Bowen fluffs the numbers. Again.

Recall my recent comments about ALP soon-to-be-Treasurer Chris Bowen:

Everyone speaks very highly of Chris Bowen and I’m sure he means well and is a nice guy and all. But there is a track record here. This is the man who brought us FuelWatch, GroceryWatch, and the changes to taxation of employee share schemes – eventually having to admit that there were two instances where rorting had occurred.

Well he has been caught out again.

Mr Bowen, Labor’s chief economic salesman, has repeatedly referred to ABS figures purportedly showing that negative gearing has failed to promote construction in new housing and create jobs.

“The most recent Australian Bureau of Statistics data shows that 93 per cent of new investment loans go to people purchasing ­existing housing stock,” Mr Bowen said as recently as January. “This means that the vast bulk of investment does not increase supply or boost jobs.

“All it does is increase demand and the price of the existing homes, allowing investors to use tax subsidies to outbid owner-occupiers and first-home buyers.”

But ABS financial statistics analyst Tony Mitchell said the agency did not collate the figures Mr Bowen had been referring to since 2016.

“If you wanted to have those numbers you wouldn’t be able to get them from our statistics because we don’t collect them,” Mr Mitchell told The Australian.

Get that?

… the agency did not collate the figures Mr Bowen had been referring to since 2016.

Wow. Pretty damning.

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27 Responses to Bowen fluffs the numbers. Again.

  1. Nob

    Pretty damning

    In whose eyes?

    Who is even taking notice, apart from a few people who wouldn’t vote for him anyway?

  2. RobK

    “The most recent Australian Bureau of Statistics data shows that 93 per cent of new investment loans go to people purchasing ­existing housing stock,” 
    Even if it were so, a significant portion is purchased for redevelopment/ infill.

  3. mh

    Bowen does say “ the most recent”. That happens to be 2016.

    It’s Labor. No one expects them to be good economic managers anyway.

  4. Peter O'Brien

    Not quite to Sinc’s point but just as a matter of interest, during our working life, my wife and I acquired 4 investment properties. They were all new – 3 of them we built ourselves

  5. zyconoclast

    Bowen fluffs the numbers

    I don’t normally engage in derogatory comments about others on the blog but is this headline suggesting fluffing in the p0rn0graphic sense and the contributor numbers?

  6. Ziff

    Sinc – you’re a smart guy. But really? Public servants wouldn’t go off the record like this without being cognisant of the severe penalties for doing so. Doesn’t sound like he’s really in the ABS does it?

  7. Q

    Who care, NG stays on new constructions, it doesnt matter if it s 7% or 30%.

    I doubt he is far off, I dont know any investor buying OTP for IP, it never makes sense

  8. Ƶĩppʯ (ȊꞪꞨV)

    Everyone speaks very highly of Chris Bowen

    Seems dumber even than Clueless Swan.

  9. Petros

    So seven percent goes to new housing stock plus the redevelopment portion on top of that as RobK says above? Seems about right to me. What is he expecting? Fifty percent for new builds??? What is our population increase?

  10. The Fifth Bike Rider of the Apocalypse

    Bowen as Treasurer will be up there with Labor’s other great Treasurers like um, er, well, er Wayne Swan for one!

  11. Bruce of Newcastle

    “All it does is increase demand and the price of the existing homes, allowing investors to use tax subsidies to outbid owner-occupiers and first-home buyers.”

    That is breathtakingly nuts.

    Investors buy existing houses so that they can rent them out. They will only buy an asset if the ROI makes sense compared with the capital they paid. If there isn’t a return they aren’t going to buy.

    The reason there are so many people investing in housing is there are so many renters. That is due to several reasons. One is the cost of housing, so those first home buyers are renting while saving up for a deposit. Another is the massive legal immigration flows this last decade. All those people need houses and the rate of new stock build is pathetic due to government failings. Then third is the overseas investment coming from China – who may leave the house unoccupied. That is something governments have caught onto – whether it should be regulated is a tricky question.

    So in all of this by preventing investment buying of existing stock he is going to (a) cause rents to rise so that ROI can match the effective new increased capex that investors have to pay and (b) turn existing rental stock into crappy tenements since the investors won’t be able to sell, and won’t have an incentive to maintain them.

    Well done Chris. The one class of people who is most hurt by this policy are the poor renters. You know: the people you ALP guys like to say you care for.

  12. Ƶĩppʯ (ȊꞪꞨV)

    Seems dumber even than Clueless Swan.

    There’s a streak of nastiness about Bowen, the hate for prosperity runs deep in this one.

  13. Woolfe

    Mr Mitchell will be looking for a new job come the Shortaggedon

  14. Bruce of Newcastle

    Further to my comment here are two graphs:

    ABS net migration

    ABS house price index (via Trading Economics)

    The net migration graph shows over two million people have permanently come to Australia in the last decade. That’s a lot of housing demand.

    The house price index is especially interesting. It shows the actual average house price change in Australia has been lower than the inflation rate. As Trading Economics says at the link I gave:

    Housing Index in Australia averaged 1.55 percent from 2002 until 2018

    Now I can’t tell whether the ABC RPPI is corrected for CPI or not, but even if it has a capital appreciation of 1.55% over 16 years does not strike me as excessive…

  15. RobK

     93 per cent of new investment loans go to people purchasing ­existing housing stock,”
    Are there any figures on how many people discharge a loan and establish a new one when they move?

  16. Percy Popinjay

    Bonehead is a disgraceful embarrassing arrogant mediocrity who’s too stupid to even be the host of an FTA commercial channel’s breakfast show.

    What the hell are these morons doing blighting public life and why the hell do let them keep getting away with it?

  17. Dr Fred Lenin

    Comrade bowen can get tuition from comrade swannie who learned economics as treasurer of the South Queensland Technical School Teachers Union ,where he was used to handling hundreds of dollars annually,a fine grounding for treasurer of Australia.

  18. Percy Popinjay

    Housing Index in Australia averaged 1.55 percent from 2002 until 2018

    If the index is averaged, it includes a wide range of housing markets and residence types, many of which would have seen zero (or negative) price change in that time. Generally speaking, well located houses in Sydney and Melbourne, not so much. Price changes would also reflect the quality of the housing stock – there is no doubt that shoddily constructed oversupplied hideously expensive to own units (or existence pods, as I prefer to call them) would have taken a massive hit, especially over the last two years. Again, this would drag down the average – and having looked at the graph, that certainly seems to be the case.

    Anyway, I wouldn’t like to be a renter in Sydney or Melbourne any time soon.

  19. John64

    Don’t forget that included in Turtlehead’s impressive CV is the honour of being the most incompetent Immigration and Border Control Minister in Australia’s history.

    (In fairness he only shares this accolade with Tony Burka in a dead heat.)

  20. Robbo

    Misleading, incompetent and untruthful. Does anybody seriously expect anything else from a Labor MP?

  21. Dr Faustus

    Bowen does say “ the most recent”. That happens to be 2016.

    Indeed. Just another hack politician using careful language to reform truth.
    What a turd. Ho Hum.

    “…Australian Bureau of Statistics data shows that 93 per cent of new investment loans go to people purchasing ­existing housing stock,” Mr Bowen said as recently as January. “This means that the vast bulk of investment does not increase supply or boost jobs.”

    More of a concern.

    Bank lending for investment property purchases, particularly for negatively geared purchases, depends heavily on the security available. Outside of the professional development market (or for individual investors with lavish colatteral security), banks will not generally finance investment construction. They almost always require the title security of a completed, certified and (for a new build) guaranteed dwelling before completing a loan with the investment buyer.

    Ipso facto, one would always expect the vast majority of new investment loans to go into “purchasing existing housing stock” – whether that stock be a 100-year old cottage, or a brand new, never occupied project build. The property development industry works on exactly this basis; developers obtain project finance so that houses/appartments are built to completion, whereupon developers’ funding can be replaced by investors’ funding.

    The important result is that, irrespective of the vintage of his data, Bowen has no support for his statement: “This means that the vast bulk of investment does not increase supply or boost jobs.”.

    Nice guy and all, Bowen either doesn’t care about the truthiness of his statement, or has no idea how his policy is supposed to work – other than ritually demonising property investors as tax fodder.

    What a turd.
    Signpost for the future.

  22. Overburdened

    Zippy

    Except for his own prosperity.

    You can tell he’s not on the dole because he is not fat enough.

  23. The Golem Rises

    Wow. Davidson fluffs again. Bowen referred to the most recent ABS figures, i.e. those for 2016. Undergraduate work by the owner of this blog, or deliberate dishonesty? Hard to tell. Either way, pretty damning.

  24. Habib

    Everyone? I think he’s a poisonous dwarf who is unfit to run a bent, legal-aid defrauding family law practice in Mt Druitt. On his best days.

  25. Seza

    He also does not understand anything about the market.
    A buys cheap house from B, who buys modest house from C, who buys new house from builder D.
    Builder D then either builds brand new house in new area or buys clapped out old unused one to knock down and rebuild, therefore adding to the stock of housing.

  26. Tim Neilson

    existence pods

    This should go into the Catictionary.

    “Existence Pods” – shoddily constructed oversupplied hideously expensive to own units
    and if I may add “in vast towers full of “progressive” voting fodder“.

  27. David Brewer

    Even if it were so, a significant portion is purchased for redevelopment/ infill.

    Very true. Practically every block of flats in the inner west and inner north of Sydney is on land that previously had a house on it, and Northbourne Avenue in Canberra has blocks that have seen three or four different constructions on them since the 1950s.

    More subtly, Bowen seems to imagine that if he retains negative gearing for investment in new property but abolishes it for investment in existing property, the only result will be a building boom. Guided by the wise hand of the state acting through a targeted tax expenditure, builders, land owners, investors and renters will all act in concert to produce a nirvana of quality affordable rental property for the wearkers.

    Bowen should read a bit more, including Mises on interventionism, or a couple of hundred Catallaxy posts, and try to get real about the actual processes involved and the unintended consequences he will bring on. First, the amount built depends much more on demand, especially that created by a rising population, than on some minor tax incentive. Second, he is also going to increase capital gains tax, which will more than wipe out the negative gearing incentive anyway. Third, we’ll see all sorts of artificial schemes to rebrand redevelopments and refurbishments as “new build” to get the tax break. Fourth, to the extent that his measure still works at all, we’ll see more crappy high-rise flats on greenfield sites miles from transport.

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