Listening to pollies talk, you’d think the whole point of government is giving battlers a fair go…
So Joe Hockey took the time to tell us what he really thinks as he left the Treasury.
Well kind of. I reckon what Hockey really thinks wouldn’t be fit to publish in a decent and modest blog like this.
Anyway, one of the things that grabbed a fair bit of attention was his u-turn on negative gearing. After spending his entire tenure as Treasurer arguing that we didn’t need to touch it, he let us know that actually, we probably should have a look at it.
We must increase and over time broaden the GST…
We should be wiser and more consistent on tax concessions… in particular tax concessions on superannuation should be carefully pared back.
… negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property and we should never ever forget small business.
Suddenly it seemed like a review of negative gearing was on the cards. Maybe its head was on the chopping block. Do-gooders worked themselves into a lather.
But then the new assistant Treasure Kelly O’Dwyer came out and hosed down any expectations that it might be reformed in the near term.
It's on the table – all these things are – although I would note…there's obviously a lot of discussion about negative gearing and a lot of people say that only wealthy Australians take advantage of negative gearing.
When you look at the facts that's not the case, average income earners are largely the people who do get to take advantage of negative gearing.
Nurses, police men and women on an average wage, for instance investing in a property, most of them hold only one property which adds to the housing stock that's available for other people as well.”
So you need to look at things holistically, which is what we're saying we will do.
It’s a bit contentious as to whether negative gearing is used by average income earners. The RBA has some data that says other wise.
And personally I’d find it a bit surprising. We know that wealthy people invest in property – a lot more than less-wealthy people. So to argue that it’s mostly used by average income earners is to say that despite the relatively smaller percentage of average income earners investing in property, they use negative gearing in such numbers that they manage to outweigh wealthier Australians, who we know invest a lot more in property overall.
I’d be very surprised to hear that that is true. But I look forward to seeing the data.
At any rate, it’s not really the point. Tax concessions will always be used more by wealthier people because they tend to pay more tax (and have much more flexibility around how they structure their tax affairs.)
And if we’re looking for ways to help battlers become property investors (which I think would be a good thing), I don’t think negative gearing is the first policy I’d go to.
Anyway, the point of today’s blog is that as I’m reading this, I’m thinking, I’ve heard this speech before. It felt very familiar.
And then it clicked.
The NRAS scheme was designed to bring more affordable rental options to the market – to help out important service workers like, … wait for it…
… teachers, nurses and police officers.
Here’s former housing minister, Tanya Plibersek:
The National Rental Affordability Scheme is about helping people like police officers, nurses, teachers, key workers who work in the local area, live in the local area.
And so it seems that if you want to assess the effectiveness and efficiency of housing policy in Australia, you need to understand how it’s going to affect people in uniform.
Ask a fireman.
Of course this is sound-byte politics, but I think it tells us 2 things.
- “Battlers” are to Australians what sacred cows are to people in India.
If you want to sell a policy in Australia, just tell people how pro-battler it is.
And if you’re not on side with the battlers, you’re toast. Take Bronwyn Bishop and the helicopter hoo-ha. Taking a helicopter to dinner was just so non-battler that it was impossible to defend. No one would touch it. Everyone knew it was political suicide.
Bishop is also seen as old-school establishment (and very non-battler) herself, which didn’t help.
- We recognise that nurses, teachers and police officers get a raw deal.
The system just doesn’t do a good job of valuing people who make some of the most important contributions to society.
In a just world, your contribution to society would be reflected by what you earn. But right now, almost the opposite is true.
Banking CEOs I’m looking at you.
And I’m willing to say this as a successful businessman. You might say that I am rewarded for the risks I take, and sure, at some level that’s true. But I’ve never faced a risk like having some junkie go me with a knife.
There are risks and then there are risks.
This is still one of the great failings in the system. Essential service workers tied to government wages are always going to struggle. And we all recognise it. And so any policy that is seen to throw these guys a bone will always win the popular vote.
But why faff around with band-aid solutions? Admit this is a bug in the system and come up with ways to deal with it, head on.
Then we could all stop feeling sorry for battlers and deal with policies on their merits.
The ultimate question is, how do we fix housing affordability?
Should policemen, firemen, nurses and all essential service workers get some sort of subsidy/support to help them enter the housing market?