Morrison: Negative gearing your “one chance to build wealth”

From the Treasurer of the Property Council via the ABC:

Mr Morrison has been leaving clues about the changes he wants to make to tax breaks for Australians who invest in property.

He has attacked Labor’s policyunder which only new properties would be able to be negatively geared after a proposed 2017 introduction — saying everyday mum-and-dad investors would be hurt.

He told 2GB radio this morning that twothirds of people are taking advantage of negative gearing have a taxable income less than $80,000, while 70 per cent of people only negatively gear one property.

“[Shadow treasurer] Chris Bowen thinks everyone who’s on negative gearing is on a rort,” he said.

“He thinks they’re big property barons and you’ve got to go and tax them and slam.

Well, for most middle-income people it is the one chance they’ve got to build some wealth.”

And there it is, the Property Council mindset writ large, where Mr Morrison used to be head of research.

This is either an admission of how completely distorted our economy is and therefore is an argument in favour of the Labor reforms, or it is a totally inappropriate (not to mention wrong) attitude for a Treasurer given it privileges a single asset class and its beneficiaries with whom he has a long association.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Did you know the MB International Shares Fund has returned an average of 17.1% per annum and the Tactical Growth Fund an average of 10.4%? Register below to learn more:

Latest posts by Houses and Holes (see all)

Comments

  1. so mum and dads who are investors have an unfair advantage over mum and dads who want to house their family in those same houses

    I will never again vote liberal at all

    disgusting country

    • Strange Economics

      Yes – Double. and the scare coming is the rents will go up so the property owner can still get 3 % yield. Rents are inelastic ( the renters are already maxed out and will move) so the result is – property falls 10 % to keep the yield. See the Australian newspaper today for heaps of PCA twisted logic.
      This is the meaning of “more affordable housing”. Same no of houses, just some of the renters can buy them (at 10 % less).

    • “have an unfair advantage over mum and dads who want to house their familY”.

      Yep. Amongst all the vile lobbying and political crap, let’s not forget what negative gearing does. It enables speculators and rentseekers to be tax favoured above someone that wants to buy a home to live in. It is fundamentally a beggar thy neighbour policy.

      When we bought our house – an established house in an average suburb – families were long gone, and I found myself bidding against two people (boomers) that lived in the same street.

      Negative gearing for established houses is about as dumb and greedy as policy can get.

      • If you assume that over time, the total return from an house is more than the borrowing or maintenance costs of it (otherwise why are we so obsessed about owning our own home) owner-occupiers get a better tax deal that investors – while they don’t deduct their interest, they don’t have any imputed rent either and of course any gain is tax free (let alone the pension and land tax benefits). You also have a very large and stable asset to borrow against in the future at rates cheaper than any other sort of funding you could get from a bank.

        The ALP policy will only distort that advantage even more.

      • It’s about the cash-flow cost of getting a house. The long term position is irrelevant if you can’t afford the purchase price i.e. the cash-flow. Why shouldn’t home ownership be prioritised it’s a social good. And the price of that asset would be much more reasonable if it wasn’t set up as a speculative target, and so the monetary gains would decrease and the social gains would increase.

        And for many it has not much to do with the numbers, and much more to do with the fact that dealing with the little landlords while renting under the Australian system sucks big time.

      • Didn’t you get the memo @aj? The Australian Dream isn’t to own a home for your family, it’s now to be a rental property baron.

      • Many view the move from owner occupier to landlord as an evolutionary process. Therefore positive and to be encouraged. OO’s are on the first ‘rung’ but still lesser humans. Renters are the sub-human classes and lucky that the fully evolved provide them with lodging. This is never stated explicitly but it is the paradigm that justifies the actions of many in Australia. As some are born with investment property, by this logic man/woman are not and never can be created equal in this society. However, one can obtain surface equality (and true beauty) via debt – mathematically hard labour alone will no longer cut it.

      • Original T – I love the fact that those renting out negatively geared properties think they are doing us a favor by keeping the rents low. Haha, but they really believe it. Quite sickening isn’t it?

        Why is property investment the only way to get ahead? How about starting a small business and employing people? Or creating a new product or service. FFS this country has gone to the dogs when it thinks the only way to be wealthy or get ahead is become a property baron. It certainly does make you better looking though..

  2. I’m actually pleased to see Morrison double-down on this. He’s so out of his depth and used to blustering his way through that he’s going to lose the argument. I’d be surprised if Turnbull doesn’t tell him to keep quiet.

    And you can only laugh at the HIA. Negative gearing only for new builds will reduce demand for new housing! What a complete tosser.

    “Grahame Wolfe from the Housing Industry Association is worried tinkering with tax breaks would reduce investment in housing.

    “In that market where we’re seeing the potential for housing activity to slow down, what we don’t want to see are distortionary effects in the tax system that might artificially reduce that demand for new housing even more so,” he said.””

    • It’s interesting, amidst all the bluster and spin, Morrison never actually addresses the merits of “NG for new builds only”.
      His answers seem to be a combination of telling us what he thinks Bowen thinks and a string of motherhood statements about investment and growth.
      My kingdom for a competent questioner
      Maybe we should formulate some questions to assist the struggling journos.
      Maybe some clever clogs could assist by tweeting them to some senior journos (Leigh Sales, Peter van Onselen, Fran Kelly, Emma Alberici, Tony Jones)
      I’ll start.
      Treasurer, Your predecessor Joe Hockey said recently “…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…”. Given this is exactly what Labor’s policy does, why do you oppose it.?

      • Would love to see Kerry O’Brien or Tony Jones take him apart. Leigh Sales unfortunately is a light weight.

        How does Morrison get away with this garbage?

      • Bowen absolute cooked Fran Kelly this morning on AM but to be fair, Kelly’s been off the boil for a while but the questions being thrown at Bowen were straight out of the PCA and HIA manifesto and easy to bat away. Bowen played it well….almost Opposition Leader like…

      • Sabra Lane sortof asks Steve Ciobo?? my question at 5min30sec
        http://iview.abc.net.au/programs/7-30/NC1605H031S00
        Ciobo says blah blah its not our policy. Thanks Steve
        Why Ciobo? ScoMo seems strangely media shy

        The douche-bag was pontificating the same horse shite on QANDA tonight, didn’t really answer any questions just obfuscate the questions and talk dribble. Pork pies…

    • FiftiesFibroShack

      The comments from Morrison and Cormann today made them look completely out of their depth, and Turnbull’s comments looked like that of a man that didn’t believe what he was saying – he was deflated. Contrast with the bearded-up Bowen handling this like a pro. Even Bill is doing well.

      • FiftiesFibroShack

        Doing well considering his past performance, it’s all relative. Who knows what he could accomplish with a ginger beard.

      • ‘Even Bill is doing well’. Yes, he absolutely nailed the narrative. A brilliantly executed strategy from Labor that would be more compelling if Bill’s whine was replaced with something as commanding as Malcolm’s baritone (or whatever it is)

  3. Diogenes the CynicMEMBER

    Scomo totally out of his depth in Treasury. Back to he shallow end of the pool mate.

    • Yep, he’s been shown up pretty quickly. Good policy move by Labor hasn’t helped of course, Bowen on Insiders yesterday was impressive.

  4. He’s a horror. By which I mean his position is completely horrible and illogical.

    Though gotta admit he’s good at his job, which first and foremost is to play politics and get voted in, he’s saying what most Aussies want to hear, or at least most would be Lib voters.

  5. That is disgusting :S just gross… if you’re going to fund a government sponsored pathway to wealth, at least channel the capital into something productive

  6. C’mon Treasurer Morrison. Saying that Negative Gearing is the ONLY way to get wealthy in this country is a little cute.
    We all know that getting elected to parliament and putting the snout into the trough is an even BETTER way to get wealthy.

  7. Horror Scum needs to keep the ponzi scheme afloat so he and his mates at the property council (along with his tarded brothers in Libland Canberra) can continue to speculate on increasing housing prices. Deserves a good kick in the nuts a straight left to his ugly mug. Might actually be a decent makeover

  8. “Well, for most middle-income people it is the one chance they’ve got to build some wealth.”

    face palm straya

    Where’s Duddles??????

    • I’ll be the Asian version. My jaw nearly hit the desk at the stupidity of that remark. Truly, if this passes the pub test then Australia deserves what it’s got coming. How can it be an acceptable state of affairs for people to need to take a house from a wannabe home owner and turn it into a tax shelter in order to build wealth. If the tax burden is too great for middle income earners to build wealth then CHANGE THE FUCKING TAX RATES.

    • +1
      Wealth creation at the expense of the tax payer & non-rorting population, and on a basic human need! Utterly disgusting.

    • Mining BoganMEMBER

      He’s playing to his audience. My fellow bogans wholeheartedly agree with this.

      Seriously, the fact that I’ve made enough for retirement without going down the specufestor road boggles their minds. They think it’s some sort of voodoo combined with luck. They have no comprehension of anything besides houses…well, now that mining shares are verboten.

      These are the folk that ScoMo is lying to. They need his truth because right now they’re on the endangered list.

      • Tassie TomMEMBER

        It’s a funny world. Do you remember the song “Who are you?” by TISM? Wankers and Yobbos. Wankers were clearly liberal voters, whereas Yobbos were clearly labor voters.

        But the Wankers and Yobbos have sort of merged to become the Bogan. And are Bogans Labor or Liberal heartland? Are they swinging voters? Probably. But what do they want? What tickles their fancy? What are the issues that will change their vote?

        He who figures out the Bogan will inherit the government.

    • This is delightful, Alby! I am pleased to see Australian politicians elected by Australians being as stupid and as greedy as I always said they were. It’s fantastic!

      On top of the refusal to consider any meaningful reform from the greedy rabble of mediocrities that Australians duly elected, Australia is sailing into a once-in-a-century perfect storm of commodities collapse and beggar-thy-neighbour international currency devaluation. You’re going to have to flog off a lot of farms to the clever Chinamen to pay for all those BMWs and Toyota Land Cruisers. Deputy PM Barnaby might eventually make some squeaking farting noises about that, but I’m pretty sure Obersturmbannfuhrer Morrison will fix him.

      I for one hope ScoMo wins the day and the rich oldies get what’s left of all the money, and house prices (and therefore the cost base) remains ludicrously high while your ability to compete with anyone on anything except red-dirt plunges to zero. As a nation, Australia absolutely deserves this. You asked for this, Australia, and now you’re going to get it! Ha ha ha ha ha!

  9. Call for his resignation. He is not acting in Australia’s interests but that of his former employers.

    • Hopefully coming elections will become his resignation. I seriously think that given GST is off the table, property specufestors benefits will become main topic of election campaign debates and undoubtedly for liberals it will be increasingly hard to support current NG and CGT status quo without losing seats. Either they surrender and follow ALP approach or their leaders end up in dustbin of history. I suppose Malcolm understands that more than ScoMo.

      • Tassie TomMEMBER

        ScoMo is the poster-boy of the LNP’s ultra-right. Their only hope against the moderate-right terror led by Micky T. Unfortunately for the ultra-right, their champion isn’t quite bright enough for his current job.

        Strategically speaking, if I was our prime minister I’d continue to give ScoMo enough rope to lynch himself. So far it’s working.

  10. It used to be that people got rich from doing their day-job. The more you learn, the better you get, the more you are paid.
    That they can’t do that now, and have to resort to gambling with borrowed money in a game to be paid for by the next generation, tells us that the skill set we given our people has failed.
    If, as is written, ” it is the one chance they’ve got to build some wealth” then what happens when that fails?
    Here’s how to make Australian wealthy, Scott – let them pay less for the cost of their homes, and keep the balance they don’t have to pay for them as their wealth!

    • No one ever got rich from doing their day job, at least not in the usual restricted sense of working for wages. Even those who built small businesses normally made their assets increase through investment, generally in property.

      • Sorry, this is not about wealth, this is about a basic need – shelter. I want to work hard and live in a place (like an adult) where I’m not subject to the vagaries of the job market or the whims and interference of a landlord to be out on the street! I thought this kind of private property ownership was the basis of liberal politics? Instead we have soviet style policy (politburo of banks and politicians), binding us to a failed state and eternal property servitude – for generations. This is so out of whack. They must let it fail or they have no ideology at all, just a power dynamic to stay in power at all costs!

    • Tassie TomMEMBER

      +1. And good use of the word “gambling”. I don’t know when that word lost its “b” and its “l” and became “gaming”.

  11. “…..the one chance they have to build wealth”……..Whoomp! There it is………. Labour should have a field day with that. Some rational policy and Australian politics finally gets interesting again.

    • Yep – combine this with competing super reforms and we’ve got an election on our hands. I said ages ago on this site that Bowen shouldn’t be dismissed lightly….he’s stepping up to the plate right on cue.

      • Labour should big this up instead of behaving like Lib/Nat lite and pissing around the edges. Given enough volume this subject could draw in a least one entire generation to politics with real tangible outcomes to great numbers of people.
        They need to point out too that at some point the current meme will fail, leaving nothing but debt.

  12. It’s great to hear Morrison say something so utterly stupid.

    In any healthy economy, the middle class have tons of different options for pursuing wealth. Morrison saying (accurately) that in today’s Australia, the only real option is housing specufestation, is a blatant admission of how utterly incompetent economic management has been…

    What a moron….*slow clap*.

  13. ALL the defences of NG are based on historical condition that no longer apply – elastic supply of urban land for housing. The defences of NG are, sickeningly, correct, IN the absence of land-rationing policies and the speculative metamorphosis of property markets that follows. Germany has much worse than “NG” in the incentivising of property investment, and it does not cause bubbles. Why? Because it is part of an overall policy package that actually incentivises the building of properties for renting out, and also avoids artificial scarcity values on urban fringes within regulatory boundaries.

    There is nothing inherently wrong with allowing the same individual to write off losses in one business against profits in another, for tax purposes. In fact it is immoral to disallow this. “Negative gearing” exists in all types of business, it is not a special concession, it is a universal norm – but only in urban land, is it being blamed for causing a speculative bubble. This is because urban land has been wrenched away from anything resembling a free market, and turned into an oligopolistic gougers paradise, which, had it occurred in land for growing wheat or rearing cattle, would have been blamed for the subsequent rent-seeking in the prices of commodities produced on that land. Who would be blaming the ability of wheat and cattle producers to write off losses should they occur, in those operations?

    For the record, I support removing NG as part of an “all of the above” addressing of the property bubble before it gets even bigger – targeted land taxes are needed too, and interest rate hikes. But I would restore NG when the essential reform – the ability to change land between uses as the market requires – has brought the property market to sanity again.

    • ““Negative gearing” exists in all types of business, it is not a special concession, it is a universal norm – but only in urban land, is it being blamed for causing a speculative bubble.”

      I’ll say it again and again and again, but you cannot deduct losses from any other business unless it has made a profit in 3 out of the last 5 years. So it’s rubbish to say that it’s not a special condition for property when you can perpetually lose money and claim a tax deduction for that loss.

      https://www.ato.gov.au/business/non-commercial-losses/eligibility/

      The profits test – the business had a profit for tax purposes in three out of the past five years (including the current year).

      • But the “profits test” applies to ANY of the businesses you are operating; it does not need to apply to “the business” for which you are trying to claim a loss as an offset. That isn’t a special provision for property, it is simply treating all businesses the same.

        If there is a special provision for property in some other legislation, so that there are no tests at all and any income at all can have the losses offset against it, then your point is correct; but I still stand by my point that this would not be a problem if not for the other distortions in property markets. It SHOULD merely be an incentive for provision of rental property and should keep rents lower than otherwise – which is how all the subsidies to landlords actually works in Germany. In which case, I have no objection to it.

        Likewise, I have no problem with high quality immigration and moderate population growth – again, there is no inherent reason that it should feed a property bubble, and that is a wretched excuse for xenophobia. In the past, it was much higher and it just grew scale economies. If anything, houses probably became cheaper. If immigration and population growth was inherently bad, the smaller the town, the more efficient the public cost of infrastructure provision and everything else should be – and this is absolutely not the case. In fact NZ should be one of the world’s most productive nations if it was efficient to have a small population rather than a larger one. The USA should be more efficient if it only had 100 million people. Europe should be more efficient if it only had 100 million people. This is nonsense. We start having the problems we are having because we have changed the politics of growth around the planning for it, and have gotten ourselves all sorts of toxic consequences. The economic rent being transferred is orders of magnitude greater than the cost of infrastructure under more enlightened policy settings with higher population growth in the past.

      • “But the “profits test” applies to ANY of the businesses you are operating; it does not need to apply to “the business” for which you are trying to claim a loss as an offset.”

        You absolutely cannot run a business at a continual loss and deduct it against your salaried income like you can with property.

        “To offset your business loss against other income, you and your business need to meet a number of conditions.” [Your business loss and other income are two separate things]

        “The profits test – the business had a profit for tax purposes in three out of the past five years (including the current year).” [The business that is separate from your other income as shown above must have had a tax profit in three out of five years]

      • OK, that makes it clear; property, in Australia, is being treated differently to other businesses under some circumstances – that is, indefinite-period loss offsetting against private salaried income is allowed?

        I would still have no problem with “negative gearing” included on property as a level playing field treatment of “all income types” if that was the case. On condition that the housing supply side of the market is not rigged. But I would hit the current bubble with all reforms including removal of NG. before settling down to a policy mixture that worked properly in the long term. Bubble-killing emergency measures would also include targeted land taxes, interest rate hikes, and abolition of restrictions on conversion of land between uses.

      • “that is, indefinite-period loss offsetting against private salaried income is allowed?”

        Yep. And it clearly shouldn’t be.

        “Bubble-killing emergency measures would also include targeted land taxes, interest rate hikes, and abolition of restrictions on conversion of land between uses.”

        I’m with you on that.

    • “Germany has much worse than “NG” in the incentivising of property investment, and it does not cause bubbles”.

      No they don’t. German subsidies are all directed at Tenants. Tenant subsidies don’t effect the asset price just affordability.

      “There is nothing inherently wrong with allowing the same individual to write off losses in one business against profits in another, for tax purposes”

      Yes there is. As AB said, non-commercial loss provisions prohibit non-commercial losses being deductible on revenue account. Housing is exempt because it’s not a business supposedly.

      ““Negative gearing” exists in all types of business, it is not a special concession, it is a universal norm”

      As above, negative gearing exists in no other “businesses”. Because businesses get caught up in the non-commercial loss provisions.

      “This is because urban land has been wrenched away from anything resembling a free market”

      It never was a free market because there is zero cost of production. It is a question of who captures the rents. The public or developers. Who would you prefer?

      • I don’t know where you are getting your facts about Germany from. Subsidies TO rental tenants are rare and exceptional: the main approach is for “the needy” to apply for a permit to occupy a rent-controlled unit built with State subsidies. Subsidies TO the landlord/developer/investor.

        https://www.justlanded.com/english/Germany/Germany-Guide/Housing-Rentals/Subsidized-rent

        Historical discussion here:

        https://www.justlanded.com/english/Germany/Germany-Guide/Housing-Rentals/Subsidized-rent

        In depth analysis here:

        http://www.europarl.europa.eu/workingpapers/soci/w14/text2_en.htm

        “…direct subsidies in the form of low interest loans as well as tax relief have been provided to owner occupiers, private landlords, and non-profit housing associations in order to encourage new construction and latterly rehabilitation. The direct subsidies were given to private landlords and housing associations on the condition that they agreed to operate the dwellings as ‘social housing, originally for 60 years but this was later cut to 30 years. In return for these subsidies, rented housing had to exceed a certain minimum standard (while owner occupied dwellings on which social housing subsidies had been received were not to exceed a certain maximum standard). In addition, tenancies were restricted to certain income groups and rents were regulated to below market levels.

        An important element of this strategy has been that the dwellings should be aimed at a broad spectrum of the population rather than just at the poor. This is one reason why social housing in western Germany has not suffered from the stigma which surrounds social housing in other EU countries such as the UK Another is that the dwellings were often built or rehabilitated to relatively high standards…”

        Your assertion that “German subsidies are all directed at tenants” is flat wrong.

        You are also flat wrong that tenant subsidies do not affect the asset price and actually make things more affordable for the tenant. In rigged housing markets with land supply racketeered, everything capitalises into higher urban land prices. Incomes, middle class welfare, subsidies to tenants, subsidies to home owners, infrastructure investments, low interest rates, “NG”, immigration… You, like the staunch establishment defenders of NG, have thinking stuck back in a different era when these things did not capitalise into land values because urban land supply was constantly being increased rapidly enough. The inability of people to see the systemic change, is often willful – due to either ideology or vested interest.

        NG DOES exist for all types of business; it merely has conditions to be met. I am arguing general principles. I accept that the situation with property in Australia is completely loose, but the fact that businesses generally qualify for NG, with conditions to be met, does NOT mean that NG does not exist other than in property.

        When you say “it never was a free market”, how do you explain decades of falling real urban land prices, stable median multiples of 3 as houses grew in size and quality, and sections became larger? Sounds like the free market working as it should, to me; it still works that way in dozens of cities (mostly in the USA) where median multiples have never even hit 4, ever. Reason being: ease of establishing property-taxable new subdivisions pretty much anywhere a developer can buy land.

        There might be an even more perfect representation of a free market in urban development, but the situation in median-multiple-3 cities is close enough, and so totally different from the regulatory-rigged racket that is the main alternative, that I would happily accept it as good enough.

        What on earth do you mean by “the rent is captured by either developers or the public”??? Developers do no capture rents other than by strategically acting as land-bankers, which is a different business – not “development” per se. Land-bankers and incumbent site owners capture rent, and mostly the development sector is the meat in the sandwich between them and the public consumers of housing. Margins on actual development work are far too thin given the exorbitant prices of the land embodied in the finished product, and this is a major reason that developers become an endangered species in these distorted markets.

        Economic rents in the “extractive” sense, do not exist in median-multiple 3 cities, housing in such cities has “consumer surplus” embodied in it. There are differential economic rents, representing local incomes, location advantage relative to the nearest lowest-cost land, and the concentration of amenities. Many US cities with highly dispersed amenities and employment, have extremely low and flat urban land rent curves, to the extent that even the most expensive land is less than 10 times more expensive than exurban rural land. Contrast this with the nonsense created by growth boundaries, where the boundary causes fringe land itself, to be inflated in value by a factor of as much as 700 times on the fringes of London.

    • Phil,
      Germany subsidises tenants not investors. This improves affordability it doesn’t effect the asset price.

      As AB has said housing is in a class of its own. It is exempt from the non commercial loss provisions because it’s not carrying on a business supposedly. The only actively managed, highly geared investment activity which isn’t carrying on a business in the country.

      • Excuse me, Germany subsidises actual landlords. What they do for the tenants, is “rent controls”. Rent controls normally destroy the rental market – Germany keeps landlords interested in spite of the rent controls, by granting major tax breaks.

        Subsidies given to tenants actually would help feed a bubble in property prices if the supply (of land) side was rigged. Everything feeds a bubble if that is the case. Most demand side subsidies and boosts would be beneficial otherwise. If you don’t rig the land side of the market, subsidies actually help renters / first home buyers. Low interest rates stimulate housing supply, not prices; and really do stimulate the economy. Population growth adds scale economies. Tax breaks to landlords incentivise rental housing provision in the absence of capital gains prospects.

        Rigging the land supply is like adding arsenic to a bread mix, and blaming the other factors in the property market, is like blaming the flour, eggs, milk and baking powder for the consequences of the arsenic. Sure, flour, eggs etc all get the odd bit of bad press anyway, but it is necessary to get things in the right proportion and stop making scapegoats out of the factors that “do good” when used in the time-honoured, traditional way. There was a time when adding land supply to urban economies was regarded as an essential role of government, and indeed necessary to “do the right thing by the younger generation” and allow for better housing for them than previous generations. Reversing this is what Edmund Burke aptly described as a breach of a cultural compact between generations.

      • The subsidies all end up with the tenant. If the rent controls and allowances were removed, the investor concessions wouldn’t be needed to induce supply.
        In other words if the rent subsidies and investor subsidies were removed, the investor would be in the same position (rents would be higher but required returns would also be higher) but the tenants would be worse off. This is different to NG.

  14. It just struck me that the Property Council logo (in the thumbnail) looks like it’s crowned with a penis.

    Very appropriate for that bunch of dickheads.

  15. Today's Empire Tomorrow's Ashes

    Things are getting grim.

    Bowen just needs to start slapping charts up on teh Twitter, use the numbers (x% of benefit accruing to Y% of taxpayers, and a debunk of the <80k households are accruing the most benefit) to show ScoMo up.

    In a rather Machiavellian thought, maybe MT recognises ScoMo as a threat (not in the brains dept) and is doing him over slowly by letting ScoMo hop up onto the spit roast himself as he douses himself in ever-increasing amounts of accelerant, ready for a deft flick of the match from MT.

    • Cunning [with a double-N] thought TETA esq..
      The old saying that “The opposition is in front of me, but the enemy is behind me”.

      • Today's Empire Tomorrow's Ashes

        I might be too cynical, or giving MT too much credit, but look at how it’s panning out.

        ScoMo floats the GST.
        Turnbull releases the treasury modelling showing how awful it is for lower income folks. ScoMo retreats.
        Liberals have talked around the edges about NG tinkering.
        Labor comes out with a policy.
        ScoMo lets the rentiers have at it, then comes out to bat, spewing such odious bile that I am shocked that half decent interviewers haven’t got him on the rack and pinion pulling him apart for such obvious dross and plain lies.
        Meanwhile, Magnificently Mellifluous Mal Manufactures Magically Malevolent Muteness, allowing ScoMo waaaay out onto an obviously rotten limb.

        It’s all too simple, perhaps too simple.

    • I was thinking that too. Clever way to deal with a potential rival. I thought Abbott tried that with MT with the NBN portfolio but got outplayed.

      • Today's Empire Tomorrow's Ashes

        …which only demonstrates Abbott’s complete lack of judgement, and/or poor advice.

        Putting an ITC-savvy thinker into a communications portfolio. After he demonstrated some clear headed thinking (whether you agree with the approach or not) on his blog. Brilliant move by Abbott. #Nnnnnnnot.

        It really has been an excellent display or politics recently.

    • That was always my thought in regard to putting Mr. Morrison into the role of treasurer. He would have to talk as he couldn’t stonewall the press like he did as the immigration minister. When someone is out of their depth the best thing to do is to get them to talk and all becomes clear, and the treasurer has a microphone near them almost as much as the Prime Minister. The question is, who can replace Mr. Morrison once he has finished hobbling himself?

  16. Here I was thinking work was the path to riches. But here it is from the Treasurer himself; the only way to become rich is to exploit the tax code at everyone else’s expense.

  17. He really needs to explain, very clearly, and specifically, how everyday mum-and-dads with an existing investment would be hurt by this proposal. And when he runs out of spin, those words need to pass his lips.

    Because without it, you’re all f**ked

  18. Terror Australis

    “Well, for most middle-income people it is the one chance they’ve got to build some wealth.”

    God forbid they would ever think of putting their money into productive investments.

    There has never been a more exciting time to be a productivity killing land speculator.

    • The proposed ALP rules apply to shares and other investments as well.

      Where is your line as to what is productive and what isn’t?

      • Terror Australis

        “The proposed ALP rules apply to shares and other investments as well. “

        That’s news to me.
        Do you have a link to support that?

      • http://www.alp.org.au/negativegearing

        “From 1 July 2017 losses from new investments in shares and existing properties can still be used to offset investment income tax liabilities. These losses can also continue to be carried forward to offset the final capital gain on the investment.”

      • First if all, shares on the secondary market is not a productive investment. Second, banks rarely lend enough for negative gearing to occur.

      • Re “first” – A higher share price encourages companies to raise capital.

        Re “second” – not so – it depends on the dividend yield as much as the LVR.

  19. What Morrison says is true to some extent, at least for the majority category of investors who are on sub $100k incomes and if the property market continues to rise. If…

    Of course Bowen will still let this demographic invest, restricted to new builds, which in theory should increase supply and boost construction. In theory…

    • You’re coming dangerously close to sounding like you vaguely approve of a Labor policy…even if you still feel compelled to defend Morrison’s comments.

      • I’m not a fan of NG. A somewhat ridiculous concept if you ask me, why is it not quarantined to investment earnings but permitted unreservedly across all income. But we have it, a lot of mums n dads utilise it, in a rising property market may result in handsome profits for some, in a falling property market, mmmmn. My gut feel is a restriction to new build will not result in all the glory Labor forecasts.

      • “My gut feel is a restriction to new build will not result in all the glory Labor forecasts.”

        Perhaps not but it’s a rort that should be done away with regardless.

    • Yes, in theory. In reality, scrapping NG will expose many myths including undersupply and affordability. Construction will tank until supply meet true demand of owner/occupiers rather than speculative demand of investors.

      I am hoping the younger generations can read between the lines. If they vote Labor/Greens into power I will be stocking up on the popcorn.

  20. TailorTrashMEMBER

    “…..the one chance they have to build wealth” ……………..the way Australia is going its is ” the only way “to build “wealth” ……..except it’s not wealth …….it’s only wealth if your house is worth more that others …..when every house is worth a million who is wealty ………….well I guess those that have houses relative to those who do not …………but for every Australian that sells out and becomes ” wealthy ” an other Australian takes on a mountain of debt……….

    Schmo is a fool and is looking more so every day he persists with these bullshit arguments ……….I have not seen a treasurer flail around so much since John Kerrin
    found he could not explain what gross domestic product meant …………a week later he was no longer treasurer ………surely Malcolm will be embarrased by this joke ……..I’m not historically an ALP voter ……….but the clear logic of their position on this is beautiful in its simplicity …..this “housing market” in Australia needs to be put to the torch !!!!……..

    • No you are wrong… you are wealthy and your tenents are not becauuse they have been locked out and forced to pay ever increasing percentage of their scares incomes to the wealthy.

      Leads to real wealth (comparative) and real poverty or poverty to all if you wait long enough ….

    • Well said. All boats rise & fall with the tide, but when the starting point is the peak of a tsunami new players cannot make a start.

  21. Can any one shed light on his current allegiance to the property council? His stint there ended more than 20 years ago. He doesn’t seem like the type to just be loyal to some old work chums.

    Specifically, in what way does he depend on the support of the Australian Property Council today?

  22. Forrest GumpMEMBER

    The implementation of negative gearing and the CGT discount policies were to encourage the construction of new homes and provide more rentals. That is the argument.

    The policy does not achieve that objective and actually prevents it. These policies are crippling our banking system.

    Every other argument added, subtracted, yelled and threatened in this debate is simply hot air

    • Straw man – NG was never about encouraging investment in new housing. It applies to all assets.

  23. Tassie TomMEMBER

    “Well, for most middle-income people it is the one chance they’ve got to build some wealth….

    ….if house prices go up, or to lose the lot if house prices go down.”

  24. proofreadersMEMBER

    “Well, for most middle-income people it is the one chance they’ve got to build some wealth.”

    So, what ScoMo is telling us is that superannuation and hard yakka are a waste of time.

    Why doesn’t he move on and go and help NATO stop the boats in the Mediterranean – that would be a worthwhile contribution.

    • “Well, for most middle-income people it is the one chance they’ve got to build some wealth.”

      So, what ScoMo is telling us is that superannuation and hard yakka are a waste of time.

      Yeah, exactly on message with Prime Minister Turnbull. Oh, hang on… I don’t think Turnbull was talking about increasingly bloated house prices when he introduced his innovation package. And “digital disruption” doesn’t refer to scouting our new IP opportunities on realestate.com.au and domain.com.au either.

      We have a PM and Treasurer singing from completely different songbooks. According to good ol’ Arthur Sinodinis himself one of the worst sins a government can commit is sending out conflicting messages.

      The Libs are almost a shoo in for this election but if they don’t sort themselves out they could find themselves fighting for their lives in the next term.

  25. We shouldn’t beat politicians up too much (publicly) for expressing what they really believe. We need them to be more open and honest. We need them to feel free to make mistake and tell us what they really think from time to time! It’s the only way we get a true insight into what these people really believe. I’m so sick of layer upon layers of spin and bs.

  26. So all those hard working people who have their own business or are thinking about starting a business should forget it according to Scomo – buy a property or two instead. What a joker

      • proofreadersMEMBER

        You are probably too young to remember, but there is an old saying: “penny wise, pound foolish”. Plus the $1,000 is supposedly referring to how worse off the average future IP “punter” would be under Labor’s policy.

        The subject pair sound like they have all the bases covered, as the article says their tax concession offsets their personal tax liabilities (nominally, probably about $25,000 each on their respective $100,000 salaries) and gives them a healthy tax return?

        While I have your undivided attention, that Grattan Institute guy John Daley irks me sometimes. He goes on and on about negative gearing (for ScoMo’s aspirational middle class) and superannuation contribution tax concessions being among the most inequitable concessions in the tax system.

        To my recollection, I can’t recall him having had a go (at least not out loudly) at one of Johnny Howard’s/Peter Costello’s classic tax system enhancements – the refund of excess franking credits.

        This is the gift that keeps on giving big time for at the very least SMSFs (and there are a few of those) who have members in full pension phase. For those lucky souls (members), for whom no tax on income in the fund is payable, there is a full cash refund from that safe credit risk (the ATO) of excess (read all) franking credits on any franked dividend income received by the SMSF attributable to those relevant members. So, as a simple example, a company paying the franked dividend has paid 30% tax on the profit from which the fully franked dividend is declared and paid that tax to the ATO. Then, in due course (shame about the bit of a wait), the example SMSF gets a refund of that tax from the ATO for the SMSF’s lucky attributable members. Bottom line – the tax paid by the profit-making company is refunded to the non-tax paying SMSF members, such that no tax will in the final analysis, have been paid on any of the profit from which the company declared the franked dividend. Nice work if you can get it And all government sanctioned. LOL.

      • No sympathy. If your going to a mass that much debt with little to show for it beyond a few houses then too fucking bad.

  27. The problem with NG and CGT reduction is that it leads to the inflation of housing prices, yet the inflation in prices is not captured by the ABS CPI figures properly if at all, the same rubbery spin the RBA bases it’s monetary policies upon. As a result you have a major asset / product/ shelter/ human need, out of control price wise, with no brakes such as interest rates to keep the lid on things. Rubbery by design indeed. The solution therefore if these clowns are going to base their policies off rubbery figures, remove/ reduce the stimuli (NG and CGT discount). Alternatively, get the figures right and put interest rates where they belong.

  28. Labor or liberal, NG or not, property prices have peaked and are set for a bust. No bubble lasts forever, even if Glenn Stevens disagrees. Whilst I feel for the mums and dads. Let’s not forget they are impoverishing their own kids.

  29. Ha ha ha ha ha ha ha! VINDICATED times a bazillion! I’m thinking ScoMo is more the Australian everyman than Testostertone. Ha ha ha ha ha!

  30. I am 35, haven’t voted for 15 years (no valid reason as no difference in policy stance).
    I will vote Labor, but am skeptical. If Libs introduce LVT, they will get my vote, but still skeptical.
    They (laberals) just do whateva China do(/tell them to do) usually. Maybe ‘Merica is tired of that, now they tell us what to do (this is better btw).

    Whatever the outcome, surely it has little impact on our situation, largely governed by outside stakeholders. It seems the Fed’s gonna raise to 2% this year. This is a mercantile war between US & China and the world is in the middle. Sorry for rant.

  31. If housing wasn’t so expensive, my wage alone could help me build wealth……wealth I have earned!

  32. “…it privileges a single asset class”

    What about margin lending to purchase; shares, fixed income, ETFs etc? Similar negative gearing benefits apply.