JIM CHALMERS:
It's a really, really busy finish to the year when it comes to the economy and to economic policy. Today, we've released changes to the foreign investor regime in housing. Tomorrow, my colleague Clare O'Neil will release our new migration strategy and on Wednesday, Katy Gallagher and I will release the mid‑year budget update, so it's a very, very busy week when it comes to the economy and when it comes to economic policy and I wanted to touch on each of those three things.
First of all, the changes that we are announcing today. This is all about building more homes and making more rental properties available for more Australians. These arrangements are already pretty strict but we are making them even stricter. This is about boosting our housing stock and getting more properties onto the rental market for more Australians. We know that the housing market is under pressure, that's why we're investing billions and billions of dollars in our housing strategy and the changes I announced today will help fund those investments. This will raise around half a billion dollars which can be invested in other areas of priority including our broad and ambitious housing policy. Our changes today have four important parts. First of all, we are tripling the fees for foreign investors in established homes. Secondly, we are doubling the vacancy fee for homes owned by foreigners which are left vacant. Thirdly, we are increasing the compliance powers and resources of the Australian Tax Office. And fourthly, we are incentivising more investment in build‑to‑rent properties. These four initiatives are really important. As I said, they are about making sure we've got more housing stock being built, more rental properties coming onto the market for more Australians. This recognises the pressure on our communities, it recognises we have a broad and ambitious housing policy and this is an important part of that policy as well.
The second issue to touch on today is the migration review. Net Overseas Migration peaked north of 500,000 people last financial year and we expect it now to moderate substantially next financial year. This migration strategy is considered, it is methodical, it's all about calibrating our migration settings so that they are in our national economic interest. This is all about recognising the recent history and making sure that our migration settings are best calibrated for the circumstances and for our national economic interest. Now, a couple of important bits of perspective here. First of all, our population shrank for the first time since the Second World War during COVID. The students came back more or less immediately and our tourism sector was strong as well and so the big drivers of the increase in Net Overseas Migration in recent times have been students and tourists and we see that in our services exports numbers as well. But we want to see Net Overseas Migration get back to more normal levels in the coming years and that's all about a better targeted, better calibrated migration system so that we can get it operating in our national economic interest. You'll hear much more about that from my colleague Clare O'Neil when she releases the strategy tomorrow. The last thing to touch on before I take a couple of questions is the mid‑year budget update.
Katy Gallagher and I will be releasing the mid‑year budget update on Wednesday. The mid‑year budget update will be defined by one thing – responsible economic management. Responsible economic management is a defining feature of the mid‑year update because it's a defining feature of the Albanese Labor government. What the mid‑year update will show is a budget in much better nick than we found it when we came to office. One of the big developments, one of the big improvements that people will see in the mid‑year budget update is that we've been able to get debt down even further and get the budget in much better nick. A couple of examples of that – gross debt will now peak lower, much lower than what we saw at the election and lower still than what we saw in the May budget. One example of that is gross debt for this year – 23–24 – was forecast under our predecessors to be well over a trillion dollars, in the mid‑year budget update, it will be closer to $900 million [billion]. We still have pressures on the budget including higher interest rates which are making it more expensive for us to service our debt but by getting the debt down from what we inherited, we will save the Australian people tens of billions of dollars in interest costs to service that debt. That means we can have a much stronger bottom line and we can also invest in other priorities.
We are getting the budget in much better nick – not instead of providing cost‑of‑living relief or investing in the future, we are getting the budget in much better nick at the same time as we roll out tens of billions of dollars in cost‑of‑living help and invest in the future growth of our economy as well. The mid‑year update will show really welcome, really encouraging, really substantial progress when it comes to getting the budget in much better nick, it will also show that we've made room for key investments in housing, in Medicare, in energy, in skills, in all of the ways that we are strengthening our economy.
The government's got four big priorities as we finish 2023 – easing the pressure on Australians, strengthening Medicare, building a Future Made in Australia and securing our place in a world of churn and change and the mid‑year budget update that Katy and I release on Wednesday will advance our interests across all of those fronts as we get the budget in much better nick.
JOURNALIST:
Thanks Treasurer. Can you just confirm the impact these new property fee changes will have on the budget. I think that's a positive impact and if that is a positive impact, does that suggest that these changes might not work particularly well if they are bringing in so much money for the budget?
CHALMERS:
There will be a positive impact on the budget of around half a billion dollars because we are substantially increasing the fees that foreigners pay to buy property here and to leave them vacant. By increasing the fees for foreigners buying property, by increasing the fees for people who leave them vacant off the rental market, then we will raise money for the Commonwealth to invest in our housing agenda and other priorities and we will also incentivise the building of more new homes because the tripling of fees applies to established homes and we'll also incentivise more rental properties coming onto the market by making it more expensive for people to leave them empty. That is a win-win for the housing market, but also for the budget. It helps us raise money to invest in other priorities, including in housing.
JOURNALIST:
Treasurer, the Opposition, in particular David Littleproud this morning said he doesn't understand why you're not just banning or suspending foreigners from buying residential homes to live in at the moment given the housing crisis?
CHALMERS:
Well, a couple of things about that. I mean, if that's the Coalition's policy, they had a decade to implement it and they didn't and so I think we take that particular thought bubble with that perspective. Secondly, the arrangements are actually already very strict, but this is about making them even stricter. In lots of cases, people are banned from buying property in Australia. The exceptions are people who come here to work or to study under strict arrangements. We want to take a regime which is pretty tight and make it much tighter. We think the best way to do that is to change the incentives. By tripling the investor fees, by doubling the vacancy fees, we will incentivise more homes being built, more rental properties on the market by discouraging people from leaving these properties empty.
JOURNALIST:
Treasurer, do you worry about the message this might send to the high quality skilled migrants that Australia wants to attract to come and live and work in Australia that it's going to become very expensive in an already expensive property market to buy a home in Australia and sent up a life here?
CHALMERS:
Well, first of all, we are changing the arrangements for established homes and we think that will incentivise people who come here for legitimate reasons and buy a property for legitimate reasons, they are now more likely to buy a new property which will incentivise more building and that's a good thing. Secondly, and this goes to our migration strategy as well, we want to make sure our migration settings are consistent with our national economic interest. We want to make sure that migration is not a substitute for training Australians, but is a complement to that. We will always need more skills in our economy and our migration strategy is about better targeting that migration, it's about cracking down on rorts and it's about ensuring that we get the migrants that we need to grow our economy including by making sure that we have the skills that we need. This is complementary to all of the work that we're doing in the skills and training and education sectors. We set out in the Employment White Paper not that long ago how we intend to get the best out of skills and training and the migration system. Australia is a very attractive place to come and live and work – that will remain the case even as we make these substantial and sensible changes to the foreign investor regime.
JOURNALIST:
Have you done any modelling and do you have an estimation or a goal for how many extra properties or how many extra dwellings this should bring on to the market for Australians looking to get into the market or looking for places to rent?
CHALMERS:
One of the reasons why this policy has four parts rather than three is because we wanted to make sure that we were resourcing the ATO to do a much bigger and better job on compliance which will help us get a much firmer handle on the numbers involved here. In one of the reports today, we saw that vacancy fees are only raising about five million a year. I think most people think that the challenge, the problem that we're addressing is bigger than that and so we are resourcing and powering up the ATO to get a much firmer sense of what's happening here to make sure that people are doing the right thing, to make sure that people are complying with the law and by doing that, we will get a much firmer handle on the numbers as well.
We are confident that this will make a difference. It will obviously make a difference to the budget, but more important than that, it will make a difference to how many homes are built in our local communities, it will make a difference to how many rental properties are made available and that's the point of the changes that we're making today.