The Prime Minister is correct. There are a lot of mum and dads with negatively geared property investments. Once upon a time, I was one of them. It was great for me. Not so much for you.
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What is negative gearing
It's a lot like Monopoly... sort of.
The property was a glorious old art deco building in Bondi, about a minute and a half from the water's edge. It was built in the early 1930s and in spite of facing into the teeth of the southerlies that came howling into the bay, it was a solid, well-maintained piece of architecture, regularly renovated and lovingly cared for by the handful of owners lucky enough to have grabbed up one of its four apartments. I owned the garden apartment downstairs at the rear.
Thanks for paying for it, because that's what you did while it was negatively geared. What you didn't do was increase the stock of housing for first-time buyers or add to the country's productive capacity. You just helped me lower my tax bill for a while.
It's doubtful negative gearing will remain a standout issue in the election. Our attention spans are too short to maintain that sort of focus. And that's a pity because it's an issue which wraps up a lot of what should be in contention over the coming weeks.
Most people do not enjoy the direct benefits of negative gearing, just as most people do not have the option of parking their money in the Cayman Islands or some dodgy Irish post office box to avoid paying tax.
Most people struggle to get by, even if their definition of struggling would seem outrageous to, say, the thin and hungry labourers who laid down the bricks of my old apartment in 1932.
I suspect that most people, even the middle classes, are just one pay day away from disaster.
Partly that's because of the massive debts we've run up, which is a matter of personal responsibility and ill-considered risk taking. Partly it's because of much deeper changes in the economy, which have shifted power away from individual wage earners and into the board rooms of huge commercial concerns.
That process, the concentration of economic and political power in fewer and fewer hands, and the freeing up of capital to seek only the greatest return without regard to any concern beyond maximum profit, is why manufacturing jobs have left for China.
It's why farmers are getting screwed by Woolworths and Coles; and why US drug companies have turned their cold, dead eyes on Australian cancer patients as an exciting new profit centre. It's why Australia Post thinks it can mug you for your own mail.
It's why tens of thousands of cheap, teenage casuals are going to be replaced by tens of thousands of even cheaper teenage interns, and why those super cheap interns will one day be replaced by free interns, as happens in the US.
It's why companies that reach a certain size seem to regard paying tax as completely optional; an option that is probably not open to you.
By looking at a single issue such as negative gearing, by drilling down into who actually benefits from the tens of billions of dollars in lost tax, which industries find it harder to raise investment capital because those billions are locked up in bricks and mortar, which public goods such as health or education must be denied funding, you can start to cut through the fog and bullshit of election rhetoric.
You can ask yourself, quite coldly, who wins and who loses out of all this.
Chances are, you lose.
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