Our Critique of the Recent Four Corners ‘Home Truths’

With negative gearing and capital gains tax breaks on negatively geared property shaping up to be major election issues, this article critiques the recent Four Corners “Home Truths” which kicked off a lot of the current dialogue and according to host Sarah Ferguson, were the two intended topics of the episo

On the first topic, it seems the reporter spends a lot of air time at cross purposes with at least three of his interviewees.

The second topic of capital gains tax breaks is just ignored.

Here’s some questions to ask yourselves as you watch and listen:

(1) Are you to assume that all of the “investors” to whom Jules McKendry has missed out more than 20 times were negatively geared and/or received capital gains tax breaks?

(2) If so, why should you make that assumption given that Jules McKendry never says so?

(3) By “investors” does Jules McKendry really mean “builders” like those she refers to at the end of the episode and for whom profit on redevelopment or subdivision and sale of property as trading stock rather than negative gearing and capital gains tax breaks would likely be the buying motivation?

(4) Although Karen and Wayne Phillip, who speculated on 18 properties, agree with the only negative gearing question put to them that they “couldn’t have done it without negative gearing” what did they understand “negative gearing” to be and how was it relevant to their strategy if at all?

(5) Why weren’t Karen and Wayne Phillip asked about their capital gains tax breaks if any?

(6) Could the rise of the investor be more a function of interest rates at historical lows than negative gearing and capital gains tax breaks?

Here’s some other questions to ask about Lindsay David’s pretty serious allegation that banks are engaged in fraudulent lending but in support of which, Four Corners’ only evidence is an experience of the ABC’s own Elysse Morgan.

(7) How can Four Corners say Elysse Morgan was “someone who’d had their loan application changed by a bank” and moments later acknowledge “she never found out who changed the figures on her loan application” ??

(8) Where’s the evidence the change was fraudulent?

(9) If the bank fraudulently changed her loan application, why did that bank not also change Elysse Morgan’s husband’s monthly income on the loan application?

(10) Isn’t it fairer to infer in the circumstances given that the change to Elysse Morgan’s monthly income might have been the result of some clerical error?

(11) Was Elysse Morgan’s bank given a chance to respond?

The above is not to defend banks (there is already enough litigation on foot establishing pockets but not acres of dodgy loan applications) nor to express any opinion about negative gearing and capital gains tax breaks. What is suggested however is that at least some of the 15% of air time devoted to the above extracts would have been better spent for example on the intersection between housing affordability, foreign buyers and looming oversupply of high density accommodation in certain capital cities.

While the episode did cover the oversupply in Melbourne, that segment also raised more questions than it answered.

For example, why aren’t all the vacant units Catherine Cashmore mentioned meeting pent up demand for accommodation?

How many of those vacant units were owned by foreign buyers?

Mention should also have been made of the risk of a similar oversupply in parts of Sydney which would also have introduced some balance into Four Corners’ analysis of the banks.

How do you reconcile for example, allegations of fraudulent lending and toxic loans with countless anecdotes suggesting that obtaining a finance approval can be like pulling teeth and that banks are blacklisting several Sydney suburbs.

To sum up: while parts of “Home Truths” were useful, it was not one of Aunty’s finest efforts.