else that does claw back wealth from the ultra wealthy, however defined.

        EDIT: Although, the whole ‘bank CEOs suffer as much, probably way more, as Joe Schmoes during their working lives and don’t enjoy their money’ thing deserves some special award for misdirection.

      • I would never use argument that there are some richer people out there if they don’t make more than millions of others. Unfortunately those few that are much richer get large chunk of everything so arguing that attention should be paid to them rather than differences between CEOs and doctors is a valid one.

        The reality is that focusing public attention on differences between someone making $180k and someone making $60k and calling the former one a high income earners is real Red Herring because it’s designed to distract attention from real issue – the fact that rich don’t pay or pay little tax

      • The reality is that focusing public attention on differences between someone making $180k and someone making $60k and calling the former one a high income earners is real Red Herring because it’s designed to distract attention from real issue – the fact that rich don’t pay or pay little tax

        FFS. You’ve suddenly gone from bankers earning multi-millions as your benchmark to $180k (high-) wage earners.

      • Most of the high flying executives would work those hours anyway. All their self esteem, such as it is, is tied up in their job, exec meetings, hierarchies, self promotion blah blah blah. I don’t have a lot of sympathy for them.
        In any case, the difference between a mining engineer and a CEO is that the CEO’s compensation isn’t strictly driven by market forces – they say it is but is isn’t. So in that sense they are really just paying themselves a dividend which they’re not entitled to.


      • the difference is that Gail wasted 30 best years of her life climbing up to the CEO position and missing her kids upbringing

        I don’t know Gail Kelly, but I find it very hard to imagine that she thinks that the 22 years it took her to go from bank teller to CEO of St George was a wasted life.

      • @doctorX

        “despite being labeled as “wealthy” investors, these people are still poor enough to be exploited by the banks owned by true rich”

        Yeah, these “investors” are the middle class who are deluded enough to believe that “investing” in pseudo assets that generate negative cash flows or PPORs that literally eat money will somehow elevate them to the wealthy. In most cases, it won’t.

        As a result of decades of such malpractice and appalling misallocation of capital, the majority of the ASX listed companies have now come to be owned by foreign investors who know better and understand that (1) allocating all of one’s capital to unproductive pseudo assets like houses is a bad idea, (2) it is worse to make housing expensive because not enough money will be left for buying profitable businesses after buying expensive houses, (3) it is still worse to sell the profitable businesses to foreign entities who will send the profits offshore which will not contribute to the local economy.

    • “Do you expect a progressive tax system where those on higher incomes don’t also receive a larger benefit back on their deductions than someone paying tax at a lower tier?”

      No, but I’d use the figures to undermine the argument that “average income earners are largely the people who do get to take advantage of negative gearing”…which is what the post is about.

      • All depends on what your definition of wealthy vs average is. I would say average would be most of those earning in the second to fourth quintiles which adds up to more people than those in the fifth.

        But these arguments are pointless distractions from the real issue anyway. These NG articles have just turned into repetitive filler material that detracts from the site in my view.

        • “But these arguments are pointless distractions from the real issue anyway”.

          How so? Exposing the lies used to justify NG and the CGT discount are essential to pressuring for reform.

          “These NG articles have just turned into repetitive filler material that detracts from the site in my view”.

          You don’t have to read this site. It’s your democratic right to choose what sites/content to read.

      • “You don’t have to read this site. It’s your democratic right to choose what sites/content to read.”

        True. There is good content here at times too which is why I read. It’s your site, if you don’t like people disagreeing with your view occasionally then just ban them.

    • What part of the above charts do you not understand, BB? Blind Freddy can see that it is higher income earners that benefit most from negative gearing, which contradicts the Coalition’s and property lobby’s lies.

      If the dollar value of benefits is not convincing enough for you, perhaps you would instead prefer to explain why the top 20% of income earners account for nearly 40% of all housing investors by number? Or why the top 40% of income earners account for 61% of all housing investors by number?

      Either way, the system is heavily biased towards the rich.

      • The terms used by KO were “wealthy” vs “average” (and no in context of the wording I don’t think she meant average to mean those on exactly or near the average/median income). What income and net assets do those in the fourth quintile have and by what justification are you suggesting that is wealthy rather than average?

        What is your definition of “rich”?

      • “Or why the top 40% of income earners account for 61% of all housing investors by number?”

        It’s hard to believe a surgeon on great money (and deserved) would rely on $4k tax refund for anything.

        “instead prefer to explain why the top 20% of income earners account for nearly 40% of all housing investors by number?”

        Could it be that the top earners have the capacity to invest in housing…. that they see it as a govt gamed investment.

      • @Unconventional Economist
        Again, are those income figures assessable income or taxable income? If it’s taxable income, for all we know, are surgeon could reduce his/her salary to the 1st decile via negative gearing.

        Unless we are given the assessable income, we are vastly understating the problem.

      • “Look at the data presented above. How does any of it suggest that NG is being utilised mostly by “average” Aussies.”

        As said above, I’d expect a majority of those in second to fourth quintiles are the average Aussies KO was talking about, teachers, police officers, etc. They (in aggregate) are larger in number than the fifth quintile. What income does the fifth quintile start at? Am being no or more less a pedant than these types of articles playing on the wording of politicians and trying to twist their meaning to suit your agenda.

        • “Am being no or more less a pedant than these types of articles playing on the wording of politicians and trying to twist it their meaning”.

          For the past year, the Coalition has argued that NG is being used mostly by ordinary Aussies, not high income earners (For example: here, here, here, here, here, here, here and here).

          Given the Coalition’s non stop lies on this issue, we can safely infer what Kelly O’Dwyer meant when she said “average”.

          I make no apology for bringing them to account. But you clearly do not believe in political accountability.

          Anyway, I’m done wasting my time with you. I made the mistake of reading the comments today, which I rarely do anymore because of the distraction.

      • Exactly and almost all those examples come down to what people think is high income / wealthy vs average Australians and your twisting of the politicians words to suit your write-up. I recall in one of those past examples you’d framed your argument to suggest that $80k was “high income” which I don’t agree with either even though it is above the “exact” average / median income.

      • @Bullion Baron
        Decile 1-5 would have a household income (not sure if assessable or taxable) of ~$75400.

      • “According to Tax Office data, nearly 30 per cent of anaesthetists negatively gear their properties, compared to just 3.6 per cent of cleaners.”

        How many more cleaners are out there than anaesthetists?

      • PS

        “Surgeons (27.7 per cent), finance managers (23.4 per cent), mining engineers (22.2 per cent), and lawyers (22.1 per cent) are also far more likely to use the strategy than people in lesser-paying jobs, the data shows.

        Sales assistants (3.7 per cent), hairdressers (5 per cent), nurses (9.6 per cent) and teachers (12 per cent) are much less likely than surgeons and lawyers to use negative gearing…”

        Again, there are far more Sales assistants, hairdressers, nurses and teachers in the society than Surgeons, finance managers, mining engineers and lawyers, are they not?

        Last time I checked, each individual carried equal weighting in voting.

      • Sales assistants (3.7 per cent),..are much less likely than surgeons and lawyers to use negative gearing…”

        Last time I checked, each individual carried equal weighting in voting.

        The 96% of sales assistants also get an equal vote – and as you have just pointed there are way more sales assistants than surgeons. Seems to be a strong argument in favour of abolishing NG…

      • Perhaps. Why is it not happening then?

        Oh I know!! That’s because the MPs are the most heavily negatively geared ones. In that case, how the rest of the NG loans are distributed in the electorates is irrelevant.

      • @Kevin,

        “Decile 1-5 would have a household income (not sure if assessable or taxable) of ~$75400”

        Don’t you think something is amiss? What will be the income of the first (lowest) decile? I mean, what are their marginal tax rates? Can they be lots of zeros (the taxable incomes below $18,200) and a handful of 19% (the taxable incomes of up to $37,000)?

        If the “benefit” of negative gearing per landlord is so low, how many negatively geared landlords will be required to capture the 3.7% share of the total negatively geared dollars?

  3. I find it amusing when media portraits people from higher paid occupations as wealthy, while in reality they are just as slaves as everyone else, they may “have” better car, bigger house or fancier clothing but they are exploited by the rich as much as rubbish collectors are

    • better cars, bigger houses and fancier clothes are a choice.

      If you work in a higher paid occupation and resist those trivia temptations and status markers life is very comfortable – plus you generally don’t find yourself hanging around with the sort of try hards that simply upgrade their ‘needs’ to match their income.

      • comfortable? what that even means for someone who has to work to be able to survive?

        higher paid occupation person is just as a low paid occupation one – because those higher wages cannot provide anything else except faster cars and bigger houses. Sometimes they like what they do but not more often than low paid people.

        Just look around among people you know and try to spot the difference between those from lower and higher occupation jobs – their lives are almost identical beside slightly better food and vine, faster cars, bigger houses, and similar trivial differences

      • @ AnonNL
        sure and being from higher paid occupation doesn’t put someone into position of being able to enjoy life more compared to someone who is paid lower (there are so many studies done that show that money matters only to certain basic need satisfaction level).

        high paid occupation people still have to work, even at time when they would prefer not to, still have to meet people they don’t like, still have to go to places they prefer not to ….

      • Wealthy = living within your means.

        Therefore, property mean reversion will make millions of Aussies very, very wealthy.

      • DocX

        “Just look around among people you know and try to spot the difference between those from lower and higher occupation jobs – their lives are almost identical beside slightly better food and vine, faster cars, bigger houses, and similar trivial differences”

        I’m not sure how that helps your argument

      • Just look around among people you know and try to spot the difference between those from lower and higher occupation jobs – their lives are almost identical beside slightly better food and vine, faster cars, bigger houses, and similar trivial differences

        No they’re not.

        People on low – even average – incomes actually have to genuinely worry about things like not being able to pay bills, buy food, keep the car running, buying the kids schoolbooks, etc.

        People on higher incomes (lets say $100-120k+) only have to worry about these things if they are putting their money excessively into luxury goods like private schools and new cars.

      • $100k is very comfortable with no kids but not enough to not worry about bills especially if any amount of day care expense is needed to get it.

      • Dr Smithy that’s not necessarily true.

        100k less tax, less mortgage, less insurances (car/home), less car rego, less power bill/telecommunications, less power, less eating, less savings….not much change left.

        As someone in that cohort, it’s not all beer and skittles and we hardly live a life of luxury (as described by those here. Certainly compared to a Syrian’s lot in life it’s ostentatious)

      • 100k less tax, less mortgage, less insurances (car/home), less car rego, less power bill/telecommunications, less power, less eating, less savings….not much change left.

        Sure. But, for a start, you’re making savings, and you have change left.

        Do you *worry* about whether or not you’ll be able to put food on the table each day ?
        Would a few $thousand unexpected expense significantly change how you lived your life for the next six to twelve months ? Might you not be able to meet it at all ?
        Do you need to structure when your bills come due, or pay monthly rather than annually, so you actually have the money on hand to pay them (without racking up credit card interest) ?

        I’m not going to try and say $100k is a lot, and i certainly wouldn’t argue anyone on it is living a life of luxury (with the same context you noted), but it’s a solid income. If you make $100k, you’re earning more than about 80% of other workers, and nearly twice as much as the median wage.

      • I’m in that bracket –

        Do you *worry* about whether or not you’ll be able to put food on the table each day ?

        This one, no. But, say, paying for the gas or lights or rent, yes,

        Would a few $thousand unexpected expense significantly change how you lived your life for the next six to twelve months ? Might you not be able to meet it at all ?

        Absolutely. My car’s alternator went at a cost of $400, and if a relative hadn’t volunteered to pay we’d have been in deep deep doo doo.

        Do you need to structure when your bills come due, or pay monthly rather than annually, so you actually have the money on hand to pay them (without racking up credit card interest) ?

        Yes, definitely. Though the notion of paying something without racking up credit card interest is long gone. i.e. we structure like that so we can pay the bills at all.

        Savings? That’s a dream for some other life.

      • Sounds like @tmarsh is talking about household income of $100k and @drsmithy is talking about individual income of $100k?

      • Um, interesting.

        If there is one thing I learned from this page, it is so easy to fool Australians with statistics.

  4. What worries me is the high proportion of “finance managers” that are doing it. Surely, they should know better…?

    But no, the mental disease is so prevalent and with such deep roots nobody notices the madness anymore.

    The lunatics are running the asylum.

    • Nothing mental about it.

      They know how it works and they know it is baked into the model of economic management that is currently in place and which no one in the mainstream of Oz politics, policy or economic commentary is even questioning.

      In the current system the RBA and APRA are required to drive the economy with private debt and a rising residential housing market is the only thing that will drive demand for enough debt to keep the economy alive.

      Those finance managers are betting on the system and that there is a lot more national furniture and silverware that can be thrown into the furnance before it explodes.

      Having watched this process for the last 15 years I am not convinced they are nuts.

  5. MaryleboneMEMBER

    John Daley is fast becoming a hero of mine. He should really be setting or consulting on government policy in some capacity.

    As for K’OL, well the less said the better. Her true colours get more and more exposed as time passes. How do we end up being represented by such people?

    • The same reason as how Tony Abbott got to become prime minister. People are not doing their civic duty and be engaged in politics.

      How do you think branch stacking works so well. Only a small handful people is required to ensure a puppet candidate is parachuted into a seat. If vastly more Aussies care about politics and join and participate in a party, that would be pretty much impossible to do.

    • Lucy Turnbull is on the Grattan Institute board… I’m sure this is getting back to Mal. Whether he does anything is another thing entirely

  6. I am sure O’Liar is well aware she made her figures up… she just doesn’t care, who in government will challenge her? They are all pigs feeding from the same trough, and are clearly happy to spout known lies to justify keeping NG in place

    • No, she was not lying when she stated that negative gearing was utilised mostly by “average Australians”.

      “According to Tax Office data, nearly 30 per cent of anaesthetists negatively gear their properties, compared to just 3.6 per cent of cleaners.”

      So, how many more cleaners are out there than anaesthetists?

  7. Here’s a quick question.

    In a great society what would rich people do with their surplus money?

    A) Share it with poorer people directly
    B) Spend on community projects such as parks and hospitals and art facilities
    C) Buy luxury items such as safety features in cars, solar electric, etc thereby supporting these technologies until they become mainstream
    D) Hoard gold, art and collectibles
    E) Use the income, combined with a tax deduction and rent from poorer people, to service debt on money borrowed offshore via banks and buy up poorer people’s housing.

    • In reality, most likely D (you also forgot hording cash in overseas tax havens). Maybe some E, but most rich people have a very diversified portfolio, and property is usually contained to a moderate overall percentage.

      In ideal world? A, B & C. By great society, do you mean the ideal world?

      Also in C, safety features and solar panels are not luxury items. Luxury items are LV bags, Jaguar cars, and private jets. Those will never become mainstream no matter how much the rich spend on them.

    • rich never do E) because they are not rich if they have to borrow to invest unless it’s a short term speculation (poor people housing is clearly not that)

    • E) Use the income, combined with a tax deduction and rent from poorer people, to service debt on money borrowed offshore via banks and buy up poorer people’s housing.

      And this is done by anyone with a bit of spare money , not just the mega rich, which is why the likes of Hockey and his cronies believe that normal working people are up to their necks in neg gearing etc. I would say that the people who now OWN other people via housing ownership have moved down to the ‘local plumber’, ‘the doctor’ ‘the mine worker’ ‘your local politician’ ‘your local newsagent’ meantime normal workers on a drab $60k + – per year are becoming more indebted to the well paid workers than ever before and not just the bankers and the white shoe brigade.

  8. Career Politicians have only two positions on policy, first how a politician can benefit themselves and second how rent seeking donors can support that benefit.

  9. This thing about ‘restricting to newbuilds’ would also be a dodgy outcome. The hoards of speculators would head off to the outubrbs and quickly buy up all the land, meantime the land bankers who already restrict supply would seize upon this and put their prices up accordingly and Mr&Mrs struggling FHB would loose one of their few openings into the housing market that is left for normal human beings. This is how it would happen, any leaks left unplugged would quickly be exploited and then used as a tool against the abandonment of neg gearing across the board.

  10. Kelly O’Dwyer is a classic case of “If you make the lie big enough and repeat it often enough…”

    • No, she was not lying when she stated that negative gearing was utilised mostly by “average Australians”.

      “According to Tax Office data, nearly 30 per cent of anaesthetists negatively gear their properties, compared to just 3.6 per cent of cleaners.”

      How many more cleaners are out there than anaesthetists?