Albanese and Chalmers play cat-and-mouse on negative gearing with the public – and possibly with each other

Is the government seriously interested in changing arrangements on negative gearing? After days of questions to Prime Minister Anthony Albanese and Treasurer Jim Chalmers, who would know?

They’ve engaged in obfuscation at every turn.

Today, Chalmers was asked, at a news conference in Beijing, whether he had told treasury to model reforms of the tax break for property investors.

He replied:

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. 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.

Not unreasonably, the Australian Financial Review took this as Chalmers owning the request to treasury. But his office contested the interpretation, insisting he’d said nothing he hadn’t said before – taking us back to the position that the request formally remains an orphan.

The story started earlier in the week with a report in the Nine papers that the government had asked treasury for work on options “to scale back negative gearing and capital gains tax concessions”. The report did not specify who’d done the asking, although Albanese later said it wasn’t him, and told reporters to quiz Chalmers instead.

That treasury is working on options has inevitably raised the suggestion that reforms to negative gearing is on the agenda, perhaps as an election commitment.

Given the government’s reaction, the story may have been a genuine “leak” rather than a deliberate balloon (although it’s often hard to be sure who’s holding the sting of balloons).

Anyway, it put Albanese in a very grumpy mood in his television interviews. Fancy journalists trying to insist on a straight answer when he kept dodging and coming up with, in today’s much-used term, “word salads”.

He stressed the government had no plans to change negative gearing. Then he got cross when it was pointed out it had had “no plans” to change the stage 3 tax cuts, until it did suddenly have a plan.

Does the history of the stage 3 change give us any clue to what’s going on here?

In that instance, Chalmers was the one wanting change as far back as soon after the 2022 election. Albanese held out, worried about what a broken promise would do to his reputation for integrity.

In the end, under the pressure of a looming byelection, change came this year. Although the shift was well received, we’re now seeing it did damage him on the integrity front – his word is not automatically believed, and his phrases are carefully parsed.

Thus when he was asked, “are you considering taking negative gearing reform and capital gains tax reform to the next election?” and he replied “No, we’re not”, this was not regarded as a definite “no”.

Could it be that Chalmers is again putting himself at the forefront of seeking to alter policy, while Albanese is equivocal or resisting?

If that is so, it reprises an old story that crosses governments: differences between a treasurer with strong views (Paul Keating, Peter Costello) and a leader (Bob Hawke, John Howard) who is politically more cautious.

If there is any substance to the theory of a difference between Chalmers and Albanese, the treasurer would be very frustrated with his boss for hosing down a change to negative gearing, to the extent he has. And Albanese would be very annoyed if he thought the treasurer was responsible, by seeking options, for landing him in this pickle.

There are strong views among experts about whether negative gearing should be scrapped or capped.

But given that making the change would not significantly add to the total supply of housing, it’s really about the politics.

The Greens are taking skin off Labor on the housing issue, as well as holding up two government housing bills in the Senate. The government is worried the Greens could successfully milk the issue at the election, especially with younger voters, many of whom see house prices rising further out of reach and rents badly stretching their budgets.

Labor is pouring billions into housing but the results are set to fall well short of the numbers needed.

Tackling negative gearing might be a “look over here” policy to undermine the Greens and attract the young. But it would be ripe for a fear campaign from the Coalition and, as Albanese says, it wouldn’t solve the problem of the inadequate supply of homes.