Nick Gruen alerted me to this piece by Ross Gittins, excoriating the Productivity Commission’s report on housing affordability. I had only seen the press reports and was struck by the absence of any reference to the cut in capital gains tax, the biggest single factor in converting a boom to a bubble. Ross says
Despite all the fine words and careful analysis in the body of the report, it was no accident that the media’s headlines focused almost exclusively on the recommendation that the premiers abolish stamp duty.
It was no accident because the report was structured to produce that response. And it was no accident the Boss [Costello] exploited it for all he was worth.
After the PC had shut down any talk of doing something about negative gearing and the half-rate capital gains tax, and excused away the federal tax system’s $18 billion annual subsidy to owner-occupiers, its brave call for the abolition of stamp duty was the only significant proposal left. ….
This report is intellectually dishonest and cowardly. It’s idle for the economic rationalists to keep carrying on about the politicians’ “reform fatigue” when, in the face of someone as terrifying as Peter Costello, the bureaucratic leaders of the movement have lost their bottle.
It’s a great read, and I know the economists of the PC well enough to recognise that Gittins has hit them where it hurts most, particularly in that last para – it will be interesting to see if there is a public response.