Peta Credlin: Scrapping negative gearing to appease Greens is politically suicidal for Labor
Given that more taxes on landlords will make the rental crisis worse, not better, why is Labor dabbling with negative gearing again? Short answer, the Greens, writes Peta Credlin.
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There is politically stupid and then there’s politically suicidal. Politically stupid was the Prime Minister breaking his promise not to scrap the Stage 3 tax cuts because, even though only higher income earners were hit, it said to everyone that he can’t be trusted.
And politically suicidal is Labor breaking its promise not to scrap negative gearing because it’s another broken promise and, this time, it’s average income earners hit hardest, the sort of people Labor needs to stay in office.
What is striking is the way news of this broken promise has seeped out. About a fortnight ago, perhaps with some inkling of backroom moves, the ABC grilled the PM about possible changes, only to get an evasive response. Then, last week, headlines confirmed that Treasury was in fact modelling extensive changes. Both the PM and the Treasurer obfuscated, saying that officials routinely canvas various policy options – except that they don’t, especially ones that the government has ruled out, unless they’ve specifically been told that they might be back in.
After a couple of days being hammered about economic issues that he (yet again) wasn’t across, the PM ended up just referring journalists back to the Treasurer, who conveniently had dashed off to Beijing. Until eventually, on Friday, Jim Chalmers was forced to fess up that Treasury was modelling changes to negative gearing at his personal request.
Yet again, the PM has been caught out not telling the truth: With his initial claim, that neither he nor the Treasurer had asked for the modelling; contradicted by the Treasurer’s admission, that this was precisely what he had done.
What is it with this mob and telling the truth?
Clearly Labor doesn’t understand basic housing economics. More than 90 per cent of all rental properties in Australia are made available via the private market, by landlords who buy properties to lease to tenants in the hope that the property will generate extra income. It’s not Australia’s rich who own these rental properties – the rich have trusts, shares and complicated funds. The vast majority of 2.2 million Australians who own a rental property are teachers, nurses, tradies and other middle-income people who’ve saved their money to invest in an asset that they can understand and manage to help fund their retirement; and 71 per cent own just one property.
About half of them, about 1.1 million, claimed a negative gearing tax deduction last year because, and this is what “negative gearing” means, their expenses on interest and other property outgoings exceeded the rental income they got from their tenants. What’s more, 65 per cent of those claiming a deduction had a taxable income of $120,000 or less.
As we head into the election campaign, Labor is under growing pressure from the Greens and the Greens hate two things – private property ownership and people working hard to get ahead. They want to see negative gearing scrapped as a way to increase housing supply.
But experts argue that’s nonsense, because it’s economics 101 that taxing something makes it more expensive and reduces supply. Indeed, Melbourne Uni research reported rents would actually go up around 2.5 per cent.
As well, ending negative gearing for rental properties and reducing the Capital Gains Tax concession would not be “closing a loophole” or “ending an anomaly” because business expenses are always deductible against income and all asset classes should be treated the same. It would be a sector-specific tax increase that would make it less economic to invest in rental property.
The inevitable result would be fewer properties available to tenants and higher rents. This is why the last time Labor tried to end negative gearing, under Paul Keating in the mid-1980s, it was swiftly reversed.
Given that more taxes on landlords will make the rental crisis worse, not better, plus would risk the sort of scare campaign that sunk Bill Shorten’s election bid in 2019, the real puzzle is why Labor is dabbling here again. Given that higher taxes on rental properties is both bad economics and bad politics, other than with Greens voters, who hate capitalism and resent anyone who has more than them, the only plausible explanation is that Labor wants these changes ready for negotiations with the Greens in the event of a hung parliament after the election.
That’s the real significance of all that’s emerged. Labor’s hard heads have decided that the government can’t win in its own right and are preparing a range of options to keep themselves in office with Greens support, and to justify them to the public by saying they had no choice.
On top of former union supremo Bill Kelty’s declaration that the Albanese government was “mired in mediocrity”, and former NSW Labor treasurer Michael Costa’s verdict that the Albanese government has “failed”, and that it was ‘a Frankenstein government of Whitlam and Rudd’, came this devastating indictment from the ultimate Labor insider, Cameron Milner, a former Queensland state Labor secretary, Shorten chief-of- staff, and Chalmers confidante. Writing in The Nightly, he said that: “Federal Labor is in a death spiral of its own making … under Albanese, interest rates are up, electricity prices way up, and real wages down. We have a per capita recession and only a flood of migrants has saved us from headlines saying we are in national recession … Whether it’s tone-deaf actions like endless flying on Toto One or seeing Taylor Swift and Katy Perry in the same weekend or listing his investment property for a huge profit in the midst of a housing crisis, Albanese has shown poor or no judgment”.
And this: “Albanese criticises the extreme Greens but his only viable plan to remain PM will see him govern with the extreme Greens”.
I doubt that the Labor caucus will take Milner’s advice and blast the PM out of office. Still, the fact that a palace coup is even being talked about publicly shows how much trouble the government is in.
LABOR STILL TRYING TO QUIETLY ADD INDIGENOUS VOICE AFTER WE SAID NO
While Labor governments around the country are still establishing separate Indigenous “voices”, exploring treaties and rewriting our history as a story of shame – as if last year’s rejection of the Uluru agenda had never happened – at least some local councils have got the message.
Last week, Unley council in South Australia and Rockingham council in Western Australia overturned earlier decisions to move their citizenship events away from January 26 and will now hold celebrations on Australia Day. Both councils conducted surveys, and in both cases more than 60 per cent of respondents wanted events kept on January 26.
So far, officialdom has mostly not let the Voice’s smashing defeat interfere with their separatist agenda. But the backlash is building against being welcomed to “country” at sporting events, civic ceremonies, and every time a plane lands, given that people can hardly be welcomed to what’s already theirs, and voters overwhelmingly said NO to having two classes of citizen based on ancestry.
Even the Minns Labor government in NSW, the country’s most sensible, last week appointed three Indigenous commissioners to work out how best to create a state Indigenous treaty process – as if a state can have a treaty with its own people.
At least the commissioners will ask “whether Indigenous communities even want a treaty”, but as we know, ‘treaty’ is almost always followed by ‘reparations’ and I would be surprised if people rule out more millions.
Of all the reasons to kick out the Albanese government at the next election, not listening to us on the Voice, and the reasons why we rejected it, is high up.
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Originally published as Peta Credlin: Scrapping negative gearing to appease Greens is politically suicidal for Labor
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