NEWSFLASH! In September I will join The Conversation as its Business and Economy Editor. I have been honoured to work at The Age for the past ten years, originally alongside the legendry Tim Colebatch, and for the past four years as economics editor in my own right.

At The Conversation, my job will be to make the best thinking from Australia's 40 univerisites accessible to the widest possible audience. That means you. From the new year I will also write a weekly column.

On this site are most of the important things I have written for Fairfax and the ABC over the past few decades. I recommend the Search function. The site is a record for you, as well as me.

I'll continue to post great things from The Conversation and other places here, and also on Twitter and Facebook. Enjoy.

Monday, May 23, 2016

Negative gearing. Attack a squid and it spurts out ink

Attack a squid and it squirts out ink. That could be why we are suddenly awash with reports on negative gearing, some of them commissioned by the property industry and others by shadowy figures who won't reveal their identities.

"One of the problems is that any time anyone writes something of 20 pages or so, everybody takes it seriously irrespective of the quality and irrespective of the source," says John Daley, chief executive of the Grattan Institute, who produces scholarly work critiqueing negative gearing from a disinterested point of view.

On his board sits Lucy Turnbull, who is married to the Prime Minister; Ian Watt, who ran the Department of Prime Minister and Cabinet under Tony Abbott; and BHP chief executive Andrew Mackenzie. They are anything but Labor stooges and, in fact, the institute has been critical of both sides on negative gearing.

Yet in the media its findings are regularly swamped by those of consultants such as BIS Shrapnel, whose undisclosed client got it to produce work finding Labor's policy would push an 70,000 households into rental stress, and now MacroPlan Dimasi, who finds it will stress even more.

It's easy to forget the consultants are being egged on by the real estate industry rather than the renters about whom they express so much concern.

Outside of the industry there's not much disagreement that Australia's near-unique combination of unfettered negative gearing and capital gains tax concessions causes problems.

In his final speech to Parliament, Abbott's treasurer Joe Hockey said 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." Scott Morrison, the present Treasurer said there was a case for curbing its "excesses" and Malcolm Turnbull actively considered a plan to cap it, according to experts who his office sounded out for reaction.

The best guess is Labor's rather timid plan to wind back negative gearing would do little to prices and not much more to rents. But it's hard to see through the ink.

In The Age and Sydney Morning Herald