Murdoch champions BIS’ negative gearing drivel

By Leith van Onselen

Is there a more politically one-eyed newspaper in the country than The Australian?

Headlining the paper today is a one-eyed column by Sid Maher trying to attack shadow Treasurer, Chris Bowen, for proceeded with Labor’s negative gearing and capital gains tax policy supposedly against the advice of BIS Shrapnel modelling showing that it could lower house prices and push-up rents:

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Labor proceeded with its controversial policy of limiting negative gearing to new homes despite opposition Treasury spokesman Chris Bowen being warned last July that such a move would push down house prices and hit economic growth.

The Australian has confirmed that accounting and financial advice firm Bongiorno & Partners last year commissioned BIS Shrapnel to conduct an analysis of the effect of limiting negative gearing to new houses and communicated key findings to Mr Bowen’s staff and then Labor ­financial services spokesman Bernie Ripoll.

BIS Shrapnel’s report — which found limiting negative gearing to new houses could lead to lower house prices, rent rises of up to 10 per cent, cost the budget more than it saved and cause unemployment to rise — sparked a political furore when it was publicly released last month.

The identity of the firm that commissioned the report was not released at the time, prompting Mr Bowen to claim it was by “an anonymous vested interest”.

In attacking the document, Labor did not reveal it had received the advice last year from Bongiorno & Partners while it was developing its negative gearing policy…

The BIS Shrapnel report predicted higher rents would push 70,000 households into “rental stress’’, where they are paying out more than 30 per cent of their incomes on housing costs…

The obvious question that arises out of this – but is not asked by Sid Maher – is why on earth would Labor heed the report’s advice?

BIS Shrapnel’s report is one of the worst pieces of analysis that I have ever read, chock full of erroneous assumptions and completely lacking in logic. It was debunked not just on this site, but also by a conga-line of respected economists. These include:

Saul Eslake:

The BIS Shrapnel report (and a recent opinion piece by its author on these pages) asserts that rents will rise significantly and property values will fall if changes to negative gearing are made. There are serious issues with the logic of these assertions. They are internally inconsistent, fly in the face of evidence, and contradict basic economic principles…

The scare campaign against changes to negative gearing ignores key facts about the housing market, ignores the compelling available evidence, and is logically flawed.

The Grattan Institute:

The convoluted logic of the report, its manifestly ridiculous economic predictions and the fact that the consulting firm in question refuses to disclose who commissioned it were not enough to stop the report being the lead story of at least one national newspaper.

The report’s claims must not go unchallenged. But nor should the fact that a report that would flunk any first year economics course has been allowed a serious voice in the public debate…

But the real concern of this episode goes beyond the claims of this nonsense-on-stilts report. The rise of consultancies churning out “independent” reports to advance the causes of vested interests has been well documented. What is alarming is the prominence these reports receive in public debate. No matter how outlandish their claims or how obscure their provenance, the media report them and politicians quote them. The public, confused or frightened by the numbers, forms the view that policy change is simply too risky. That’s a pretty cheap way of buying policy outcomes, especially ones that help special interests but go against the long-term interests of the country.

The Australia Institute:

The Australia Institute has called for a code of conduct for economic modelling in the wake of flawed and ridiculous BIS Shrapnel economic modelling of negative gearing…

A code would require key assumptions to be revealed, context and comparison to be provided, and the identification of who, if anyone, commissioned the work.

“Modelling results are being used to make important policy decisions that have the potential to effect all Australians,” Executive Director of The Australia Institute, Ben Oquist said.

“Today we’ve seen modelling driven into the centre of the tax reform debate by an unknown vested interest. While the startling allegations in the BIS Shrapnel report have been quickly torn apart by many economists, it has nonetheless misinformed and mongered fear among the public.

“We don’t know who this was produced for, but even more importantly, it’s not even clear how the key assumptions were selected.

“Everyone knows that when it comes to modelling; garbage in, garbage out.

Maher also conveniently fails to mention that BIS Shrapnel didn’t even model Labor’s policy, and that its chosen assumptions were different.

In mid-March, Media Watch ran a segment slamming the media’s treatment of the BIS Shrapnel modelling. But instead of letting the modelling die, as it should, Sid Maher has used it for what is clearly a partisan attack on Labor’s Chris Bowen.

Obviously The Australian has entered election mode.

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Comments

  1. ceteris paribus

    No need to evaluate stories in The Australian. For a story to appear under the masthead itself is evaluation enough.

  2. Is there a more politically one-eyed newspaper in the country than The Australian?

    No, there isn’t. ???

    • The Daily Telegraph.

      Duh.

      Though to be fair it looks more and more like Viz magazine everyday.

      • You guys are talking about regional rags. The Australian is the only national newspaper whose best function is to be stuck on a nail in an outdoor dunny.

      • I’m just in Gloria Jeans and the Daily Telegraph is running the exact same storey about NG, by Simon Benson!

        And the opporsition was told removing NG would be a disaster. Says the

      • Please do not compare Viz with The Australian. Viz is vastly more intellectual, informative and profitable; all the thing The Australian is not.

  3. Am I only only one that misses the way 3d1k would come here and unashamedly swoon over the Australian and Sky News? Others might celebrate his/her absence, but 3d1k was so much fun to hate..

  4. I look forward to the election being decided on whether to kill off the golden egg laying velociraptor! You certainly learn who the sociopaths are.

  5. Sid Maher FFS, that giant of economic discourse
    I remember Sid when he was a dopey drunken sub-editor at the CourierMail.
    I can’t imagine another 20yrs of boozy lunches on Rupert’s coin have made him any sharper
    Kudos to Shorten and Bowen for taking on the scaremongering FIRE behemoth
    I fear it will kill them but better to go down fighting
    The choice is clear
    Bring on the election

    • “I fear it will kill them but better to go down fighting”

      Hopefully the result will be good enough that others will feel emboldened to repeat similar risks in the future. I mean who would have thought Labor would have the audacity to take significant negative gearing changes to this election? For the first time in 10 years I may actually give Labor my first preference in the house of reps. Not that it matters, for some reason people love Greg Hunt here.

  6. Bowen’s beard has obviously set the Labor party on fire. It’s the best thing to happen to Australian politics in the last ten years. We need to get more politicians growing beards, getting in touch with their manly sides and actually doing things like producing good public policy.

    • reusachtigeMEMBER

      Personally, I think a beard is a sign of laziness! A real man trims his facial hair to create artistic charactures of himself.

      • Today's Empire Tomorrow's Ashes

        Hi pot, what with your twirly mustachioed visage!

        Bowen is great – Brissendon didn’t really pursue the timing on AM this morning but Bowen made it clear it was all a lot of codswallop.

        Future leader, right there.

    • I like you, because you represent the incarnation/embodiment of all that is great about real estate investment and the prevailing attitudes that go with it in this country. Especially the “Let them eat cake”, way in which you delivery your commentaries.