18 February 2019
Transcript - #2019030, 2019

Doorstop interview, Parliament House, Canberra

Subjects: Housing roundtable discussion; Labor’s housing tax; small business; small amount credit contracts; and energy prices.

JOSH FRYDENBERG:

Good morning. It is terrific to be here my friend and Parliamentary colleague, Senator Seselja. We’ve just been at a roundtable with some of Australia’s leading property analysts and businesses, representatives of the Property Council of Australia, Real Estate Institute of Australia, Master Builders of Australia. Mark Bouris was there and many other economists and analysts in the property sector. They were there because they wanted to express their deep concern with Labor’s new housing tax; a housing tax that if implemented by the Labor Party, will ensure that anybody who owns their own home will see it worth less and anybody who rents their own home, will end up paying more. There are more than 2 million young people who rent and under the Labor Party’s policy, their rents will go up. The Master Builders Association says that as a result of Labor’s policy to abolish negative gearing as we know it and to increase the Capital Gains Tax by 50 per cent, we will see 42,000 fewer homes being built and 32,000 jobs being lost. Australia has a $7 trillion residential housing market with investors playing a significant role in that housing market. But Labor wants to change the rules. Even after Wayne Swan, when he was Treasurer of Australia, said it would be economically disastrous to change negative gearing. The reality is, the Labor Party’s policy is a mess. They can’t even say when their policy will start and Bill Shorten says prices will go down, Jim Chalmers says prices will go up and poor old Joel Fitzgibbon says prices will neither go up nor down. The reality is that there is deep concern across the community with Labor’s new housing tax and what we’ve seen in new figures released today is that many Australians, aged between 45-59, over half a million, who are actually planning for their retirement will not only be hit by a retirees tax, but will actually be hit by Labor’s new housing tax. This is the worst possible time for Labor’s new housing tax and there is deep concern across the key stakeholders of the industry.

ZED SESELJA:

Thank you, Treasurer. Look, there is no doubt that what we saw today was a message that reinforced the real downsides of Labor’s housing tax. So, yes if you’re an investor you would be aware of the negative impacts, if you’re a mum and dad investor. But, there are millions of renters and there are millions of homeowners for whom this is their only asset. The family home plays such an important part in people’s security and whacking the housing market, and we heard a lot about the potential for a housing shock, obviously we have seen prices coming off their very high prices. And, what we don’t want to see is that further exacerbated through a really reckless policy that has significant flow on effects for the broader economy.

JOSH FRYDENBERG:

Thank you, Zed.

QUESTION:

Can you explain why the Government has back flipped on the small business access for justice measures? And, will you commit to a Lower House vote on the Payday Lending Bill before the election?

JOSH FRYDENBERG:

Before we get to that, are there any questions on negative gearing or capital gains?

QUESTION:

Just a brief one. What, specifically, was the main concern that those people you just met with had about Labor’s policy? What specifically was it?

JOSH FRYDENBERG:

Well, that this would actually hurt the housing market, that this would cost jobs, secure houses being built and be a real deterrent to investors. But, also, we will see that property prices go down and see rents going up. There were very strong messages that came through and we all know that the family home, for most people, is their greatest asset that they will own. But, under the Labor Party’s policy, it will go down. This is a desperate tax grab and it couldn’t come at a worse possible time in the housing market.

QUESTION:

Why would it push down the price of the family home?

JOSH FRYDENBERG:

Because, the whole policy is designed to take investors out of the market and when you take investors out of the market, you got few buyers, and therefore prices are low.

QUESTION:

That’s your policy at the moment…. to reduce the exposure of investors in the property market.

JOSH FRYDENBERG:

APRA have lifted their restrictions and as the RBA said, Shane, APRA’s interventions will help bring resilience to the market. But, the Labor Party’s policy is a permanent change. APRA’s policies were targeted, they were time constrained and they had the desired impact of bringing greater resilience to the property sector. The Labor Party’s policy is permanent and it is a desperate tax grab. And, what we’re really concerned about is the impact on a dramatic fall in housing prices on Australia’s AAA credit rating, on the real economy. We know for so many small businesses, they borrow money from the bank off the value of their home. If their home is worth less, their ability to support their small business will be much more difficult.

QUESTION:

Dwelling values have fallen 7.7 per cent over the last twelve months…

JOSH FRYDENBERG:

Higher in Sydney.

QUESTION:

10.9 per cent in Sydney…

JOSH FRYDENBERG:

Actually 12 per cent…

QUESTION:

Are you saying that that’s having a macroeconomic effect under your policies, a direct impact on the economy?

JOSH FRYDENBERG:

Well, the impact on the economy has helped create a resilience, they’re the words from the Reserve Bank. These were short-term, targeted interventions by APRA that have now been brought to an end. What the Labor Party is proposing is a desperate tax grab which will smash housing prices, and it’s for those reasons that Wayne Swan said it was economically disastrous to touch negative gearing when he was Treasurer.

QUESTION:

Can you explain why the Government has back-flipped on the small business access to justice measures and will you commit to a Lower House vote on the Payday Lending Bill before the election?

JOSH FRYDENBERG:

Well, on the small business measure that you refer to, that will go through on voices. There is only one side of politics that is standing side-by-side with small business, and that is the Liberal and National Parties or the Coalition Government. We have reduced the tax rates for small and medium sized enterprises, over three million of them. We’ve cut red tape, we’ve ensured that they are getting paid on time so that big business doesn’t use small businesses as a bank. And, we’ve introduced legislation to the Parliament for the $2 billion Securitisation Fund to increase access to finance, that is absolutely critical.

QUESTION:

You voted against it in the Senate, why the change of heart?

JOSH FRYDENBERG:

Well, I think our position on small business is very clear. As I said, that will go through on voices. Your other question was about Payday Lending. I note that there’s a Senate inquiry reporting back on Friday. So, from the Labor Party’s perspective, why wouldn’t they wait to see what the response is on those particular issues?

QUESTION:

Just on the big stick, Treasurer. Why did you basically fold on that one in the face of the Greens and Labor’s moves to amend that? There are a lot of National MPs who are quite angry about moves to shelve that legislation. What have you told them?

JOSH FRYDENBERG:

Well, the big stick is absolutely vital legislation. It is part of a suite of measures that we are introducing or have introduced to try and bring energy prices down. As you will know, from the 1st of January this year, many peoples power bills on standing offers went down quite significantly. We are taking measures right across the energy space, including greater investment in storage, particularly through Snowy Hydro which is helping to create more stability for the system, creating a default price, and the work that we’ve been doing through the ACCC. But, this piece of legislation not only has the divestment power, which I emphasise, can only be done after a court order. And, as we see in the United States and the United Kingdom, you’ve got similar powers. But, these sorts of legislation is all about stamping out bad conduct in the wholesale markets and the retail markets and in the contract markets. I don’t know why the Labor Party is against stamping out the sort of bad conduct. We have seen conduct from companies that has led to higher power prices for Australian families and businesses and we stand on the side of the consumer.

QUESTION:

So, why wouldn’t you bring it on for a vote?

JOSH FRYDENBERG:

Well, we obviously need to get strong support of not just crossbenchers, but also we want the support of the Labor Party. They are seeming to stand with the big energy companies against the Australian consumers.

QUESTION:

Was the decision to shelve it in the House of Representatives in any way influenced by pressure campaigns by the BCA and other big business groups?

JOSH FRYDENBERG:

Well, firstly, it’s on the Notice Paper, Phil, and it remains very important Government policy. But, just as the BCA have been against the legislation, COSBOA, representing small business, has been for the legislation. I mean, we stand on the side, not of the big energy companies, but of the Australian energy consumer and families and businesses. Let’s not forget, that when the Labor Party were last in Government, energy prices doubled. They put in place the Carbon Tax, which was punishing. They ignored the warnings on gas shortages on the East Coast of Australia. It was in their own energy White Paper was an AEMO reports about the challenges in the supply and demand balance for gas. And, of course, that input in the storage and backup in place like we are now doing for Snowy Hydro and other projects that we are supporting around the rest of the country. So, our track record on dealing with some of these challenging energy issues shows that we have been able to bring prices down. Labor’s track record is that prices went up.

QUESTION:

In August, Malcolm Turnbull promised to legislate Payday Lending reform this year, is that promise still good?

JOSH FRYDENBERG:

Like I said, we’re going to wait for the report from the Senate Committee on Friday. Thank you very much.