P,

I assume your lack of comment on Bowen's mendacity means that you accept that Bowen was lying through his teeth in claiming complete ignorance on a report that was essentially handed to them by Bongiorno & Partners while developing their policy. PS Next time read the link I provide then you won't miss it.

Secondly, if banning negative gearing is such a wonderful idea, then why did Keating after introducing the ban in 1985 do a rapid and humiliating back flip less that 2 years later? Perhaps something to do with the spike in rents in Sydney and Perth?

The major difference between BIS's report and labor policy is that labor's policy went far further in banning all negative gearing which would cripple small businesses and investors.

When I was studying Economics 20 years ago there were two prime examples of where government meddling in the market produced consequences that largely negated any benefits, these were rent control and banning negative gearing.

This is bad policy pure and simple.

The solution to reducing the cost of housing is to reduce the cost of building by:
Stopping councils gouging up to $400 000 in fees per house,
Reduce building costs by stopping union extortion and thuggery,
Reduce the red tape that delays buildings by up to 2 years costing developers a fortune.

Owner-occupiers will be directly impacted by Labor's attack. For instance those who are figuring that their home is their nest egg for education of children and for retirement.

Some have outstanding mortgages and may have increased their original loan for necessary things such as elective surgery and aids for daily living, periods of lower income and higher outgoings. How do they get on when the lending institution revalues (devalues) their home as it must after Labor's ?

Labor's continued interest in meddling in superannuation funds and now insurance is very worrying, particularly to young workers who are experiencing all sorts of trouble because their super is already being gobbled up in fees and permanent, full-time work is a thing of the past.

SM,

"Secondly, if banning negative gearing is such a wonderful idea, then why did Keating after introducing the ban in 1985 do a rapid and humiliating back flip less that 2 years later? Perhaps something to do with the spike in rents in Sydney and Perth?"

Ahem....it's already been addressed in that the spikes were due to a shortage of rentals in those cities.

I speak from experience. In 1986 we were looking to rent in Perth and it was extremely difficult to find a rental. The vacancy rate was down to 0.7%.

We were lucky (because we are charming) and found a place in Como, south of the river. But that was after going to quite a few places, each with streams of people hoping to be selected for the rental in question.

You're really grasping at straws trying to denigrate Bowen...especially with the particularly vacant ScoMo currently as Treasurer.

He makes Hockey look like an economic genius!

P,

There is no doubt that the lying Chris Bowen makes Hockey look like a genius.

With all due respect saying that the rental spike was not due to the ban on NG but on a shortage of rentals is like saying that someone's injuries are not from falling off a roof, but only because he hit the ground.

The most immediate and direct consequence of a ban on NG is that the supply of rentals will decline. The markets that will feel it first will be the tightest, such as Sydney and Perth, but there is no doubt that other cities would have been affected in time.

This populist brain fart of a policy will have the effect of slamming on the brakes of all forms of investment from property development to shares to small business etc, and Aus will experience a real recession.

SM,

How about showing a bit of due diligence?

As Saul Eslake points out:

"If the abolition of negative gearing had led to a "landlords' strike", "then rents should have risen everywhere (since negative gearing had been available everywhere)...."

He puts the vacancy rate in Perth in 1986-87 at 1.4%, however, I seem to remember at one stage in '86 I did see a figure of 0.7%.

In any case, he's right as far as Perth was concerned:

"During the period when negative gearing was abolished, Sydney and Perth had the lowest vacancy levels of the capital cities.

Sydney's vacancy rate was 1 per cent and Perth's was 1.4 per cent.

The 1987 cabinet submission noted: "The market in Perth has been easing after tightness during the America's Cup period".

In contrast, rental markets in Melbourne, Adelaide and Brisbane were not at the same stage in the cycle.

Melbourne and Adelaide in particular experienced an extended period of low rental vacancies from 1982 to 1984.

ABS data for this period shows that in response to the tight rental conditions, real rental price growth in 1984 was over 6 per cent in both cities.

In response to rapidly increasing rental prices, vacancies started to increase in Melbourne, Adelaide and Brisbane, and there was a corresponding fall in rental price growth as market conditions became less tight.

But the data shows that vacancy rates were higher in Sydney and Perth in the early 1980s and fell rapidly in the mid 1980s."

"During the period that negative gearing was abolished real rents notably increased only in Sydney and Perth - where rental vacancies were at extremely low levels."

The America's Cup was huge in Perth at the time and that did impact the cycle.

http://www.abc.net.au/news/2015-05-06/hockey-negative-gearing/6431100

So, SM, you tell me why there wasn't a uniform rental shortage across the country after negative gearing was abolished - and why was it only confined to Sydney and Perth?

When you can give a good reason for that, you'll have an argument - until then....

Re ABC FactCheck (P's link) I see rents adjusted for inflation used against the case that national rentals had risen.

From https://en.wikipedia.org/wiki/Negative_gearing

"While Eslake's comment is correct for inflation-adjusted rents (when CPI inflation is subtracted from the nominal rent increases), nominal rents nationally rose by over 25% during the two years that negative gearing was quarantined. Nominal rents rose strongly in every Australian capital city, according to the official ABS CPI data. However, it has not been proved that the strong rise in rents was entirely a direct result of the quarantine.[7]" (......the quarantine being that of NG on housing).

While taking on board the last sentence in the above quote, when inflation is high, rents don't necessarily follow, and vice-verse. Inflation does not enter my mind as a landlord in setting rent, but market forces do. This makes the Eslake analysis a little spurious for mine as 25% nationally seems to big a number to explain away with inflation.