Labor shadow treasurer, Chris Bowen, has cleverly used the Productivity Commission’s (PC) Draft Report into Competition in the Australian Financial System to attack the Turnbull Government’s unwavering opposition to Labor’s proposed negative gearing reforms. From The AFR:
The Productivity Commission report was scathing of dwindling competition in the financial services sector, caused by policies which focused on stability.
It said macroprudential policy, designed to curb investor borrowing, had allowed banks to lift interest rates and reap a $1 billion profit “windfall”.
This mean about $500 million in income tax was returned to investors as a deduction via negative gearing.
Labor used the revelation to demand the government follow its lead and curb future negative gearing to apply to new properties only.
“Leaving APRA to do all the heavy lifting, not only has that seen a windfall for the banks…that has been subsidised by the taxpayer,” Mr Bowen said.
“Enough is enough.”
Mr Turnbull described Labor’s policy proposal as “ugly, unfair and discriminatory ” while Treasurer Scott Morrison said he did not accept the commission’s analysis.
The obvious question that springs to mind when reading Scott Morrison’s response is just whose analysis will he accept?
Morrison won’t accept Treasury’s advice that Labor’s policy to restrict negative gearing to new builds and halve the capital gains tax (CGT) discount would have a “relatively modest downward impact on property prices”, would shift the “composition of ownership… away from domestic investors”, would save the Budget some $3.4 to $3.9 billion per year, and that “negative gearing benefits high income families”.
He won’t accept last month’s study prepared on behalf of the Reserve Bank of Australia (RBA), which showed that axing negative gearing would significantly boost Australia’s home ownership rate and would raise societal welfare by far more than the Coalition’s policy to cut the company tax rate.
And Morrison won’t accept the PC’s analysis here.
MB often refers to Treasurer Scott Morrison as “Australia’s real estate treasurer” because of his close links with the Property Council of Australia (PCA), where he served as National Manager of Policy and Research between 1989 and 1995.
We also frequently deride the Turnbull Government for its staunch defence of negative gearing, and its blatant lies surrounding the issue, as well as its support of Australia’s mass immigration ‘Big Australia’ policy, which is designed in part to keep the property industry well fed with extra demand.
In the case of Scott Morrison’s staunch defence of negative gearing, Upton Sinclair’s famous quote comes to mind:
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”
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