The Reserve Bank of Australia has just provided the best election guide for this boring, overlong, misdirected 2016 federal election campaign. While the political parties have forgotten about the real Australia in their pursuit of daily ‘What’s in it for me’ Spend-o-meter handouts, the RBA has reminded them of the assets Australians own that are on the table in this election. If the close opinion polls are any guide, far too many seem unaware of how their assets are at risk on July 2, starting with the two-thirds of Australia’s almost 10 million families that own their own homes, with 20 per cent owning other property, a lot of it negatively geared. According to the latest RBA Bulletin, housing makes up 60 per cent of the total assets of Australian households and 80 per cent of household debt. Mess with these by threatening to cut negative gearing and you should be in political trouble. It’s not just the depressing impact on the housing market, to the huge cost of the 6.6 million property-owning households (and the benefit of some first-home buyers), but it would push up rents, particularly for low-income earners. As the Reserve Bank noted, growth in rents has eased and vacancy rates increased in most capital cities as dwelling investment has continued to grow strongly. So the ‘benefit’ of negative gearing’s tax loss is the reason rents are lower than their economic cost, to the significant advantage of renters; chop negative gearing and either rents will have to soar to make it worthwhile to buy an investment property – or the price of housing will have to collapse to make current rents cover its cost. But this is a fight the government has shied away from. What is lacking is not only a justifiable scare campaign on Labor’s attack on the assets of aspirational Australians, but a solid positive defence of a Coalition policy that benefits many millions more voters than it disadvantages.
The same goes for the 40-odd per cent of non-housing assets (with booming superannuation already making up half of it, while investments and business assets comprise most of the rest) that are under assault from the Labor-Greens anti-business pro-union rhetoric. Australians’ average wealth has risen to about three-quarters of a million dollars despite the GFC, mainly due, in recent years, to the impact of superannuation (especially at the high income end) on financial assets. These are the assets, making up a sizable part of the wealth of everyday Australians, that are at risk from Labor’s overt anti-business attack but which stand to gain most from the government’s growth program. Apart from pointing to Labor’s hypocrisy in attacking the very corporate tax cuts its leadership was so recently proposing, the government seems to have left it largely up to the self-interested (but welcome) intervention of the business community to argue publicly its case for graduated corporate tax cuts to bring rates more into line with lower international norms. Add to that, Labor’s opposition to urgently needed industrial relations reform, especially in the construction industry, and the political reality emerges that the great majority of Australians, those holders of assets as identified by the Reserve Bank, are most at risk from Labor’s current populist policies, let alone from a repeat of its six years of economic mismanagement. But Labor is nevertheless running neck and neck with the government in opinion polls.
This is largely due to the government’s inability to sell its policies to those who clearly stand to benefit from them. One example is superannuation where the well-publicised negative response to limiting tax concessions to provide, as originally intended, only for retirement incomes, not as an unlimited tax dodge, has neither been effectively countered nor an attempt made to sell its consequential $3 billion of support for lower-income superannuation. This will benefit probably five times as many Australians as those at the top end who face being disadvantaged. The government’s failure to even try to gather the political reward for its $3 billion of equity and fairness is either incompetence or cowardice. The facts do not speak for themselves; the (silent) majority, not just superannuation dissidents, needs to be made aware of the impact on their assets of the main issues at this election — and it’s almost too late for the Coalition to begin talking the talk.
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