Some advice to Malcolm Turnbull on negative gearing.

On 7.30 last night, Leigh Sales quizzed, rather than grilled, you on negative gearing. You didn’t look too good, not because Sales gave you a particularly hard time, but because your defence of negative gearing is fundamentally flawed, demonstrating that you either doesn’t understand it or you’re deliberately misleading the public.

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The Age reports that:

He offered no modelling, only “common sense” to justify his negative gearing policy, telling the ABC’s 7.30 host Leigh Sales that figures showing top earners had the most to gain were “beside the point”.

Seventy per cent of people who negatively geared in Australia owned just one property, and another 20 per cent owned two, according to the Prime Minister.

“Most of them are on average earnings or less,” he said.

“This is a matter of common sense,” Mr Turnbull answered.

“Around a third of the buyers for residential property currently are investors. What Labor is proposing will take all or almost all of them out of the market.

“If you take a third of the buyers out of the market, prices, values will fall. That’s common sense,” he said.

I don’t know if you’re listening Malcolm, but there are a couple of things you got really badly wrong.

The first is that, if the Labor Party policy on negative gearing were to be implemented, it would only affect new investments on existing properties. What that means is that investments  in existing properties may slow or possibly even (in your book) dry out completely. But it will only affect new investments.

What it doesn’t mean, and what you implied that it did mean, is that people with existing investments in property would leave the market. This is highly unlikely to happen as their   existing negative gearing arrangements will not be subject any change.

This is why your claim that the Labour Party policy will affect 30% of investors and that they will sell their properties driving down house prices, is wrong.

If you don’t know that this is the case, then you are dangerously misinformed. If you do know that this is the case and stated otherwise, you’re telling porkies.

The second problem with what you are saying is the statement “Most of them are on average earnings or less” and  “There are well over a million Australians, most of whom are on average earnings, who have an investment property and they are negative gearing”.

In part, this is because higher income earners are able to reduce their taxable income through negative gearing. If you take that factor out, you get a better picture which is: The top 10 per cent of earners collect almost half the negative gearing tax deductions and three-quarters of the concessionally taxed capital gains.

This equates to $13 billion per annum which is handed to the 1.26  million people who have negatively geared property. If you do the sums, that’s 10% of the population of taxpayers (around 12 million). I presume you realise that $13b billion is about one third of the current deficit.

There is a wider issue in this debate which should also be considered.

Who will buy the properties that investors put on the market as a result of changes to negative gearing? There’s a good chance it will be first-time buyers, many of whom are currently locked out of the market.

And this is where you’ve got the politics are wrong.

Most Australians would probably understand that negative gearing benefits a small group of wealthy people. Many of us have children who cannot get into the housing market and maybe still living at home well into their 20s and 30s. For these people, housing affordability (and its feral little brother, negative gearing) is the major problem.

Informed opinion is lining up against you.

The Guardian’s Catherine Murphy writes Negative gearing changes won’t drive all investors from the housing market – here’s why

Former Commonwealth Bank boss David Murray’s sweeping review of Australia’s financial system singled out negative gearing as one of a number of tax arrangements that “distort the allocation of funding and risk in the economy” and may “adversely affect outcomes in the financial system”.

And John Daley, Chief Executive Officer of the Grattan Institute is no great fan.

Politically, negative gearing is an issue that is racing on three legs and you keep backing it.  It’s a loser and everybody else realises this. The only other group that is backing it is the real estate industry. Shouldn’t that tell you something.

Malcolm Turnbull’s huge D-D gamble

Malcolm Turnbull doesn’t come across as  “crash or crash through” politician. In fact, after his decisive  coup against Tony Abbott, he has been more like the Muddleheaded Wombat, particularly in relation to tax policy.

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Now he is threatening to call a double dissolution over the stalled legislation to set up a building industry watchdog, not something you would not normally die in a ditch for.  Ostensibly, a double dissolution would bring about joint sitting of the upper and lower Houses of Parliament where the government would have a majority to pass stalled legislation.

in preparation for this he has introduced and passed legislation that changes Senate voting patterns, with the aim of cleaning out a recalcitrant cross bench.

But his plan to return to government with the majority in both houses is fraught with risk and far from a certainty.

The first risk is that if the trends in the opinion polls continue until the election, whenever it is held, is a very good chance he will not win it or may even be faced with a Julia Gillard scenario of a hung parliament in the lower house.

But the  outcome of the Senate election is going to be even more fraught with risk.

The first problem is that with the changed Senate voting processes, the most important of which is that it is now possible to vote below the line and only have to number 12 boxes rather than the 100+ of previous years. There was a very real possibility that the voting patterns under this new system will be highly unpredictable and not produce the results that previous Senate elections have produced, particularly in assuring the election of candidates listed high on the  how-to-vote cards.

One of the outcomes of the changes to Senate voting and voters not following how to vote cards is that some senators, whose election was normally assured by their position on the how to vote card, may not be elected. It may be that senators such as Cory Bernardi will find re-election very difficult.

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Electors may choose to bypass the how-to-vote cards of the major parties and allocate their minimum 12 votes in quite different ways. If the 25% who do not vote for the major parties vote in a consistent pattern, some 25%, or around 20 senators, maybe elected from the minor parties and independents.

This is a worst-case scenario for any government and is probably unlikely to play out.  However, if voters limit their below the line choices to 12 and keep their votes tight, it is likely that the number of independent senators will increase.

So there is a distinct possibility that there may be more Rather than fewer independent crossbenchers than there are present and there is no guarantee they will be any more tractable.

Another  problem for the Turnbull government, if re-elected, is that three of the current crossbench, Madigan, Day  and Leyonhjelm, who generally supported the Government, are unlikely to be re-elected.  Dio Wang will not be re-elected, bringing the potential total of wild cards to four. There is no guarantee that they will be replaced by Senators who will support the government.

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Once were Senators?

Nick Xenonhon will certainly be returned and may also bring a friend from South Australia. Jackie Lambie is probably a shoo-in in Tasmania and Glen Lazarus is in with a chance in Queensland.

And then there’s the accidental senator Ricky Muir who may get the “decent bloke” vote in Victoria and be returned.

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 Ricky Muir has grown in stature since his election.

 So, if Malcolm Turnbull has made a seriously bad mistake in the timing of his double dissolution, his popularity continues to decline and he loses control of both houses, the Liberal party will have a conniption fit and probably return Tony Abbott to lead them in opposition.

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Expect his revenge to be swift and bloody.

 

The needless death of Hamid Khazaei

Last nights episode of Four Corners centred on the case of a Manus Island detainee, Hamid Khazaei, who died following a bacterial infection in 2014.

GEOFF THOMPSON (voiceover): What started as a small skin infection on his leg is now poisoning his body.

Within 10 hours he will have three heart attacks. Within 20 hours his brain will be as good as dead.

The program is a damning indictment of the casual neglect, inefficiency  and bureaucratic meddling in the system that provides health care for the detainees on Nauru and Manus Island. The senior doctors who have chosen to speak out painted a damning picture of events leading up to the death of Hamid Khazaei.

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AMA President Brian Owler was one of the number of senior doctors to speak out

The end of the program, Scott Morrison who was Immigration Minister at the time, makes a statement which, given the events related the program, indicates he was either misleading the public or dangerously mis-informed by his department

SCOTT MORRISON, IMMIGRATION MINISTER 2013-2014 (5 Sep. 2014): I can confirm that an… at an adult male transferee from the Manus offshore processing centre was transferred for urgent medical care to Port Moresby and subsequently transferred to the Australian mainland and, as you know, would, would- is here in Brisbane.

GEOFF THOMPSON: On the morning of September the 5th, Hamid Khazaei is still technically alive.

Scott Morrison later fronts the media again.

SCOTT MORRISON (5 Sep. 2014): Um, when someone becomes ill they receive outstanding care from the people, um, who work as part of our, ah, mainland detention network and in the offshore processing centres that are under the management of the governments of Papua New Guinea and Nauru.

Ah, IHMS who work as part of that team there do an out-outstanding job.

Our focus and care, eh, has been on this young man, ah, from the moment he presented to medical officers at Manus Island and on focusing on the interests and engaging with the family. That’s where our attention has been. And, ah, that young man, um, is- is still with us, but his condition, as you know, is extremely, extremely parlous.”

There will be a Coronal Inquest into the matter and it is to be hoped that the role of Canberra bureaucrats and medical officers on Manus Island in this appalling event will be thoroughly exposed.

More spin and confusion on negative gearing

In response to the Grattan Institute’s report on negative gearing, Treasurer Scott Morrison has said

“The sheer numbers are this: two thirds of those who actually use it, by the number of people who actually engage in negative gearing, are mum and dad investors. They’re nurses, they’re teachers, they’re police officers.”

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 Scott Morrison puzzles over some decimal fractions

Mr Morrison cited Australian Tax Office data showing there were 57,000 teachers who used negative gearing, 39,500 nurses and midwives and 17,500 electricians – in contrast to just 7500 finance managers.

Australian Taxation Office (ATO) data also shows that of the 12.78 million Australians who filed a tax return, 10 per cent (1.26 million) were negatively geared in terms of rental property, which meant they recorded net losses on rental properties.

OK, so let’s do the  maths. There are 113,500 in the group that Morrison cites out of a total of 1.26 million. That’s around .09%.

Even if we add in police officers we are not going to get much above 10% which is a long way from the two thirds that Morrison cites.

The worrying thing is that this man is the Treasurer and clearly has trouble with fractions.

To misquote Shane Warne, “Can’t bat, can’t bowl and can’t do sums.”

And it would appear that the Treasurer is not taking Age readers with him.

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Virgin Airlines and acts of bastardly at the check-in

Everyone has a story about perfidious airlines. Here is another one.

I arrive at Melbourne airport  on Sunday night to catch a 5.15 Virgin Airlines flight to Sydney to be told that the flight has been overbooked and I would have to take a later flight.

“The airline has a policy of overbooking” is the reason/excuse that is given.

So, if its policy, it’s OK.

Not my book. The booking is a booking and should  be honoured.

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 Happy Virgin Airlines customer who made it onto the flight he had booked for

 It got worse. Apparently my booking, made and paid for,  by the University where I was teaching through a travel agency, had been made for two months earlier.

So I didn’t have a booking, which made the question of overbooking rather less relevant.

My only option was to book another flight.

The price of the flight was $638. The price if you book ahead on-line, is just under $200.

The only reason for charging this extortionate price is that the customer has no option. The cost of carrying the passenger to Sydney has not gone up.

If you have to be in Sydney on Monday morning, you have to fly on Sunday night at treble the price.

In fact, Virgin had already been paid $200 for the flight I didn’t take and which was presumably filled under the overbooking policy.

So the total cost of the flight was over $800.

So there is a simple message from Virgin Airlines to its customers.

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Malcolm Turnbull: Negative gearing is off the table and blancmange is on (again)

The Age reports that “The Coalition will make no changes to capital gains tax and negative gearing arrangements, as Prime Minister Malcolm Turnbull signalled an election campaign focused on property values and household wealth.

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 Malcolm Turnbull is short of budget options

After weeks of suggesting the government might make some changes to negative gearing at the higher end of the income scale, Mr Turnbull said it was “common sense” to make no adjustments to existing arrangements.

Mr Turnbull faced opposition to any changes to negative gearing from within his own party room, including from former prime minister Tony Abbott.”

Well, opposition from within the party is something he could have expected but then again, he could have expected support from within the Labor Party because a goodly proportion of parliamentarians own negatively geared properties.

Turnbull has done a remarkable job of ruling out  options for the budget and has effectively left himself and Treasurer Scott Morrison no political or economic wriggle room.

If he goes to a double dissolution, he must be hoping that his budget is going to earn a lot of political brownie points. So it’s going to need to be a political masterpiece, given that he has decided not to address the issue of bracket creep or of the debt and deficit crisis so actively touted by Abbott and Hockey when they were around.

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The days of shock/horror debt and deficit crisis are over

His decision to focus on property values and household wealth is going to be a difficult one to pursue because the only option has a scare campaign about Labor destroying capital value of family homes with its policy of restricting negative gearing to new properties.

Particularly in the light of the report published by the Grattan Institute and published in The Age today which shows that:

Surgeons, anaesthetists, finance managers and lawyers will be the overwhelming beneficiaries of the Turnbull government’s decision not to touch negative gearing in the budget, research shows.

The report also finds that teachers, nurses, hairdressers and sales assistants are among those least likely to negatively gear. The top 10 per cent of earners collect almost half the negative gearing tax deductions and three-quarters of the concessionally taxed capital gains.

What is not mentioned is the huge number of people who don’t,And can’t afford to, negatively gear at all, hairdressers, builders labourers, waiters and waitresses, all the low income earners who subsidise the top 10%.

One of the profound ironies of the situation is that Malcolm Turnbull’s wife, Lucy, is a director of the Grattan Institute. She is also the head of New South Wales Government’s new Greater Sydney Commission tasked with tackling Sydney’s housing affordability crisis.

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A clear distinction on gay marriage

Federal Treasurer Scott Morrison’s speech to the 600 people attending the Australian Christian Lobby conference “Cultivating Courage” focused on the importance of marriage and the family, which he called “the most sacred national institution. To protect our country, to protect our society, to protect our economy and to protect our children, we must protect the family,”.

ACL managing director Lyle Shelton told the conference that it was becoming harder to be a Christian in Australia. “We face false slurs and labels, designed to demonise us into silence,” he said. “Bigot, homophobe, hater, are just some of the pejorative terms that have been used to characterise us ordinary Australians, who simply believe that marriage [should be] between a man and woman.”

In 2014, Opposition Leader Bill Shorten used his appearance at the ACL conference to make a case for marriage equality and argued that freedom of worship did not mean freedom to vilify.

 

Doubts on Govt Dental Care funding

In what appeared to be a smart move before an election, the Turnbull government promised

Every Australian child – and millions of low-income adults – will be eligible for subsidised dental care under an ambitious new Turnbull government plan.

Health Minister Sussan Ley has announced $5 billion in frontline dental health funding over the next four years, including $2.1 billion for what’s being called the Child and Adult Public Dental Scheme, or caPDS.

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Health Minister Susan Ley: A great ad for good dental care

But then it all went rather pear-shaped

Dentists have slammed the Turnbull government’s new dental scheme, describing it as a “smoke and mirrors” plan that will cut $200 million a year from the system and put further pressure on public waiting lists.

Australian Dental Association President Rick Olive said in a statement  “Let’s see this for what it is. This is a budget saving resulting in a reduction of about $200 million per annum for dental care,”

ADA President Dr Olive said the government was effectively reducing its funding allocation from $615 million a year under the current scheme to a new scheme that will provide $425 million a year.

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ADA President Dr Olive

So is this announcement step forward for dental care for Australians or is it just a cynical move to make a budget cut look like a benefit?

The campaign leading up to the next federal election, whenever it may be held, will give the Australian people are chance to see Malcolm Turnbull’s  true political colours. To date, his vacillation of the policy’s taxation, same-sex marriage and constitutional recognition for native Australians does not auger well.

If re-elected, the best we can hope from a Turnbull Government is a muddle through approach to national policy issues combined with a little bit of political skulduggery.

 

 

 

Letter to my grandson (xiv)

You are just beginning your third term of swimming lessons at the Richmond Recreation Centre pool.  I come along to each lesson as cheer squad, backup team and occasional purchaser of small chocolate bars and later join in with you and your dad for a swim after the lesson.

Your dad is also taking you for a swim most nights of the week and sometimes on Saturday and you are becoming increasingly confident in the water as a result. I look at you and your dad in the pool was all the other parents at swimming lessons and think how lucky you are to have a dad who really knows how to swim and can show you what to do. You can tell most of the other parents aren’t swimmers and probably aren’t going to do laps with their kids or take them swimming in the surf.

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These are the two pools where we spend most of our time with you running backwards and forwards between them.  I’ve been away for nearly a week teaching in Sydney and you seem to have grown up even in that time.

Yesterday in the pool, you were going  completely underwater to pick up some small toys on the steps of the pool. It was the first time I have seen you do that and it’s yet another big step towards being a good swimmer.

I took some photos of you and your dad at your swimming lesson last week. The first four are of the two of you sitting quietly. You both look so happy. I know you’re growing into a big boy when I see you with your dad, who was a real giant, I realise that you’re only little giant at the moment.

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These moments of tranquility are few and far between, interspersed with your usual exuberant and energetic enjoyment of being in the water.

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But my favourites are these pictures of you jumping into the pool propelled by the huge muscles in your little legs. Most of the other kids just topple into the pool, but not you, it’s airborne or nothing.

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And now for a bit of family history.

Swimming pools were a big part of my life when I was a little boy, even in Wellington where I lived until I was eight and where the climate was nowhere near as good as in Melbourne.  My first memories of a a swimming pool are of the Khandallah baths.

They were three train stops up the line from Ngaio where we lived.  I would walk to the station, shown by the little blue dots which took about 20 minutes, catch the train shown by the green line for another 20 minutes and then walk to the baths for another 20 minutes shown by the yellow dotted line, so it was about a two hour round trip.

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I was eight at the time (so would have been around 1952) and would normally do the trip on my own, something that most parents would not contemplate letting an eight-year-old do nowadays.

The baths were pretty ordinary by today’s standards. The pool was made of pebbled concrete and the water was a murky green. Heated pools were still a thing of the future.

Khandallah baths

My most vivid memory of the Khandallah baths was swimming (underwater) numerous times across the pool with my eyes open. Swimming goggles were also a thing of the future. As result of the high levels of chlorine in the pool, I was close to functionally blind when I started my way home. I remember the trip being long and difficult. My parents  didn’t seemed at all perplexed by the situation, certainly I wasn’t rushed off to the doctor. I recovered and gave up swimming underwater with my eyes open as a recreational occupation.

This is another shot of the baths taken from the hill on the right of the picture above.

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There was a playground up behind the baths and I remember there being, what appeared to 8-year-old eyes, a number of huge slides and these two roundabouts.

Children in the playground at Khandallah Park, Wellington, ca 1927

Smaller kids, like me. would get on the roundabout on the front of the picture and get as close to the centre as possible and hang on to the bars as tightly as we could, while bigger kids ran on the outside pushing the roundabout as fast as they could until they jumped on as well.  Neither of these two pieces of play equipment feature in modern playgrounds. It’s a safer but perhaps less exciting world.

We shifted to Auckland, with its subtropical climate and numerous swimming pools, when I was nine.  It was a kind of heaven where we had the Parnell baths, somehow a symbol of the sybaritic  and hedonistic pleasure that Auckland was known for by the citizens of Wellington.

The shot of the bath is very much as they were in the 1950s. The pool was huge, 33 m across and 66 m long with a kids’ pool on the left. But the real attractions were the slide and the raft where anarchy was the normal rule.  This anarchic rule was to throw everybody else off the raft so it was the scene of long and ongoing brawls.

Parnell baths

I had my first swimming lessons here  when I was nine but it wasn’t until we shifted to Parnell that I spent much time here as it was particularly long ( 5.5 km) and hilly ride  and took around 45 minutes each way from Remuera.

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So my normal swimming pool was the Olympic Pool in Newmarket where the 1950 British Empire Games were held. It was also where the annual swimming sports of my school, St Kentigern College, were held.

Olympic pool

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It was a pretty functional pool with none of the glamour and excitement of the Parnell Baths but it was close to home, about a 15 minute bike ride, so I could do it most nights after school.

Our other main swimming pool was the Tepid Baths or the “Teps” as they were known. These were heated baths, something of a rarity in the city. There were little booths all round the edge of the pool for people to get changed in.

As you can see, they weren’t expecting the  crowds that you got at the Olympic Pool or the Parnell Baths. But the good thing about the Teps was that you could swim in winter and for me that was something close to heaven.

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I had my second and third set of swimming lessons here and remember one of the exercises being to swim as slowly as you could across the pool. I was a lean, muscly kid and had to keep moving otherwise I would sink. I remember the fat kids being real stars at this particular exercise.  I remember thinking that was a pretty idiotic thing to be practising as it seemed to me that there was no point in swimming slowly.

The good thing is that I don’t think anybody is going to ask you to swim slowly sure if they did would feel much the same way about it as I did.

 

Tony Abbott and the blind deer

It’s an old joke, a dad joke, probably grand dad joke, but I will bore you anyway.

Q: What you call a deer with no eyes?
A: No-eyed deer.

Q: What do you call a deer with no eyes and no legs?
A: Still no-eyed deer.

Q: What do you call a deer with no eyes, no legs and no balls?
A: Still, f@#&ing, no-eyed deer.

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 Tony Abbott is still amazed that people have not realised how good he was.

Abbott is still justifying his disastrous term as prime minister, primarily by overemphasising his achievements in an attempt to rewrite history.

 The Age reports that

Tony Abbott has admitted he made unnecessary enemies and left his friends feeling under-appreciated during his time as prime minister, as part of an extraordinary mea culpa on his government’s failings.

“I can’t let pride in what was achieved under my leadership blind me to the flaws that made its termination easier, even if claims were exaggerated or exploited in self-serving ways,” he writes.

What a wonderful example of weasel words: pride in what was achieved under my leadership. Abbott may be proud  but the majority of the Parliamentary Liberal party and the vast bulk of the Australian electorate certainly weren’t.

And then there’s this little pearl:  even if claims were exaggerated or exploited in self-serving ways.   In essence, Abbott is saying  “Really, when you think about it, things weren’t as bad as they were made out to be, there were just nasty people around, self-serving et cetera et cetera, who made me look worse than I really was.”

Mr Abbott stands by his approach to same-sex marriage, climate change, asylum seekers and national security,

What he doesn’t realise is that his approach to these issues was probably central to his ignominious dumping as prime minister.

It’s time to move on and out, Tony. Your party and the Australian electorate has made their decision about you.

Everything you do from now on will only reinforce the perception that getting rid of you was a good decision.