ANOTHER SLOMO OWN GOAL: PC CALLS OUT MORRISON $500 MILLION DEBACLE ON NEGATIVE GEARING

In an extraordinary finding, a draft Productivity Commission review commissioned by Scott Morrison has found that banks have increased existing investment and small business loan interest rates in response to APRA’s macroprudential measures, which through negative gearing has seen the taxpayer subsidise this to the tune of $500 million a year.

 

The Productivity Commission report found that because Scott Morrison has left the heavy lifting to the regulators, banks have taken the opportunity to increase interest rates on their investment loans and that has been subsidised by the taxpayer due through interest rate deductibility and negative gearing.

 

The Productivity Commission said that leaving the heavy lifting to the regulators has:

“Up to half of this gain is in effect being paid for by taxpayers, as interest on investment loans is tax deductible. The Commission estimates that the cost borne by taxpayers as a result of APRA’s intervention was up to $500 million a year.” [page 35]

 

Scott Morrison has previously shown a willingness to jump on draft PC findings and run with them, so there’s absolutely nothing stopping him making a statement this morning to explain how he let the taxpayer get stung by $500 million a year, and more importantly, what he’s going to do to fix this mess.

 

This almost takes the cake in terms of embarrassing SloMo own goals.

 

Scott Morrison is fully responsible for how the banks have responded to the new rules and ultimately passed on a $500 million tab to the taxpayer.

 

The Productivity Commission also makes clear it’s not just existing investment loan holders who have paid the price, small businesses too have had increased financing costs as a result of the banks jacking up interest rates.

 

So while you have a Treasurer crowing about small business benefitting from a company tax cut, Mr Morrison has overseen operating costs for small businesses rising courtesy of the higher small business loan costs.

 

No wonder small businesses have no confidence in the Turnbull Government’s policy priorities.

 

Mr Morrison has pretended that he owns APRA’s macroprudential measures in the residential investment loan segment – despite them being an independent statutory authority – well today he needs to explain the PC’s findings and why he continues to allow the taxpayer to pick-up the tab for this bank rate gouging.