Stephen Cenatiempo:
Time to talk federal politics with the Assistant Minister for Productivity, Competition, Charities and Treasury and the Member for Fenner, Dr Andrew Leigh. Andrew, good morning.
Andrew Leigh:
Good morning Stephen, how are you?
Cenatiempo:
Very well. Now Andrew, we see on both sides of politics, travel entitlements used incorrectly from time to time. But beyond that, where was the evidence of wholesale corruption at a federal level that we needed this NACC?
Leigh:
Well, there were a number of scandals under the Morrison government. You had the Paladin scandal, you had the sports rorts, you had car park rorts, you had the scandals around that required the resignation of Minister Bridget McKenzie.
Cenatiempo:
But again, coming back. But this is my point when, you know, when we’re talking about car park rorts and sport rorts, this is just the other side of politics did something so therefore it’s corrupt, it’s not real corruption?
Leigh:
Well Minister McKenzie stepped down because what was judged to have been a breach of the ministerial code of conduct. Under Robodebt, you certainly had people who took their own lives as a result of a terrible…
Cenatiempo:
Yeah but, but Andrew that’s not corruption, that’s bad policy?
Leigh:
Well what you had under Manus Island was you had a contract being given to a firm with a no‑bid contract, which was operating in a small shack. That certainly raised a range of eyebrows. And you have certainly these ongoing challenges. The tax office has had some issues recently which resulted in the resignation of one of their senior people over the actions of his son.
So it’s not just what politicians are doing, it’s also what’s happening with the public service. You go back further, you’ve got the UN Oil‑for‑Food Scandal, of course the Khemlani loans affair on my side of politics. And you have various resignations under the Howard government over a whole series of travel rorts scandals.
Cenatiempo:
But this is my point. Those things were handled with the existing bureaucracy. Khemlani is a classic example. The travel rorts in 19 – and we’re going back to 1996 there, we still see that kind of behaviour. Anika Wells has been the most famous of them recently. But there are institutions and bureaucracies in place to deal with this. Why do we need to spend millions of dollars on an organisation that is clearly falling apart at the seams?
Leigh:
The NACC is not the only game in town, you’re quite right about that. And there’s other accountability mechanisms, such as the one to which Minister Wells appropriately referred herself. But it is important at a time which we’ve got anti‑corruption bodies at the state and territory level to put one in place at a federal level, and indeed that’s why the Morrison government promised to do so and yet failed over the course 3 years to actually put that into place. So putting in place a NACC was a bipartisan reform. The Coalition voted for it and we finally got on to do the job. And I think the stepping down of Commissioner Brereton does provide an opportunity for a reset for the organisation.
Cenatiempo:
Well, but an organisation shouldn’t need a reset this quickly should it?
Leigh:
Look, it’s less than ideal but I think it does create new opportunities for a fresh approach and that’s what the NACC is focused on. We’re very respectful of how it handles its matters and its independence from government, but I do think it’s part of one of the institutions of government that ensures that we have higher trust in government.
Cenatiempo:
Yeah okay. I don’t know that that’s helping at the moment. The latest Redbridge poll shows One Nation overtaking Labor as the well in primary vote support. Now, I take Redbridge polls with a bit of a grain of salt but clearly this is evidence that the Budget has fallen like a lead balloon?
Leigh:
Tax reform is often accompanied by challenges in the short term. You look at the Hawke government when it introduced fringe benefits tax and capital gains tax in 1986 and then fell behind the Coalition in the polls. I don’t take polls terribly seriously Stephen. If you go back to the beginning of last year, Peter Dutton was clearly leading the polls and set to become the next Prime Minister. So I’m really focused on what makes a difference for Canberrans and how to get more money into people’s pockets. We’ll deliver nearly $3,000 worth of tax cuts and how to get more young Canberrans into homes and our reforms are all about housing affordability and making sure that young Australians get a place of their own.
Cenatiempo:
But except for the Barefoot Investor, every expert, I should say, has said that it’s not going to work. And when you look at the auction rates over the weekend, particularly clearly, first home buyers aren’t flocking to buy property?
Leigh:
Well, you look at the comments from Saul Eslake, Chris Richardson, Ken Henry, Aruna Sathanapally, Grattan Institute and E61 – there’s been a range of experts that have come out and spoken in favour of reforming these systems. And indeed, the call to curtail negative gearing, the capital gains tax discount, has been out there for years. Joe Hockey in his farewell speech to parliament was saying that negative gearing should be restricted to newly built homes. That’s exactly what we’re doing.
Cenatiempo:
If you guys are suggesting that you’re now following Joe Hockey’s lead, well I’ll eat my hat. But explain to me this; why do you consult after you’ve put a policy in place? Why not consult before you do?
Leigh:
We certainly are part of that conversation. The Economic Reform Roundtable was about engaging in the reform conversation. And then when you announce reforms, you focus on the particular implementation details of those reforms. That’s something we do a lot in my space in the competition consumer area and it’s normal to do in the tax space too.
Cenatiempo:
Yeah, okay. Most people out there in voter-land would say, ‘Oh, hang on a sec – you should have asked us first rather than asking us after’. But clearly these measures have spooked the market?
Leigh:
What we’ve seen is more first homeowners beating out investors at auctions. For my mind, that’s a good thing. We’ve seen so many stories of first homeowners just not being able to get a foot on the property ladder and investors getting their fourth, fifth, sixth home instead of them. I think if there’s that rebalancing, that’s good. There’s a range of stories around about that and that’s a healthy thing.
Cenatiempo:
But Andrew, isn’t that the dishonesty of this whole campaign when you keep talking about fifth, sixth, seventh homes when the reality is that 85 per cent of investors are mum and dad investors with maybe one or 2 investment properties. Wouldn’t it have made more sense to just put a cap on the number of properties where you can get the tax breaks?
Leigh:
What we’ve done Stephen, is to ensure that negative gearing continues to operate for existing properties. So you’re grandfathered if you’ve already got a property. Or for a new investor who’s buying a newly built home and thereby adding to the housing stock for the rest of us.
Cenatiempo:
But don’t you realise that most investors, and those mum and dads that I’m talking about who own one or 2 homes will go and buy a cheaper property at the bottom end of the market – an existing property because they can’t afford to build a new home and therefore aren’t going to. So it’s all well and good to say, ‘Well you can negative gear a new home’, but how many investors can afford to build one?
Leigh:
Well Stephen, we’ve got the home ownership right now at the lowest it’s been in 60 years, falling particularly steeply for young Australians. People are struggling to get into their first home and that’s the priority for the government. Most of that’s about housing supply, such as the big development that the Commonwealth is co‑funding near the Belconnen owl on Benjamin Way. But part of it also is about getting the tax settings right in a way in which the experts have been urging on us for years.
Cenatiempo:
Andrew, I would love to talk to you about other things but I’ve got to move on. I appreciate your time this morning.
Leigh:
Thanks Stephen, take care.
Cenatiempo:
Dr Andrew Leigh, the Assistant Minister for Productivity, Competition Charities and Treasury and the Member for Fenner.