Understanding Supply and Demand

In a recent interview with Leigh Sales of ABC1, the Prime Minister Malcolm Turnbull, claimed that he didn't need any evidence for his claims that a third of "investors" will leave the property market if Labor's proposals on negative gearing are introduced and that Labor's negative gearing reforms would "take a sledgehammer" to property prices.

The Prime Minister claimed that evidence or modelling was't needed. Plain common sense was sufficient:

"Well Leigh, your viewers tonight understand the laws of supply and demand," Mr Turnbull said.

Well, I have the conceit that I might actually know a little about property economics. So I raised the question on Twitter:

Some people discussed the Tweet on Facebook and GooglePlus, but alas, the Prime Minister did not have the courage of his convictions to reply. Or maybe he was too busy - like he was too busy to check the research on negative gearing.

This entry is not to discuss that research (that can be for another time), but rather it is a brief comment on the failure of good public research to sway those who have power and vested interests influencing them. Malcolm Turbull, from all accounts a somewhat intelligent man, must surely be aware that Australia's policy of negative gearing has demonstrably failed to improve housing supply and is being used as a one of the worst tax rorts by the wealthy in existence. He knows this.

But it seems in his hope to retain power in the next Federal election he can run a divisive campaign that manipulates people who are not as well versed in economics, but are subject to emotive fear-mongering of the alleged collapse of the value of their home. He is also subject to the vested interests of the support base that makes up much of the Liberal Party of Australia.

Largest 10 average net rental loss by electorate

Electorate Net Rental Loss Party Representative
Wentworth -$20,248 Liberal Malcolm Turnbull
Curtin -$19,216 Liberal Julie Bishop
Kooyong -$17,169 Liberal Josh Frydenberg
Bradfield -$16,969 Liberal Paul Fletcher
Higgins -$16,659 Liberal Kelly O'Dwyer
Warringah -$16,423 Liberal Tony Abbott
North Sydney -$15,895 Liberal Trent Zimmerman
Brisbane -$15,666 Liberal Teresa Gambaro
Goldstein -$15,068 Liberal Andrew Robb
Ryan -$14,857 Liberal Jane Prentice

From: http://www.abc.net.au/news/2016-04-27/grudnoff-facts-about-negative-gear...

It is by the use of such tactical political maneuvering that poor public policy is implemented - and we can see who benefits.

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