19 November 2018
Transcript - #2018077, 2018

Interview with Ray Hadley, Morning Show, 2GB

Subjects: Labor’s property tax; and Australian embassy in Israel.

RAY HADLEY: 

Treasurer, good morning.

JOSH FRYDENBERG:

Nice to be with you, Ray.

RAY HADLEY:

Obviously you want to be going out about negative gearing and what John Symond has warned about in today in The Australian newspaper?

JOSH FRYDENBERG:

Well, it’s absolutely critical that your listeners understand the true impact of Labor’s plan to abolish negative gearing as we know it, and to increase the capital gains tax on investment properties, because it will hit not just the 1.3 million people who currently negative gear, including teachers, nurses, emergency personnel and police. But also everybody who owns a house today will see their house be worth less under Labor’s policy, and everybody who rents their home today will see their rent go up under Labor’s policy.

RAY HADLEY:

What I don’t understand, it would be a very simple thing to do, for Chris Bowen or for Bill Shorten, to pick up the phone and ring Paul Keating, and say, old mate…

JOSH FRYDENBERG:

...exactly…

RAY HADLEY:

…you changed all this in ’87, by ’89 it was gone.  Why, why did you do that, what happened? And he’d say, well it buggered up the housing market so we tossed it out.

JOSH FRYDENBERG:

Well, Wayne Swan, when he was the Labor Treasurer just a few years ago said it would be economically disastrous to touch negative gearing. And what they don’t understand is that they’re doing it at a time when house prices are coming down and we saw when they came up with this policy, house prices were going up.

But now prices are going down, this would be a disastrous policy to implement. And the Master Builders Association who know a thing or two about employment and the construction sector said Labor’s policy will cost 32,000 jobs, will see 42,000 fewer homes being built.

RAY HADLEY: 

And manna from heaven for you, as a Government, given the various polls and another one out today from Ipsos, and it gives you a free shot, I would imagine, because obviously you have no intention of changing laws in relation to negative gearing.

And I also notice a story from your hometown today, that Melbourne has now surpassed Sydney as the town that’s losing, the city that’s losing the most in relation to real estate.

JOSH FRYDENBERG:

Well, we have seen a correction in terms of real estate, and some of the economists are commenting that it’s because already buyers are factoring in Labor’s policy, and Chris Bowen has made this now an issue of his own credibility. He’s said he’s not changing the policy between now and the election and he’s going to implement it as soon as possible.

But we’ve also seen mixed messages from Labor, Ray, because Bowen and Shorten say that prices will go down, Labor’s Shadow Finance Minister Jim Chalmers says under Labor’s policy, prices will go up, and poor old Joel Fitzgibbons says prices will neither go up nor down.

So, they’ve got a few mixed messages.

RAY HADLEY:

I got some emails last week from real estate agents who were active back in the 80s. One from the eastern suburbs of Sydney that said you just couldn’t get rental properties.

It sort of went back to the bad old days of ‘key money’ back in the 1950s, when there were attempts to bribe property managers because there were so few rental properties available that when they did come on the market, there was a queue of people at the front door as early as Saturday morning to try and secure an inspection.

JOSH FRYDENBERG:

Well, as you know, investors are prepared to take lower rents because they expect a future after tax capital gain. But Labor, by abolishing negative gearing as we know, will take those investors out of the market and therefore, when you sell your property, you’ll be selling into a market with fewer buyers, and your prices will go down.

RAY HADLEY:

Okay.

Just while I’ve got you there. It’s funny how Paul Keating has entered the front here on two stories. This one I’m talking about now, but also on Dr Mahathir and the battles he had with him. I think 25 years ago when he called him recalcitrant because he didn’t attend an APEC meeting in the United States of America. And the good doctor has entered the debate now from Malaysia, about the possibility of us moving our embassy to Jerusalem and you feel very strongly about it, of course, but there’s been various mixed messages about all this.

What’s the Government’s position now despite the intervention Dr Mahathir?

JOSH FRYDENBERG:

Well, Scott Morrison, I think has taken a principled position that he is going to conduct a process, take the input from the experts and resolve our position before Christmas, and I think that’s the right thing to do.

But I share John Howard’s view on this, which is that in principle he has said that the embassy can move to Jerusalem, but more importantly, he said that it’s a basic tenet of our own foreign policy that we decide where our embassies go.

And I think John Howard’s intervention is very, very important.

Israel is alone, as you know, as a country, that Australia doesn’t have its embassy in their own capital. We already acknowledge the sovereignty over West Jerusalem, and the United Nations and some of its agencies have tended to have double standards on Israel compared to other countries.

RAY HADLEY:

If there’s to be a two state solution, could it be a possibility that we have an embassy where the current one is, and have another embassy back in Jerusalem in any case?

JOSH FRYDENBERG:

Well look, people have commented on various options and permutations for that.

But look, unfortunately the peace process is now stalled and you have in the West Bank Hamas, in control, sorry in Gaza Hamas is in control, they’re a listed terrorist organisation and they don’t have good relations with the other Palestinian group in the West Bank, which is Fatah. And as long as that’s the case then Israel unfortunately doesn’t have a negotiating partner at the table.

RAY HADLEY:

Ok, I noticed Christopher Pyne has been on ABC this morning, chiding you and Steve Ciobo about your differencing opinions on all of this. He says that it would be more appropriate for you not to express your strong view, along with that of Mr Ciobo. Have you had a conversation with the Defence Minister about his view?

JOSH FRYDENBERG:

I haven’t seen that. But, you know Chris has been giving his opinion freely on this matter for quite a while, so I don’t know what got into his Weeties this morning.

RAY HADLEY:

Well, exactly. I mean, I actually had the pleasure of sitting adjacent to him recently at a farewell to Angelos Frangopoulos at Sky News, where he does big appearances from time to time and his opening comment to me was, “get over Malcolm, get over Malcolm, Ray”. So, I said listen fixer, you’ve buggered most things up, don’t bugger me up, leave me alone. So the Defence Minister…

JOSH FRYDENBERG:

Chris is his own person…

RAY HADLEY:

Oh yes he is quite unique…

JOSH FRYDENBERG:

Quite unique…

RAY HADLEY:

Quite unique…

JOSH FRYDENBERG:

And we leave him to be a legend in his own lunchtime.

RAY HADLEY:

Yes ok, well as one of your colleagues, Peter Dutton, once described someone from the other side of politics as a weird cat, I think sometimes the Defence Minister is the same. So, telling you to pull your head in, and that’s my words not his, and Steve Ciobo, he’s of course making comment about an issue he wants you not to talk about.

JOSH FRYDENBERG:

Well, he has had plenty to say on it and I will make my comments judiciously and appropriately on all matter of issues.

RAY HADLEY:

And you will probably be on the phone to him when you farewell me. So, thanks for your time.

JOSH FRYDENBERG:

Thank you.

RAY HADLEY:

Josh Frydenberg, the Federal Treasurer.