FRAN KELLY:
Treasurer, good morning. Welcome to Breakfast.
TREASURER:
Good morning Fran.
FRAN KELLY:
Treasurer, yesterday you said that the – we’ll talk about the property market issue first – you said the new measures that you announced are essential for reassuring Australians that when they go to an auction they’re on a level playing field. In what way is the playing field uneven right now?
TREASURER:
Well, there is anecdotal evidence and some very firm evidence that foreigners have been buying existing residential real estate in Australia. That is unlawful, and we have, at the moment, not got the resources to be able to properly track that, we have no register of foreign ownership of residential land in Australia. There has never been any enforcement under the previous Government and we are determined to make sure that we have a foreign investment regime with integrity. So, we are setting up not only a system where foreign investors need to pay a fee and register with the Foreign Investment Review Board before they purchase residential real estate but also, importantly, civil penalties if they break the law.
FRAN KELLY:
Just to be clear on the law – because you made this announcement at a house for sale in a Sydney suburb yesterday on the market I think for just over $1 million – just to be clear, under the rules as they stand now, foreign investors who don’t live in Australia, they can’t buy that house can they?
TREASURER:
No, they can't, and if they were to seek permission to buy that house, it would most likely be declined. But if they were buying it for temporary living purposes, they may be approved under certain circumstances, and in the case that the property goes for more than $1 million they have to pay a $10,000 application fee.
FRAN KELLY:
Okay. It is a common belief and concern – as you say ‘anecdotal evidence’ – certainly it's deeply held by many people that foreign investors are pushing up property prices.
TREASURER:
And you know Fran...
FRAN KELLY:
What is the evidence of that? Because the parliamentary inquiry concluded there is little evidence of it, in fact, found that overall foreign investment is good for Australia and good for property prices; do you agree with that?
TREASURER:
Well, it is, it is; there is no doubt about that. We need foreign investment, we want foreign investment, but we also want to have integrity in the foreign investment regime. Now, you know, if a person goes along to an auction and they have a particular ethnicity about them, then there becomes a stereotype that they're a foreigner trying to buy a property – they may be fifth generation…
FRAN KELLY:
And of course they're not necessarily.
TREASURER:
That’s right – that's the point I'm making. They may be fifth generation Australian and perfectly entitled to. So, I think people want to know and be reassured that they're not being forced out of the property market by people unlawfully buying Australian real estate. Now, it's not just about that. It is about setting up a register so that we can actually identify how much real estate in Australia is foreign owned. We do not have that information now. I think the system needs integrity. We're not changing the laws in any significant way. We are simply enforcing the laws, which our predecessors in the Labor Party failed to do.
FRAN KELLY:
Given peoples’ concerns, isn't it also equally important, perhaps as you say, getting integrity and compliance measures in place, but to get out the message that in fact, foreign investment is help keeping – getting more housing stock out on market and that’s what’s going to help keep house price houses down. That's the point the Property Council made earlier – that in your home town of Sydney you are going to face a shortage of about 190,000 homes in the next 10 years, and if we do anything to put off foreign investors, well that's going to put a squeeze on Australian home buyers.
TREASURER:
Then that would suggest that it's far more significant than people are claiming – the level of foreign investment, and far more significant than any of the data we have would indicate. There’s 20 per cent…
FRAN KELLY:
But isn't it something like 20 per cent of the apartment stock – new apartment stock is foreign investment?
TREASURER:
Well, I can tell you – I mean, I haven't got all of the details because obviously we haven't been collecting them because the systems we inherited were effectively broken, but residential real estate properties of less than $1 million, we were advised that we expect around 19,500 proposals, and for residential real estate properties over $1 million, around 2,600 proposals. So, that's around 21,000 – 22,000 proposals in relation to properties. Now, in New South Wales in the last 12 months, under us, there's been a 20 per cent increase in residential construction and it's created a lot of jobs and it's a great story, but we want it to spread throughout the country.
FRAN KELLY:
And a lot of that’s foreign investment money, yeah?
TREASURER:
No, I don't accept that. I don't accept that at all – that a lot of it is foreign investment money.
FRAN KELLY:
Well, the Property Council has certainly come out and said very strongly that it's a key factor in the building and the ongoing building of these kind of apartments?
TREASURER:
I hate to pick you up on that but there is a difference between you saying there's a loss and the Property Council saying it's a key factor. There is a difference there, but there are many factors at play. I mean, lower interest rates are obviously having an impact on property. Again, Fran, I emphasise, we want integrity in the system, and also at the moment, people can apply for free. So, foreigners who want to invest in Australia don't have any application fees. Australian taxpayers are paying for the enormous amount of resources that are dedicated to screening those investment proposals. We're asking people to pay their way who want to invest in Australia. We welcome their investment and we're going to have a fee. Now…
FRAN KELLY:
Can I just – in terms of the paying the way thing, though, sometimes, you know, it feels like we're getting mixed messages because on the one hand, the Government says Australia's open for business under the Coalition Government and you particularly welcome foreign investment, but then we hear things like, well, but, you know, they've got to pay their way. Now, in terms of paying their way, the economy is a connected beast obviously, you know that more than any of us. The Government's enticing – and past governments for many years, enticing foreign students, Chinese students in particular, to Australia to support our education export business, which I think is our third or fourth largest export business and yet these are the people who are buying these houses, aren't they – many of them?
TREASURER:
They're also the people in the case of students that are paying university fees so they pay their way.
FRAN KELLY:
So, they're paying their way now – that’s what I’m saying.
TREASURER:
Yeah, well for university education, yes, and if they want to buy a house in Australia, and they want to make an application, it is about making a small contribution. Now, you look at, for example, Singapore or Hong Kong, they charge 15 per cent for foreign investors – 15 per cent – $150,000 dollars. And if those foreign investors coming to Australia want to buy, you know, a unit or a house in Sydney for $900,000, they pay $37,000 in stamp duty. Well, we're saying: please pay a $5,000 application fee so that you can buy the property. We don’t think that is unreasonable.
FRAN KELLY:
And can I just clarify this because there’s some concern in some of the newspapers today, I noticed from some in the sector: is that $5,000 – is that for an application even if you're then not the successful bidder on that apartment or do you only put in the application fee once you have secured the apartment? Because, obviously, foreign investors looking around might bid on 20 properties and not get any of them. Do they need to pay that fee at each one?
TREASURER:
That's something that is out for discussion. We obviously have the costs of processing the application. We have to do security checks…
FRAN KELLY:
It's not $5,000, is it?
TREASURER:
…on individuals – we need to do checks on individuals. That is not a costless process…
FRAN KELLY:
Your inquiry said $1,500 would do it?
TREASURER:
And we consulted with colleagues in the Liberal and National Parties and their very strong view was that $1,500 is not enough [inaudible].
FRAN KELLY:
Yes, but is that based on anything?
TREASURER:
Well, it's based on consultations already; we said it's up to $5,000. Now, if the community comes back and says $5,000 is too much for a foreign investor to buy a $900,000 home or unit, then we'll take that into account. That's why we go through this consultation process.
FRAN KELLY:
You're listening to RN Breakfast. It’s 16 to eight. Our guest is the Federal Treasurer Joe Hockey. Treasurer, I’m not sure if you've heard the interview with Christine Milne, the Greens Leader on AM this morning, but the Greens are putting a proposal – they've had the Parliamentary Budget Office cost a proposal to change the superannuation concessions, replace the flat 15 per cent tax rate on super contributions with a sliding scale. It would raise about $3.5 billion a year. It would also be a fairness measure, obviously. What's your response to that?
TREASURER:
Well, the Greens are obviously welcome to put forward proposals. I mean, it's very hard, I’m sorry Fran, to take them seriously when they're the only Green Party in the world that actually votes against an increase in fuel excise.
FRAN KELLY:
But on this point of super, they're not the only ones to come up with it. The Henry Report came up with something very close to this. Is there merit in this idea?
TREASURER:
The Henry Report also recommended that we don't go from 9 per cent compulsory super contributions to 12 per cent but there was a resolution of the Parliament to increase super contributions to 12 per cent, which was a trade-off. So, we made a commitment before the last election that we were not going to change super laws for the first term of government. We did so because the previous Government kept chopping and changing the laws. If others in the community want to engage in the conversation about it, they're welcome to do so. But again, I just emphasise, I can’t take the Greens seriously given they're voting against an increase in tax on fuel when in fact it's been part of their platform forever…
FRAN KELLY:
Okay.
TREASURER:
…and when they get the chance to vote on it, they vote against it. So, you know, how can you take the Greens seriously on any economic policy?
FRAN KELLY:
Treasurer, on the Intergenerational Report, you're going to be releasing it soon. When are you going to release it and what's it going to tell us that we don't already know?
TREASURER:
Well, Fran, it is a hugely important document because it represents a look into the future of Australia for the next 40 years. It's released under the Charter of Budget Honesty every five years by whoever is in government. I’ll be releasing it next Thursday and we will begin a conversation with the nation about how we can make sure that our future is as prosperous as our present and our past. It is an exciting document in that it gives us hope that we're going to have longer lives with a better quality of life. It will also illustrate that we have come some way in addressing the structural problems facing the government's Budget, but there is still some way to go as well.
FRAN KELLY:
You're listening to Breakfast. It is 13 to eight. The Federal Treasurer Joe Hockey is our guest. On another matter Treasurer, the issue of the Human Rights Commission President Gillian Triggs, do you share the Prime Minister's view that Gillian Triggs is incompetent and lacks judgment?
TREASURER:
Well, I don't know if he used those particular words but…
FRAN KELLY:
But the Government has lost faith in the Commissioner and her competence?
TREASURER:
I mean, that's right – he didn't use those words. I thought that might be the case.
FRAN KELLY:
Well, lacks competence.
TREASURER:
No, we lack confidence in her, and that's what he actually said – I heard him say it. And the reason why, Fran, you know, when the boats were coming to Australia, people were being locked up. One and a half thousand people died at sea, including children – floating dead in the oceans north of Australia. We said we'd stop the boats. Our critics were hugely critical of us about our policy to do that, but we did. As a result, instead of having 2,000 children in detention as was the case under Labor, we’ve got it now closer to 100 children in detention and we're getting them out of detention centres. No children should be in detention centres. We've actually done that. Now, when there were 2,000 children in detention centres, the President of the Human Rights Commission went to the Labor Minister and said, “I think it might be a bit too political if we have an inquiry whilst you have 2,000 children in detention," but then as we get the children out of detention, down to closer to 100, the President of the Human Rights Commission, as far as I'm aware without consulting the Government, decides to have a full inquiry.
FRAN KELLY:
Is the – the point I'm asking you about is do you agree with the Prime Minister's attack on the Human Rights Commission President, because Malcolm Turnbull one of your colleagues said yesterday the issue is not Gillian Triggs, the issue is the children in detention. Are you concerned or do you believe that the President of the Human Rights Commission deserves to be denigrated – continuously denigrated by the Government – by the Prime Minister?
TREASURER:
Hang on, the Prime Minister said that he does not have confidence, as did the Minister, as has a number of others.
FRAN KELLY:
That's public denigration, isn't it?
TREASURER:
Fran, I mean, if that's public denigration then I tell you what, I cop it every day as does everyone else…
FRAN KELLY:
To an independent statutory authority?
TREASURER:
This is the point: if they're an independent statutory authority, why did they go to a Labor Party Minister when there were 2,000 children in detention and say, "Look it might be a bit too political if we have an inquiry here”. Sorry, Fran, is that the action of an independent authority? That they would go to the Labor Minister and advise that it's probably a bit too political to enquire into children in detention centres?
FRAN KELLY:
I'm not going to answer for Gillian Triggs. She has given an answer many times on that issue…
TREASURER:
No, no, no, it is a very important point.
FRAN KELLY:
…but the Government doesn't accept it – I accept that they don't agree she's been impartial.
TREASURER:
Well, I don't think Australians would accept it. I don't think Australians would accept that's impartial. And then when there's a change of government when we actually [inaudible]
FRAN KELLY:
But she came out with a report that criticised both governments.
TREASURER:
…by getting them out of detention. We're the ones that get the children out of detention. We’re the ones that stopped the children dying at sea and all of a sudden the Human Rights Commission wants to have an inquiry into us.
FRAN KELLY:
No, into the issue of children in detention. It wasn't into the Government. It was into the behaviour of Australian governments and our record of policies on children in detention, wasn't it?
TREASURER:
Well, Fran, whatever the case, seriously, any independent-minded person would wonder about the motivation.
FRAN KELLY:
Just finally, one question, Treasurer: reports in the media yesterday that the federal Liberal Party donors were being put off by the Government's political problems – were holding back on donations. Have you experienced that in your fundraising committee – in the North Sydney Forum?
TREASURER:
Well, for a start, I don't actively engage in issues relating to the level of fundraising in various forums or wherever the case might be, but I must say…
FRAN KELLY:
No, I'm just wondering if you're aware of it?
TREASURER:
… I'm not aware. I mean, you know, Fran, I still have lots of people wanting to come up and attend lunches or dinners or I go to cocktail functions or go to morning tea with my colleagues and there's a lot of people there. Always a lot of people there, Fran.
FRAN KELLY:
Joe Hockey, thank you very much for joining us.
TREASURER:
Thank you very much, Fran.