8 January 2018
Transcript - #2018001, 2018

In the role of: Minister for Revenue and Financial Services [19 July 2016 - 28 August 2018]

Interview with Sandy Aloisi, ABC News Radio

SUBJECTS: negative gearing, housing

SANDY ALOISI:

The Federal Opposition is seizing on official documents this morning that it says refute the Government's criticism of a key Labor policy. You may recall that prior to the 2016 federal election, the ALP pledged to crackdown on negative gearing and capital gains tax to help level the playing field between first home buyers and investors. The Government slammed the proposal, with Prime Minister Malcolm Turnbull saying it amounted to taking a sledge hammer to the housing market. But Treasury documents, released under Freedom of Information laws, state that Labor's policy would have only a small impact on house values. So, did the Government exaggerate its claims? Kelly O'Dwyer is acting Treasurer and joins us now. Kelly O'Dwyer, good morning to you.

KELLY O'DWYER:

Good morning Sandy. Lovely to be with you and your listeners.

SANDY ALOISI:

Well, Treasurer Scott Morrison responded to Labor's policy to restrict negative gearing to new homes with claims it would crash confidence in the economy. Was he overstating it?

KELLY O'DWYER:

No, Treasury's advice confirms what we've been saying all along, that to have a permanent tax hike – which is what Labor's proposing – to increase capital gains tax by 50 per cent and to remove negative gearing would have a disastrous impact when combined with weakness in the housing market and that's what the documents reveal. I mean, let's be quite clear. With the slightest scalpel-like changes by the regulator, APRA, to macroprudential rules on interest only lending, we have seen Sydney house prices fall from double digits from around 15 per cent to around five per cent in six months. So, what Labor's proposing is to slash house prices by an even more significant amount. At this point in the cycle, what do they think that would do to confidence, consumer spending, growth and employment? And let's also understand that housing investment is more than two-thirds of Australia's household net worth. So, Mr Shorten should come out, he should admit that his goal is to reduce wealth and to slash the value of Australian homes.

SANDY ALOISI:

Kelly O'Dwyer, before we get into a bit of a battle with what Labor's policy is now, let me take you back to those Treasury documents. You say the Treasurer, Scott Morrison, was not overstating it when he said – and the Prime Minister too – that Labor's policy would be like taking a sledge hammer to the housing market. Treasury documents clearly, clearly reveal it would have just a small impact.

KELLY O'DWYER:

Well, look, firstly, let me say that these documents were drawn up at the time that the policy was released and before any changes to macroprudential rules but there was nothing inconsistent with what the Government has been saying…

SANDY ALOISI:

It sounds clearly inconsistent!

KELLY O'DWYER:

The Government has a very careful, calibrated plan around housing affordability and it's already working. I've talked about the changes that the regulator has made which is designed to limit riskier lending to investment properties and are bringing down investor lending. The Government has also tightened the rules on foreign investors to ensure that they can't purchase existing homes and we have sold up on foreign nationals to the tune of more than $100 million in illegally purchased property. Now, this stands in contrast to Labor, Sandy, who actively weakened the rules and didn't sell up one property when they were last in government. We have also legislated a tax cut for first home buyers by allowing them to save for a deposit inside of superannuation through the First Home Super Saver Scheme which people can take advantage of now and we have legislated incentives for older Australians to downsize their homes by allowing them to contribute up to $300,000 into their superannuation, which will free up more family-sized homes.

SANDY ALOISI:

OK. So, Ms O'Dwyer, with great respect, we have strayed away from our original discussion which was about these Treasury documents. This was confidential advice, given to the Treasurer, which seems to contradict what he said to the Australian public. Now, the Opposition is accusing the Treasurer of lying. What do you say to that?

KELLY O'DWYER:

Well, I say it's completely false and this is typical of Labor's beat-ups. I mean, let's not forget…

SANDY ALOISI:

How can it be completely false when the Treasurer said one thing and the confidential documents show he was given advice saying another?

KELLY O'DWYER:

Well, what we have said is entirely consistent with what the advice that Treasury have in fact released – that's point number one. Point number two is Labor will do anything to distract from the fact that their tax hikes now mean that they are going to have a dramatic impact on Australians and the Australian economy to the tune of tax hikes or increases of more than $160 billion if they were given the Treasury benches in government. Now, people can decide for themselves whether they think that increasing taxes is a good thing for investment, for employment, for growth and for jobs.

SANDY ALOISI:

What do you say to the Australian public when anyone listening to this would hear that confidential advice given to the Treasurer and the Treasurer then made a comment to the Australia public that actually it was contradictory to that advice? What do you say to the Australian public who would think: well hang on a second, the Treasurer got advice and basically said something entirely different?

KELLY O'DWYER:

Well, Sandy, I don't know if you've actually had a look at these documents. I have had a look at them and there is nothing inconsistent with what the Treasurer said, with what the Government has been saying and the advice that's been provided. I know that Labor would like to change this story, they would like to distract from the fact that their policies would have a very significant impact…

SANDY ALOISI:

But it's not about Labor – I'm sorry to interrupt you – but it's not about what Labor's policies are now, it is about what these Treasury documents are purported to have said.

KELLY O'DWYER:

Well, of course it's about Labor's policies and of course it's about the contrary approach that the Government has taken to the issue of housing affordability. We recognise that if you think that the property market everywhere in Australia is exactly the same – which is what Labor's view is, that they are saying, that what is happening in Sydney is the same as what's happening in North Queensland or Perth – I mean, it's completely wrong. And the idea that you would make changes to tax policy on that basis that would impact the entire country rather than taking a scalpel-like approach – that is the approach – a scalpel-like approach is the approach that will mean that more people can save for their own home, that more people can take advantage of negative gearing. Because let's not forget, the Government is on the side of not only Australian home owners, but also first home buyers and the over one million Australians who negatively gear property. Most Australians who negatively gear property have taxable incomes of less than $80,000 and the RBA has confirmed that negative gearing provides the greatest proportional benefit to low income earners. Now, that is the difference between the Government's policy and Labor's policy.

SANDY ALOISI:

Alright. Kelly O'Dwyer, I'll leave it there. Thank you for your time.

KELLY O'DWYER:

Terrific. Thanks Sandy.

SANDY ALOISI:

The acting Treasurer, Kelly O'Dwyer.