Malcolm Turnbull’s scare campaign that didn’t scare anyone

So Treasury didn’t think Labor’s negative gearing/capital gains tax proposals would crack the earth asunder and spew forth toads and serpents. Nobody much else did either.

Oh, as part of their election campaign, the Prime Minister and Treasurer both said Labor’s policy would result in all manner of disasters befalling the nation, but put your hand up if you believe that they believed what they were saying or were just fibbing away as politicians will to get elected.

The choice here is between the credibility of the Prime Minister and Treasurer or their competence in assessing economic policy.

As Peter Martin has reported: “Labor’s policy, or cut-down versions of it, has been supported by the Property Council, the Business Council, the head of the Abbott government’s Commission of Audit, the head of its review of the financial system, the Reserve Bank governor Philip Lowe, the Institute of Company Directors, and the Committee for the Economic Development of Australia.”

I can’t see many raised hands.

There are a couple of upsides in this grubby lesson about political opportunism being preferenced over economic honesty.

The first is that it seems the electorate saw through the coalition’s furious fibbing. (I call it “fibbing” rather than “lying” because I can’t recall either Turnbull or Morrison claiming they were honestly purveying Treasury’s advice. Please correct me if I missed it.)

This was the scare campaign that didn’t scare. Unlike “Mediscare”, the electorate didn’t bite. In a close result, frightened would-be landlords didn’t cost Labor the election or a single seat. It’s why Labor has stuck with the policy instead of quietly ditching it.

Secondly, the fine work by the ABC in pursuing a freedom of information request to obtain Treasury’s advice has reassured us that Treasury was capable of giving the government honest advice before the 2016 election, rather than telling the Treasurer only what he wanted to hear.

But the downside is that we are left wondering what else Treasury really thinks of important government and opposition policies. We were already sceptical about our politicians, now there is reason to be cynical. Yes, they really will argue black is white for the keys to the Lodge.

Predictably and of necessity, the acting Treasurer, Kelly O’Dwyer, is employing weasel words while the government waits for attention to drift to the next issue.

“The documents released by Treasury confirm what we have been saying all along – Labor’s policies would reduce house prices,” Ms O’Dwyer said. “Labor should come out and finally admit that their goal is to reduce the wealth of millions of Australians. After all, housing investment is around two-thirds of Australian households’ net worth.”

Well she would say that, wouldn’t she. Yes, Treasury said the Labor policy “could introduce some downward pressure on property prices in the short term”, it could have “a relatively modest downward impact” on prices. No, it didn’t confirm what the government had been saying all along.

But there’s no surprise about that either. Independent economist Saul Eslake summed it up for nestegg苏州美甲学校419论坛.

“I think the government’s motivation was primarily what economists might call product differentiation???they wanted to have something that would be a clear difference between the Coalition and the Labor party over taxation. So I think it was essentially politics, not economics that drove this.”

The irony is that Treasurer Morrison subsequently has moved to tighten up on the legion of negative gearers, those poor Aussie battlers he rhetorically champions, by scrapping the tax deductibility of property inspections and depreciation of second-hand items. The latter move has the effect of a little push towards investors favouring new rather than established housing – just like Labor’s negative gearing plan.

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