One of the biggest cards the Coalition government has in their deck for the upcoming federal election is their repeated claims that Labor‘s policy to reform negative gearing would “smash” Australian housing prices. You also might have noticed that Scotto Morrison and his merry gang haven’t really been pursuing that particular line as much recently.
Now, emails revealed by the ABC after a months-long investigation show that the Treasury explicitly told the government that their claims Labor’s policy would act as a “sledgehammer” to Australian housing prices were at best exaggerated:
The […] statement is not consistent with our advice.
We did not say that the proposed policies ‘will’ reduce house prices.
We said that they ‘could’ put downward pressure on house prices in the short-term depending on what else was going on in the market at the time.
But in the long-term they were unlikely to have much impact.
The email was received in response to an inquiry from Acting Treasurer Kelly O’Dwyer‘s office, who asked Treasury to fact-check the statement that Labor’s policy to increase the capital gains tax and abolish negative gearing for new dwellings would reduce house prices.
Of course, the framing of the debate reveals the insane conflict between the two sides. Labor’s whole justification for pitching changes to negative gearing and capital gains tax, according to their own policy website and the party’s public statements, is to incentivise new housing construction and “[tilt] the balance back towards first home buyers.”
That means, ultimately, housing prices need to fall. Houses become more affordable because they cost less. That sounds painfully obvious, but you wouldn’t know it from the debate. Hence the reason Labor says “affordable housing” whereas the Coalition says “a fall in housing prices”.
Labor’s Shadow Treasurer Chris Bowen told the ABC that the email meant the government “had been caught red-handed” telling fibs about the policy:
This is quite a significant revelation. [The Government should] stop abusing the Treasury processes, abusing the independence of the Treasury, misrepresenting what the Treasury has said.
Whether or not the government heeds the Treasury’s advice, taxation and negative gearing is 100% going to be a big part of the upcoming election campaign. That much is guaranteed.
