If the tax change was causing trouble, you'd expect it to be...

If the tax change was causing trouble, you'd expect it to be showing up in all cities, not just one or two.

Mr Eslake's conclusion is that rents in Sydney and Perth surged because their rental markets were unusually tight for reasons that had little to do with the tax change.

And this conclusion is supported by an earlier study by Blair Badcock and Marian Browett, geographers at the University of Adelaide.

They say Sydney was the only case that provides support for the claim that the tax change caused problems. "And even here the flow-on effects of the tax changes have to be weighed against the contribution of the general turndown in housing activity in Sydney to the deterioration of the vacancy rate and a real rise in rents," they say.

But the academics remind us of a factor the pollies gloss over: the central role that politics played in the whole affair.

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The REIA began campaigning against the move to curtail negative gearing even before it was put into effect. The estate agents predicted that ending negative gearing would have dire consequences for renters, and they really stepped up their claims of disaster in the federal election campaign of July 1987.

They managed to win the support of the Labor governments of NSW, Victoria and Western Australia, and they put the frighteners on Bob Hawke to the point where, in just the last week of the campaign, he agreed to re-examine the issue.