27 April 2016
by Michael Galvin
Negatively geared houses for one-year-old babies? Malcolm Turnbull is a dill
Prime Minister Malcolm Turnbull has, again, showed himself to be a colossal, irresponsible, dangerous dill over his negative gearing attacks on Labor, writes Michael Galvin.
According to a recent media report, nearly 3 million voters have changed their minds about Malcolm Turnbull in the seven months since he became prime minister. It is almost certain that the votes that determine the outcome of the July 2 election will come from that cohort.
How and why would so many voters turn against a personable, "moderate" politician in such a short time? I will attempt to answer this question by referencing the Godwin Grech affair back when he was Opposition Leader in 2009. Turnbull handled the politics of that issue appallingly, most observers agreed. It was the big dent in his armour that let the crazy Abbott finish him off more easily a few months later.
At the time, I recall discussing the Grech business with a group of seniors at the local gym.
"He's a bit of a dill, isn't he?" one of them said. Everyone agreed.
A bit of a dill, indeed.
An incident occurred last weekend that showed that the earlier judgement is highly likely justified. Turnbull showed himself to be a colossal, irresponsible, dangerous dill. Let me explain.
Turnbull and Morrison had decided to launch an all-out assault on Labor's negative gearing policy. They decided to launch their attack in the modest home of what looked like a working class couple in the Sydney suburbs. Kim and Julian Mignacca had just used negative gearing as a strategy to buy a unit for their nearly one-year-old baby, Addison.
On the social, economic, political and personal levels, it stretched credulity to believe that a sane, rational politician would pull such a stunt. It needs to be deconstructed in some detail.
Firstly, the idea that the times we live in are such that a new-born baby's future life in Australia is so insecure that her parents need to start saving on her behalf now is socially repugnant. The effect is to increase the financial insecurity of the bottom 80 per cent while rationalising the ways the rich justify widening economic inequality in their favour. Yet rising inequality is now broadly accepted as an economic negative in itself, not just a fairness issue.
Secondly, by buying that unit, this couple contributed to its higher price and made it less affordable for people who might want to purchase it to live in. But Australia already has a housing bubble in its most populous cities. There is a risk that the bubble could burst. As Paul Krugman pointed out in a recent column in the New York Times, there are major dangers in the global financial system of similar magnitude to the GFC that a new U.S. President will likely face. Krugman listed a China slowdown and oil, not to mention the risk of Trump or Cruz becoming President. Anything that adds to the housing price bubble in Australia is adding more risk to an already unpredictable and dangerous situation.
Thirdly, Turnbull and Morrison's stunt was politically inept, unbelievably so. For every young parent watching the news, there would have been many more young people who see a baby getting into the property market ahead of them and making it harder for them. And many parents of young adults as well, who see up close the housing affordability crisis affecting their children's generation. To let himself be led into such a counterproductive stunt, Turnbull must be desperate. Or a real dill.
And finally, there are the personal circumstances of the situation. One of the photographs of the event was particularly telling. It shows the young couple in the far background being herded off stage, their role as props or dupes for the Liberals done.
In the foreground, Turnbull and Morrison prepare to launch their missiles at Labor for proposing a minor improvement to the tax system. Hands on aggressive hips, cowboy-style, they could have been channeling the mad monk himself. Meanwhile, the young parents slip away, hostage to all sorts of realities down the track, like a recession, a housing bust and so. One wonders what financial advice they have got, to encourage them to buy a property in an apartment market already trending downwards, and put this ahead of paying off their own house mortgage? Surely Turnbull knows that the last thing the Australian economy needs right now is lots of average wage earners using negative gearing to buy into an already highly leveraged property market. They put everything at risk, including all the superannuation funds with shares in banks, which means nearly all of us.
Until last weekend, I was prepared to give Turnbull more time before writing him off. Now I think he must be what my local friends thought seven years ago: a real dill.