On the eve of the election campaign, Labor’s numbers man, Chris Bowen, has developed a problem with negative numbers — negative gearing numbers that is.
Labor’s Treasury spokesman has dramatically changed the public presentation of the key figures for one of Bill Shorten’s critical revenue-raising measures, based on changes to negative gearing and capital gains concessions.
Bowen is putting out confusing and contradictory figures and is unable or unwilling to say how these new figures affect Labor’s revenue forecasts for the next 10 years.
For almost four years, Bowen has been arguing in favour of Labor’s changes to tax breaks for negative gearing and capital gains aimed at raising $34 billion over 10 years on the basis that only 7 per cent of investors bought “new houses” and 93 per cent invested in existing property.
Apart from cutting the negative gearing tax concessions for the purchase of existing flats and houses from January next year to raise significant revenue to pay for many of Labor’s promises — including the $2.3bn biggest change in Medicare since it started — Bowen also says it is designed to expand investment in new housing to give first-home buyers a greater chance to buy their own home.
Yesterday the long-quoted “7 per cent” became an economic orphan. Bowen didn’t repeat or explain it. The Parliamentary Budget Office hasn’t used it. The Australian Bureau of Statistics disowned it and the Grattan Institute denied ownership.
Instead, in a media statement — and at the National Press Club — Bowen attacked the media and “self-interested” building groups and revealed the PBO had actually used a figure three times higher — 22 per cent for the first year of operation and “rising over time”.
He also quoted yet another PBO figure of 12 per cent for investors putting money into new dwellings, which was the PBO’s initial calculation.
Even if the various numbers are explicable, they are confusing. And Bowen is still refusing to indicate what impact the various numbers have on the long-term revenue raised.
In 2016, he faced his most humiliating moment as a politician when he had to admit Labor had a $16bn shortfall in the four-year budget estimates compared with the Coalition, and you had to wait for 10 years to be “better off” under Labor.
Bowen has done well on championing strong policy and arguing for equity and has benefited from not facing consistent grilling from the government on his negative gearing policy.
Well, the heat’s on. And he needs to clarify Labor’s position as soon as possible and demonstrate that outdated figures don’t have an impact on the $34bn in revenue Labor is relying on in every spending announcement by “closing tax loopholes used by the top end”.
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