Hockey flying blind on gearing: Labor

The federal treasurer has been accused of “flying blind” about the impact of negative gearing on house prices.


Labor pounced after Joe Hockey’s own department admitted on Friday it hasn’t been asked to research how the policy affects prices.

Mr Hockey and Prime Minister Tony Abbott have strongly argued that getting rid of negative gearing would drive up rental prices.

When asked during a parliamentary hearing what the treasurer is relying on when he makes the claim, a senior Treasury official said the department has not done any work on the impact.

“Right now, there is no Treasury analysis of the impact on the tax system on housing affordability?” Labor MP Jim Chalmers asked Jenny Wilkinson, the acting deputy secretary of Treasury’s macroeconomic group.

“Not to my knowledge,” she replied.

Dr Chalmers said it was “extraordinary” that Mr Hockey had not ordered such fundamental modelling from his department.

“He’s been having conversations with his state colleagues, it’s been in the front of mind of policy debate in this place and around the country and we’re flying blind on the impact of federal policy settings on the conversation,” he said.

Ms Wilkinson said although the department had not provided any advice, it was true that the impact on rents across the country could not be solely blamed on one policy.

“So I think we would be very cautious in drawing any conclusions,” she said in response to further questions from Labor MP Pat Conroy.

The issue of negative gearing has again been in the spotlight after the Australian Greens recently called for its abolition.

The move would save the budget $3 billion over four years, they say, calling for some of the return to be invested in new housing.

Labor is considering a policy change, but warns it won’t support anything that would be retrospective or have an impact on the provision of new housing supply.

During Friday’s hearing, Ms Wilkinson also agreed with comments by Treasury secretary John Fraser that there had been a period of very strong house price growth that could be described as a “bubble”.

However she said there was a “general sense” that some pressure was coming out of the market in Sydney and Melbourne.

The latest Reserve Bank data shows Australian household debt is more than one and a half times (155.9 per cent) that of incomes, and housing debt is 142 per cent of incomes.