TOM TILLEY:
Josh Frydenberg, thanks so much for joining us.
JOSH FRYDENBERG:
Good afternoon. Great to be with you.
TOM TILLEY:
Why do you believe dropping the GST on tampons and pads was the right decision?
JOSH FRYDENBERG:
Well, as you pointed out, it's been an anomaly to not have condoms and lubricants with the GST, but to have tampons on there and other feminine hygiene products was out of step with community expectations. So, I'm glad that the states, the territories and the Commonwealth could reach agreement. We put it on the agenda and now the GST will come off these feminine hygiene products from the 1st of January next year.
TOM TILLEY:
So, if it's such a clear decision in your mind, why didn't it happen sooner?
JOSH FRYDENBERG:
Well, I think lots of reasons, namely you never want to get between a state government and a bucket of money, as Paul Keating famously said, and removing it is going to cost them $30 million a year. But in light of other changes that we've made to the GST, in particular extending it to online purchases, the states are benefitting to the tune of $6.5 billion over the forward estimates.
TOM TILLEY:
Okay, and why not enact this change straight away? Why are we waiting until January?
JOSH FRYDENBERG:
Well, we are going to consult publicly and, again, with the states and territories over the definition of those hygiene products and there is going to be a bit of a transition period for the industry and the 1st of January, you blink and it will be there. So, it's not that far away.
TOM TILLEY:
On the text line, "speaking from someone who is 16 and had my period now for 80 days and then other long periods in one time, I'm absolutely over the moon about the cut of GST on sanitary items," and someone else says, "I think the tampon tax is just a distraction from how crummy the Liberals are at the moment."
You are listening to the Federal Treasurer, Josh Frydenberg, talking about his involvement in helping get the States over the line to drop the GST on tampons and other sanitary items. We will ask him some other questions. Treasurer, we have lots of young listeners who have been worried that buying a home was slipping out of their reach. So do you think it's a good thing that the housing market is softening in the bigger cities?
JOSH FRYDENBERG:
Well, it's certainly the view of the Reserve Bank Governor that the housing market is coming back to a sustainable level. So, that is something that we do support.
We've seen capital city housing prices fall for 12 consecutive months and first home buyers have entered the market in their highest numbers in a decade. So, that is a good thing. We've also seen a change in the housing market dynamics away from investors because the rules by the Australian Prudential Regulatory Authority have been tightened there, more to owner‑occupiers and that is going to be good news for first home buyers.
TOM TILLEY:
Just a quick question that's come in on the text line about the last topic, the tax on tampons, "can we get our tax money back if we've been paying it unfairly for so many years?"
JOSH FRYDENBERG:
Look, there's no retrospectivity to this change. It's going forward from the 1st of January.
TOM TILLEY:
Okay. Back onto housing. You've been giving dire warnings about Labor's plan to scrap negative gearing on existing properties. You said it's going to smash the housing market. How bad do you think it will be and what are you basing your predictions on?
JOSH FRYDENBERG:
Well, there is a lot of data out there that says over 1 million people have negative‑geared properties, two thirds of whom have a taxable income of less than $80,000 and the existence of negative gearing has made renting more accessible to many people.
You take negative gearing out of the market and suddenly rents will go up because people won't be getting the same sort of capital gains that they do.
TOM TILLEY:
But first home owners might be buying those properties and therefore coming out of the rental market, couldn't that even out?
JOSH FRYDENBERG:
No. What we'll see, as a result of Labor's abolition of negative gearing, is people losing value in their homes and given that most people see their home as their primary source or their primary asset, their primary source of wealth, this is not something that will be a good outcome for families across the country.
TOM TILLEY:
But how bad is it going to be? You've said it's going to smash the housing market. Are you talking 20 per cent? Can you put a figure on it?
JOSH FRYDENBERG:
Well, what we've already seen is the housing market coming back to sustainable levels so this will come at the worst possible time for people's values of their homes and this is exactly what the Labor Party had intended to happen, namely that the housing prices would fall and even they, I think, are going to be shocked by the way the public see this policy.
TOM TILLEY:
Scott Morrison had advice from the Treasury Department in 2016 and they said in the long run the scrapping of negative gearing could have a relatively modest downward impact on property prices. So, if he's not going on that advice, what advice are you going on that it could smash the market?
JOSH FRYDENBERG:
Well, actually, the Treasury advice did say that it could have a negative impact on the housing market and that it could particularly be coming at a time when the housing market was slowing. That's actually turned out to be the case.
But we've seen a lot of reputable organisations talk about the impact it would have on the housing market and that's the purpose of their changes and, you know, I think just like some of their other changes, the new tax on retirement savings, which will hurt pensioners and other people like self‑funded retirees; like their failure to support our legislated changes on income tax; and their decision to wind back the tax cuts for small and medium‑sized enterprises, that will stifle growth, stifle jobs, stifle investment in the economy and ultimately see the economy perform less well than it currently is.
TOM TILLEY:
Okay, so if Labor's plan is going to smash the housing market, should people hold off from buying a new property until the election?
JOSH FRYDENBERG:
Well, one thing a federal or a state treasurer should not do is be giving property advice or other forms of financial advice. What I can say is I look at the national economy, the national economy is growing well.
At the same time there are some challenges internationally including the trade tensions that we're seeing playing out between China and the US and we're continuing to watch the domestic market very closely. But your listeners can rest assured that the Australian economy is growing well, jobs are being created and the budget is coming back into balance a year earlier than expected.
TOM TILLEY:
Alright, just before we let you go, Treasurer, lots of Triple J listeners were concerned that in your previous role as Environment Minister you gave $444 million to the Great Barrier Reef Foundation without a competitive tender process. Was it initially your idea or Malcolm Turnbull's?
JOSH FRYDENBERG:
I was the one who took the submission to the Expenditure Review Committee and let's not forget that the Foundation is the leading Reef charity in our country and let's not forget that the Government was making a commitment to improve the water quality and the health of the Reef, building on the $2 billion Reef 2050 plan that we put together with Queensland.
So, this was a very significant investment and my Department advised me in writing that this represented value for money; that it was consistent with the Government's guidelines of grants; and that it would help us meet our objectives, which is to support the science, to support the farmers have better farming practices when it comes to improving the water quality of the Reef and that we would be helping the Barrier Reef maintain its status as one of the great natural wonders of the world.
So, this is an investment that we really should be welcoming and we should be comparing what we've done as a Government with the Reef where we banned the five dredge disposal projects that were planned for the marine park, that we were successful in getting the Reef off the in danger watch list and that we put in place a long‑term plan. All things the Labor Party failed to do when they were in government.
TOM TILLEY:
Josh Frydenberg, I'd love to ask you a lot more questions about that but we're out of time. Thank you so much for making time for us on Triple J.
JOSH FRYDENBERG:
Always good and look forward to joining you again.
TOM TILLEY:
Speak to you soon.