The ABC, also known as the media wing on of the Greens-ALP coalition, reported yesterday that Labor pounces on Scott Morrison’s negative gearing ‘lie’ after release of secret briefing documents.
According to the insightful analysis of the ABC:
The previously confidential advice to Treasurer Scott Morrison from his own department said the Opposition’s plan might cause “some downward pressure” and could have “a relatively modest downward impact” on prices.
Here is the actual document from which the ABC bases its reporting. This is a single document of presumably many produced by the Treasury on its analysis of negative gearing and capital gains tax. Perhaps 60% of the contents of this document has been redacted, but there is no place for doubt, modesty or uncertainty when the ABC is criticizing a Liberal National Government.
According to this Treasury advice, Labor’s proposed policy would generate $3.4 to $3.9 billion of additional tax revenue. Or in Swan-speak, $3.4 to $3.9 billion of “saves”. The Commonwealth collected approximately $370 billion (yes billion!) in tax revenue in 2015-2016, so this increase in tax (or Swanny-Saves) would equate to an approximately 1% increase in tax. Not a drop in the ocean.
Changing circumstances are also no barrier to the ABC when criticising the government. Treasury’s advice was from early 2016 and yet the state of the property market in early 2018 must be ignored so as to support the narrative. But here is the rub. According to Treasury’s advice, when it comes to existing residential investment property:
Overall, price changes are likely to be small, though the composition of ownership may shift away from domestic investors.
So, for a policy that was designed to improve housing affordability , what it actually is expected to achieve is a significant increase in tax revenue and an increase in foreign investors.
But that’s not the story for the ABC.
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