Most “independent modelling” is nothing but hired fluff and puff. Geez. Who can you trust these days?
More dramas for the government last week, as tried to keep its scare campaign around negative gearing upright, (even though half of its voters actually support some level of reform).
Anyway, if you listen to the various Coalition mouth pieces, Labor’s policy seems to be about to warp space-time itself, both hammering house prices and sending house prices through the roof.
What kind of monstrous policy would increase and decrease house prices at the same time?
But things got awkward when Morrison tabled some “independent modelling” from BIS Shrapnel that he said showed that Labor’s policy would lead to a spike in rents, a collapse in construction and a $19 billion dollar hit to the economy.
But then BIS Shrapnel came out and said that actually, the report was written last year and has nothing to do with the particulars of Labor’s policy. I guess they’re still hoping for some Labor work down the track.
And then the numbers in the report turn out to be a tad ridiculous.
As Grattan Institutue CEO John Daley writes:
“The report claims that removing negative gearing for existing (but not new) properties would shrink cumulative GDP by up $190 billion over ten years.
All tax increases drag somewhat on economic growth, but some have less of an economic effect than others. Treasury estimates that the loss of economic activity from every dollar of tax collected ranges from almost nothing, for broad-based land taxes, to 50 cents for company tax and more than 70 cents for residential stamp duties (the most inefficient taxes).
The consultancy’s report suggests that the annual increase in tax collections from the change to negative gearing would be $2.1 billion. The $19 billion hit to GDP would make the loss of economic activity from each additional dollar of tax collected more than $9. That’s right, more than ten times the economic harm of stamp duty, almost universally accepted among economists as the most economically damaging tax….”
Spot on. If ever there was a stupid tax, it is stamp duties. But to argue that negative gearing reform is ten times worse is a bit OTT.
But the real hoo-ha comes because no one knows who commissioned the report. BIS says it was written for a private client, but refuses to tell us who.
Was it one of the property or developer lobbies? Was it the Liberal party themselves? Was it some concerned philanthropist hoping to further the objective pursuit of truth?
Everyone wants to know who and BIS isn’t saying.
And that probably means that is was commissioned by some heavily vested interest. If it wasn’t, what harm in saying?
And here is another great lie in the foundations of democracy: That there is such a thing as “independent modelling”.
It’s right there alongside the idea that corporate donations to political parties don’t corrupt the democratic process.
The only way that both of these things can be true is if money doesn’t mean what we think it means – if we imagine that people aren’t motivated by money.
I consider myself a money expert. I have a lot of it. We’re intimate. And I can tell you, money is very motivating.
So we have this idea that some vested interest comes to an economic consultancy and says, I want you to look at this topic, I’m going to give you a lot of money to do it BUT, I’ll be totally happy with whatever results you find, even if they’re not the results I want, because I’m only interested in the truth.
It’s ridiculous right? And it’s just not how the world works. When reports are commissioned, the conclusions are almost pre-written. Maybe the numbers change a bit.
“I want a big number. Something in the billions.”
“ooh, maybe that’s pushing it a bit…”
“How about $19 billion?”
“Yes. Let’s go with that. Here’s $50,000.”
You stop and look at it for a second and of course it’s ridiculous. Of course it’s a total scam. Nothing but fluff and puff.
But still, the media reports “independent modelling” as some sort of fact, and not as the whiny bleating of gassy vested interests that it is.
Same story with the Trans-Pacific Partnership (TPP). The government is trying to rush it through parliament, and refuses to let it be reviewed by an independent panel, and prefers to take the word of paid ‘consultants’.
It’s not like there’s a rush. We have two years to get it through parliament. And it’s not like there isn’t an independent body just ready and raring to go. This is exactly what the Productivity Commission was designed to do.
But the government doesn’t want to let them look at it because they’re afraid of what they’ll find. There’s 6,000 pages, 30 chapters, much of it written by American Pharmaceutical and Ag companies.
AND it opens the way to foreign companies suing the Australian government if they don’t like what we’re doing.
The risks are huge, but we don’t want to trouble the PC with it? Give them a quick flick through?
Economic consultants just take the bullshit that even politicians are too modest to put their name on, dress it up in a glossy report, and ram it into the democratic process.
The sooner we clear all the lobbyists and ‘independent consultants’ out of Canberra the better.