3 January 2019
Transcript - #2018103, 2019

Doorstop interview, Lorne, Victoria

Subjects: Housing market; Labor’s housing tax; and Neil Prakash.

JOSH FRYDENBERG:

Labor's plan to abolish negative gearing as we know it and to increase the capital gains tax by 50 per cent will be disastrous for the Australian economy. Today, leading independent property expert CoreLogic has issued a warning about the dangers of Labor's plans to abolish negative gearing and increase capital gains tax.

They follow a number of leading economists and organisations who've also been critical of Labor's policy, including the Property Council, RiskWise, CitiBank and the Master Builders Association who said that Labor's policy will cost 32,000 jobs, see 42,000 few dwellings being built and be a $12 billion hit to the Australian economy.

You even had Aussie John, John Symond warning that Labor's plans for a new housing tax could even lead, possibly, to a recession.

Labor's policy was designed at a different time in the property market, when prices were going up. Now, prices have come down and Labor's policy is ill suited to the times. Not only that, the Labor Party frontbench can't even get their lines straight on the impact of their policy.

Chris Bowen and Bill Shorten tell you that prices will go down, Jim Chalmers, the Shadow Finance Minister says prices will go up and poor old Joel Fitzgibbon says prices will neither go up nor down. And Labor can't even tell the Australian people the start date for their signature new tax policy.

They only have to listen to their new President of the Labor Party, former Treasurer, Wayne Swan who said, when he was Treasurer of Australia, that to change negative gearing would be economically disastrous for the nation. So, Labor should look at the past words of a past Labor Treasurer to direct their policy today.

At the same time, we are now seeing larger, higher numbers of first home buyers getting into the market. Over the last financial year, over 115,000 first home buyers got a loan approval. This was the biggest number since 2009 and the dynamic of the housing market has changed from investor-led growth to now owner-occupier led growth with first home buyers being a greater proportion of the overall housing market and number of housing buyers.

And this is a result of policies that the Government has put in place like the First Home Super Saver Scheme, policies that we're allowing people that want to downsize their home to put more money into their super, the role of APRA and intervening into the market with targeted short-term interventions to change the housing dynamic away from investor-led growth to owner-occupier growth, as well as the large number of young people who are now in jobs.

We've seen a record number of young people getting into jobs on the Coalition's watch. So now is the worst possible time for Labor's disastrous new housing tax, which will ensure that anyone who owns their own home will see their home worth less and anybody who rents their own home will end up paying more.

JOURNALIST:

Just on what the Government's doing, what's your message to the banks?

JOSH FRYDENBERG:

Well, what we have seen is lending in the housing market from the banks be lower than the 10 year average. And so, my message to the banks – keep your books open. You have a social and an economic responsibility to ensure affordable and accessible and timely loans to the broader public.

It's in the banks interest, it's in the economy's interests and it's certainly in the public's interest.

JOURNALIST:

Has the crackdown gone too far?

JOSH FRYDENBERG:

Well, APRA made targeted and time-constrained interventions in the market and that has had the desired effect, which is to build the resilience of the economy, and they're the words of the Reserve Bank of Australia.  Now those restrictions have been lifted and that has been because their policies have worked.

The concern that the Government and economists and independent analysts in the property market have about Labor's new housing tax is that it's not short term. It's going to be permanent and it's going to ensure that there are less buyers in the market and that means anyone who owns their own home will see it worth less under Labor, and anyone who rents their own home under Labor, will end up paying more.

JOURNALIST:

What impact has this tighter bank lending criteria going to have on the economyand what advice have you sought from Treasury?

JOSH FRYDENBERG:

Well, what we have seen is the lending growth from the banks has come down in the housing market. In terms of business lending, it's still above the long-term average. But now that APRA has lifted some of their restrictions on investor lending, we should see a pick up. But my message is still very clear to the banks. Keep your books open, you have a social and economic responsibility to do so and it's in the economy's interests and it's in the public's interest.

JOURNALIST:

The dollar has dropped to a ten-year low today. Do you consider this an indictment on Australia's economic outlook?

JOSH FRYDENBERG:

Far from it. The dollar goes up and down and as you know, we're the fifth most traded currency in the world. At this time of year, you see smaller volumes of trade, so I wouldn't read too much into that other than to say the dollar moves up and down and it's not for the Treasurer to comment on the daily movements in the Australian dollar.

JOURNALIST:

Well maybe I'll try and get you to. What do you think the currency is reacting to?

JOSH FRYDENBERG:

As you know, there are a variety of factors at play when it comes to the dollar, including what's happened in the United States with their interest rates and we'll see what happens in future weeks and months with the dollar. But it does go up and down and it is the fifth most traded currency in the world.

And in terms of our economic plan, the best vindication of our economic plan, the fact we're on the right track, is the Mid-Year Economic and Fiscal Outlook, which the Government recently announced. It showed that the Australian economy is growing stronger than any G7 nation in the world, except the United States.

It shows that we have seen exports up as the Government enters into new free trade agreements with our major partners across the region. It sees that a record number of people are in jobs; over 1.2 million new jobs have been created on the Coalition's watch, including a record number of women in employment, more seniors in employment and over 100,000 young people got a job over the last financial year, which was the highest number on record.

We've also seen our AAA credit rating reaffirmed by the leading credit rating agencies and we've seen them praise Australia's economic management and we're also seeing a Budget come into surplus next year, which will be the first time in over a decade.

This is a result of strong economic management over the last five plus years, the Government inherited an economy where unemployment was rising, where growth was falling, where debt was rising and we've been able to bring back the rate of government spending dramatically, we've been able to provide tax relief for millions of income earners and for millions of small businesses across the economy and we're putting in place nation building infrastructure projects across the country, including defence industry which has received a major boost under the Coalition.

JOURNALIST: 

If we could just turn to Neil Prakash, Fiji's Prime Minister has reiterated that he won't be allowed into their country, saying he doesn't qualify. What advice were Australian officials provided that shows he was eligible to have his Australian citizenship stripped and that he'd have somewhere else to go?

JOSH FRYDENBERG:

Well, Peter Dutton has dealt with this issue extensively and as he pointed out, the Government received advice from the Citizenship Loss Board and that board deemed he was entitled to citizenship of another country and Australia will remove the citizenship of these dual nationals who are engaged in terrorist activities. We will do everything we can to protect Australian citizens.

JOURNALIST:

But did Australia engage with Fiji before the board made that decision?

JOSH FRYDENBERG:

Well, as Peter Dutton has said, Fiji was notified before the announcement of that decision. 

JOURNALIST:

Because Fiji is saying they weren't notified.

JOSH FRYDENBERG:

Peter Dutton has said…

JOURNALIST:

But how, it seems that he is possibly not a dual citizen, so how is this going to work?

JOSH FRYDENBERG:

Peter Dutton has dealt with this matter extensively, but the key point is we, as a Government, will do everything possible to ensure the safety and security of our citizens.

JOURNALIST:

Thanks Treasurer. I've just got some more questions from that have come through. I'm not sure of the background of this, this is from Channel 7. How can you explain the serious bungle that saw an Islamic State member walk free in Sydney and Melbourne? Are you across that?

JOSH FRYDENBERG:

You can direct those questions to my fellow Ministers.

JOURNALIST:

Great. Did you have anything to add?

JOSH FRYDENBERG:

I've reiterated the main message which is the housing market has cooled, prices have come off, but Labor's policy to abolish negative gearing as we know it and to increase the capital gains tax by 50 per cent would be disastrous for the Australian economy.

We've had independent economists and property experts warn of the dangers of Labor's policy which will see anybody who owns their own home have a house worth less under Labor, and anyone who rents their own home will end up paying more under Labor.

It was a policy that was prepared at a different time, when prices were going up. Now that prices are coming down, it's time that the Labor Party abandoned this terrible policy which will have a disastrous impact on the Australian economy.