Sometimes political leaders send up a test balloon on a policy idea to gauge public reaction. The news that Treasury officials have been working on possible fresh housing measures, including options for changing negative gearing and capital gains tax, was not one of those times.
Since the promise to pare back negative gearing helped Labor lose an election they thought they’d win in 2019, nobody in the Albanese government has even dared to whisper about the possibility of doing it again. Not until this week and the accidental balloon.
The clue that Nine newspapers’ mid-week revelation was an unauthorised disclosure and not a deliberate balloon-shaped leak was all over the treasurer’s face when his attempt to trumpet a stunning drop in the monthly inflation figure was foiled by questions on negative gearing.
“First of all, the real story today is inflation,” Jim Chalmers insisted, after the first question at his Wednesday news conference ignored inflation altogether. “The story today is about a substantial moderation in headline and underlying inflation in our economy. We’ve got a housing policy, and that’s not in it. We’ve made that clear today.”
But it wasn’t really clear and six more questions about negative gearing followed.
The ghost of policies past even followed him to Beijing, where he made the first visit by an Australian treasurer in seven years. There, after days of speculation about how treasury came to be working on this advice, Chalmers continued to walk a careful line.
“When it comes to negative gearing changes, it is not unusual at all for governments or for treasurers to get advice on contentious issues which are in the public domain, including in the Parliament,” he told journalists. “It is not unusual for treasurers to do that, but we have made it very clear through the course of this week that we have a broad and ambitious housing policy already, and those changes aren’t part of it.”
He said it’s not unusual for treasurers to get advice but he didn’t actually say whether he’d asked for – or received – any. It would be a bit unusual if treasury officials were working on options for adjusting such a controversial policy measure without the treasurer at least knowing about it. Word is, while advice may have been prepared on policy options, it hasn’t yet gone up the hill.
Chalmers’ protestations notwithstanding, not much has been “very clear” about the government’s public responses in the days since the newspaper report appeared.
The prime minister, Anthony Albanese, tried to wave the issue away, saying the government had no “plans” to make changes – a language construct he also used when asked many times if he would amend the Coalition’s tax cuts in the months before he did. In that case, it was a denial and then it wasn’t. So you can see why this kind of response might not exactly stop the questions.
“We have no plans to touch or change negative gearing,” Albanese said on Thursday. “What we’re concerned about is supply of housing.”
He added that he was “not convinced” that paring back the concessions underpinning negative gearing would help supply. When Labor under Bill Shorten proposed the move, its plan was to grandfather all existing arrangements and restrict future arrangements to newly constructed homes. Then, it was pitched as a housing supply measure.
Even if that argument could be made again, the political appetite for making it seems vanishingly small. It’s less evident that the same goes for any adjustment to capital gains tax arrangements. It’s just not clear because there’ve been no definitive denials.
In the midst of a flurry of interviews featuring the “no plans” lines, Albanese made a slightly more absolute-sounding statement when ABC News Breakfast host Bridget Brennan asked for clarity on Thursday, on behalf of viewers.
“Are you considering taking negative gearing reform and capital gains tax reform to the next election?” Brennan asked.
“No, we’re not,” the prime minister responded. Of course, politicians aren’t considering something until they are. Still not really clear.
At a news conference on Friday, he was not repeating that language and the only thing clear was his irritation. Asked, again, for clarity, he said: “Just for clarity, what we are doing is what we have before the parliament. So I talk about what we’re doing, not what we’re not doing.”
The refusal to be clear or even consistent means the rogue balloon remains aloft.
Contrast that with another time under this government that something floated into the public domain and got caught in a force-10 gale. On that occasion it also involved the treasurer, though then by his own hand.
On 20 February last year, Chalmers addressed the Australian Superannuation Funds of Australia and raised concerns about the sustainability of the tax concessions on superannuation balances.
“I think it is important that we recognise if our big task is to make superannuation sustainable, then this kind of conversation shouldn’t be off the table,” he said at the time.
It was certainly a dispatch with all the characteristics of a test balloon. Unfortunately for both treasurer and government, the journey skyward began without a tethering strategy and the damn thing got away.
Doing something about capping super concessions was a live discussion inside the government at the time but there had been no actual policy decision. They hadn’t even fixed on where such a cap should be set. The opposition seized on Chalmers’ big thought bubble and the debate exploded.
The government didn’t want the idea itself to go the same way. Within two days, the treasurer was seizing control of the renegade blimp and trying to steer it to a safe landing. He doubled down on the proposal and started speculating about capping concessions once contributions hit the $3m mark.
Just over a week after the balloon went up, Chalmers and Albanese announced their new policy – a concession cap on contributions above $3m.
But it’s a bit different this time. On whether something might be going on with negative gearing or capital gains tax or both, it seems a notion has taken off without anyone from the government letting it go. At week’s end, it was still on the loose.
Maybe they think it will just quietly deflate and drift back to earth. But speculation has a remarkable capacity to remain airborne.
History suggests to avoid a nasty crash there are only two ways to deal effectively with a political balloon that gets away, whether as a tester or a rogue release.
It needs to either be hauled back in and tethered to some kind of announcement, or burst.
Karen Middleton is Guardian Australia’s political editor
