Crikey readers talk The Australian, the ABC and negative gearing.
The Australian v the ABC
Glenys Stradijot, campaign manager, Friends of the ABC, writes: Re. “Crikey says: News Corp is threatened by Aunty” (yesterday). With The Australian being a great advocate for freedom of information, rather than pressure the government to waste precious public resources on yet another review of the ABC, perhaps it could urge it to release the results of the last. Leaks from the KPMG report commissioned by the former Coalition government provided a damning assessment of the ABC’s inadequate funding.
Joe Boswell writes: Your editorial refers to “James Murdoch, before he became perhaps phone-hacking’s most high-profile victim”.
This is the most astonishing inversion of reality I have encountered in a long time. It is the custom of the age that people with immense power and privileges portray themselves as victims, but we seem to have reached the point where anyone held at all accountable for anything is ipso facto a victim. For example, poor old King Herod; perhaps the most high-profile victim of the slaughter of the first-born.
Martyn Smith writes: The Murdoch media was vocal in criticising Julia Gillard on every occasion that it believed the former Labor prime minister was breaking an election promise. In case The Australian’s editor missed it, Tony Abbott went to this last election ruling out cuts to the ABC. (Abbott’s interview by SBS World News presenter Anton Enus is still at www.fabc.org.au.) Or don’t the promises of elected politicians count when they don’t further the Murdoch media’s business interests?
The property’s industry’s negative gearing falsehood
Paul Pollard writes: Re. “Should negative gearing be abolished? Experts weigh in” (yesterday). The real estate lobby assiduously spreads the falsehood that the abolition of negative gearing in 1985 led to huge rent rises in two years. This is impossible, if only because investor finance at that time was only about 10% of housing finance. As the stock of houses grows very slowly (1.5% a year), even if all investor finance was in new construction then (very unlikely), the stock of housing would have been only 0.3% smaller than otherwise in 1987, which could not account for any significant rent increases. Rents rose, in Sydney and Perth especially, for other reasons. Keating apparently abolished negative gearing just as a market confidence booster after the 1987 crash.
Negative gearing reduces house construction because it forces up prices, thus destroying effective demand. The argument that negative gearing provides more rental housing is mainly false because 90% of investor finance goes into existing dwellings, and for every extra existing house thus made available for renting, one potential owner-occupier is displaced, adding one more household that must rent, so no net gain. The only thing that matters is whether the total stock of housing is increased.
Steve Keen is right; negative gearing should be grandfathered out, but with one amendment: it should be retained for new construction. This is quite feasible administratively, and would mean negative gearing would serve its proper economic function: adding to real capital stock.