In his final address to Federal Parliament, former treasurer Joe Hockey dropped a couple of big truth bombs.

Freed from the requirement to sell the government line, Hockey advocated an increase in the GST, a top marginal tax rate of 40 per cent, a 20 per cent corporate rate and a big reduction in various tax concessions to pay for these changes.

“In that framework, negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property,” he said.

Two treasurers on, we are back to claims from the Government that without negative gearing house prices will collapse, rents soar and the world come to an end.

Complete and utter tosh.

We’re back here because of Labor’s now 21/2-year-old policy to overhaul negative gearing which is the way Australian property investors can write off losses against their total income.

Those losses amounted to more than $12 billion in 2015-16 (offset by the $8.6 billion made by people who owned positively geared investments).

It’s a peculiarly Australian (and New Zealand) concession with no other country enabling property investors to write off their losses against their total income. And we do it on top of a concessional capital gains tax system that encourages investors to dive into property, get taxpayers to pick up their losses while they wait to sell off their unit or house for some extra cash.

Labor plans to restrict negative gearing only to losses made on new properties. Importantly, for the nation’s 1.3 million people who are currently negatively geared, the tax concession will be grandfathered.

When the ALP’s Chris Bowen first announced the policy, then treasurer Scott Morrison conceded that there were “excesses” in negative gearing. The fastest growing negative gearing segment has been among people who own five or six or even more properties.

But with the Government wanting to portray Labor as a threat to homeowners everywhere, the “excesses” were dumped in favour of fire and brimstone.

Malcolm Turnbull warned Perth residents that a 6 per cent fall in prices to 2016 would be nothing compared to what would happen if Labor got its way. Since then, Perth prices have edged down another 6 per cent.

With the Morrison Government facing its political Waterloo, it is now returning to its message of property destruction aided and abetted by elements of the property industry who only ever see benefits in higher prices.

Some property spruikers claim Labor’s policy is partly responsible for the fall in prices now evident in Sydney and Melbourne.

Only problem — if you’ve got a policy that grandfathers existing investors, then they should be diving in to the property market right now ahead of the changes to safeguard their position, thereby pushing up prices.

The reverse is happening, and that’s being mostly driven by Government policy to make the banking sector stronger.

Another problem is that we actually have a lived experience of life without negative gearing which occurred in the mid-to-late 1980s.

Supporters of the tax perk claim it led to disaster, saying landlords went on “strike” which in turn drove up rents in every nook and cranny.

Sadly for those who mount the argument, it’s just not true. Rents rose in Sydney and Perth but were steady in Brisbane, Hobart and Adelaide while they actually slowed in Melbourne.

There was no extraordinary change in house prices through the period. In Sydney they jumped by 43 per cent, in Perth by about a third, by 12 per cent in Brisbane and by just 9 per cent in Adelaide.

A policy that was causing so much damage should be doing it consistently across the country. Sadly, the facts get in the way of that fairytale.

So instead, we’ve got “modelling” of changes to negative gearing claiming huge falls in house prices and massive job losses. None of the modelling, however, has been of Labor’s actual policy.

These have been pushed by organisations with vested interests who put the needs of future generations or current taxpayers way down their priority lists.

What we do know with certainty is what happened when Peter Costello halved the capital gains tax rate (replacing a system whereby capital gains were taxed at a taxpayers’ full marginal rate less an adjustment for inflation).

In 1998-99, the last year of the older capital gains tax system, the nation’s landlords made a taxable profit of $700 million. A decade later, landlords were making a total loss of $6 billion.

This one policy overhaul changed the nature of negative gearing, enabling people to defer tax while waiting on a super-charged property market to deliver them huge capital gains which were then concessionarily taxed.

Great for those people. Not so great for anyone who might want to buy a house now or into the future with the income-to-price ratio hitting all-time highs.

It’s no surprise that since that change to capital gains tax, and the way it intersected with negative gearing, the proportion of Australians owning outright has plummeted while the level of household and mortgage debt soared to record levels.

In 1988-89 about 60 per cent of under-35s owned a home or were buying one. That’s now less than 40 per cent as this group finds themselves priced out of the market.

Australian households are the second most indebted in the world, thanks overwhelmingly to big mortgages for expensive homes.

Federal Treasury told Morrison when he was in charge of the department that Labor’s policy would only have a minor impact on house prices.

That was ignored.

Also discarded was advice from the Reserve Bank which has repeatedly noted that negative gearing funnels debt-fuelled investors into the property market in the hope of making a capital gain. The victim is the wider economy.

And the Henry tax review of 2010 proposed reducing to 40 per cent the amount of interest tax-deductible on investments and that the capital gains tax concession be sliced.

Now Josh Frydenberg is out scaring 170,000 negatively geared investors in WA even though under Labor’s policy their investment won’t be affected. It’s not even close to being “truthy”.

To supporters, negative gearing is the Philosopher’s Stone. It’s the elixir of property life even as house prices fallen.

But it’s a poison for everyone else as it imposes a huge cost on taxpayers (which will grow sharply when interest rates rise), advantages debt over equity (when there should be no difference) and hands investors a huge leg-up when competing against genuine homebuyers.