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Stephen McMahon

Nov 11, 2010

The people will be angry about what we tell them they're angry about

Check out this headline from yesterday's Herald Sun, and

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Check out this headline from yesterday’s Herald Sun, and the story it accompanied:

stamp

It’s obvious what’s important to Stephen McMahon and his editors:

STAMP duty reform is shaping as a key issue at today’s Herald Sun/Sky News People’s Forum.

The latest Treasury figures show home buyers will be slugged more than $15.6 billion in property taxes over the term of the next government. Stamp duty is forecast to peak at $4.17 billion in 2013-14 as the State Government cashes in on Victoria’s booming property market. When Labor took power 11 years ago, the annual tax was worth $1 billion.

But neither party is willing to commit to stamp duty cuts with less than three weeks until the November 27 election.

Alright, but what evidence does he present in support of his headline and primary contention that stamp duty is “shaping as a key issue” at their forum, where “the people” will “have their say”?

None.

The only quotes in the article about stamp duty and taxes are from self-interested lobby groups like the Real Estate Institute of Victoria. They find one bloke on the printed page to ask about stamp duty, but to suggest that makes it “the key issue” about which there is “rage” in the community (as opposed to in the REIV, which will obviously benefit if stamp duty is cut and house prices inflate to make up the difference) is absurd. Who’s “raging”? Where? Why are they not in your story?

A spectacularly shameless example of a paper trying to tell people what they think (in a frankly misleading way), ahead of asking them.

But did it work?

Well, not one single question on the issue made it to the Herald Sun‘s transcripts of the questions for either Mr Brumby or Mr Baillieu. These “locals” it found didn’t mention it (actually, they mentioned a Greens policy, a rail line out to Doncaster – but of course at “Herald Sun/Sky News People’s Forum” the Greens were not allowed to speak). From their story, it looks like the only mentions of stamp duty were from Baillieu, indicating that he was going to make an announcement in the future to cut it in some way.

But, if you ignore the shameless editorialising in the Hun’s report (“VIOLENT crime, cuts to stamp duty and the Labor Government’s 11-year record last night dominated Victoria’s first people’s forum”) and look for the actual evidence of voters being particularly concerned with stamp duty – it’s simply not there.

Some “rage”.

PS: For the record, although at first glance it sounds like a cut to stamp duty would make housing more affordable, in reality it would – like the first home buyer’s grant – push prices up.

That’s because people tend to bid what the bank will lend them, which means that a $380k house plus $20k stamp duty will just become a $400k house. The vendor and real estate agent will pocket the difference – and existing home-owners, with more equity in their existing properties, will be able to borrow several times more than the difference when they go out to gobble up entry-level properties as investments by outbidding first home buyers.

And that’s quite apart from the tax revenue that would have to be sought from another source.

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26 comments

26 thoughts on “The people will be angry about what we tell them they’re angry about

  1. DeanL

    Some facts on stamp duty here:

    http://www.sro.vic.gov.au/sro/SROnav.nsf/alltitle/First%20Home%20Owners?open

    Summary:

    For a new home in Melb, a first home buyer is eligible for $20K in grants ($7K for an existing home first home buyer).

    Stamp duty on a $500K home is around $22K.

    So, the grants are pretty much off-setting the stamp duty, exceeding it if the home is lower in cost (a $400K home has stamp duty of around $16K)