James Willis:
The Treasurer Jim Chalmers, who has just delivered his fifth Budget in Canberra. He joins us live from Parliament House. Treasurer, thanks for your time.
Jim Chalmers:
Thanks for having me back on the show, James.
Willis:
Can we start with an obvious question about your long‑term commentary? Given you publicly ruled out, denied, slapped down, flat out said no to any changes to negative gearing or capital gains tax – why should anyone, Treasurer, take you on your word ever again?
Chalmers:
Well, first of all James, I want to acknowledge to you and to all of your listeners that the government has changed its policy in this regard. I think the most important thing to do, having changed policy, is to front up and explain why that’s the case, and that’s why I’m on your program. I know that this is contentious. I know that this is not the same policy that we have had in the past but it’s an important change, nonetheless. The easiest thing in the world would have been to ignore these intensifying challenges in the tax system and in the housing market and to leave them completely undisturbed and unattended to. We’ve chosen the more difficult path, which is to come to a different view and then explain to your listeners why.
Willis:
Right. The public remarks from you, from the Prime Minister which date back to prior to the 2022 election – 4 long years, probably 5 long years of public denials where journalists have given you so many opportunities to flag that this was coming. You were asked on this radio network, the ABC, Sky News, repeatedly, capital gains tax, negative gearing and instead you continuously ruled it out. So, Treasurer again, just from a public standpoint, an integrity standpoint, what value is your word?
Chalmers:
Well, that reflected our position at the time James, and in a couple of different ways I’ve acknowledged to you and your listeners that we’ve changed our policy. We’ve come to a different view and the reason why we have is because all of those comments that you are rightly referencing, they reflected at the time the government’s almost singular focus on housing supply. Housing supply is still the biggest problem in our housing market. We don’t have enough homes and in this Budget we’re investing another couple of billion dollars in the small‑scale infrastructure to make more homes get over the line so we can get more homes into our communities right?
So that’s the first point. Our comments, our commitments reflected the government’s focus on supply. It’s become increasingly clear to us that supply is the main part of the problem, but it’s not the only part of the problem. What has happened over the years is that the way that the tax system interacts with the housing market is it’s locked too many people out of housing and especially young people. You would know from being tapped into your listeners and talk‑back from time to time, that this is a concern which is broadly shared in the community about how hard it is for young people to get a toehold in the market. It’s not just a concern that’s held by young people, but often by parents and grandparents. You and I would speak to the same kind of people who think that this is one of the biggest challenges in our economy –
Willis:
I understand that. Treasurer, I’ll just pull you up. You are talking right now. You’re talking off the talking points that the Labor Party distributed today. There were 7 points, and I don’t want to just allow those to be circulated everywhere. I understand you’ve made some critical changes here. But the one thing I want to know, because according to the ATO –
Chalmers:
I haven’t seen those. I haven’t seen those talking points, James. I’m not reading from notes.
Willis:
Well, one of them is young people and their –
Chalmers:
I’m not reading from notes.
Willis:
Well, I can tell you, young people and their parents and grandparents are worried they will never own their own home. That is a fact. You would be aware as well that there are a lot of people under the age of 40, according to the ATO, who are negatively gearing right now. It’s not just boomers?
Chalmers:
Yes, they can continue to negatively gear the properties that they’ve bought. It’s one of the ways that we are recognising and respecting decisions that people have taken in the past. More than that James, if people want to continue negatively gearing into the future, they can do that with new properties.
That’s a really important feature of the policy we’ve announced, because if people are negatively gearing into the future they can make a contribution to this supply challenge that we have in the housing market. It’s one of the ways that I think we’ve struck the right balance. You can keep negatively gearing for new properties. If you’ve got a property now, you can keep negatively gearing it into the future. And that’s because we recognise and respect that people have made decisions based on the old arrangements. And those old arrangements will continue.
Willis:
Will it increase rents, your changes?
Chalmers:
Overall, the housing package in the Budget won’t. The tax changes we think will have a very modest impact on rents, a couple of bucks a week, and we’ve –
Willis:
Are you sure about that?
Chalmers:
We’ve released the Treasury modelling that came with the decision that we took. But overall, James, the Budget means more homes, and more homes puts downward pressure on rents.
Willis:
Right. Is there a chance migration, maybe even 10 per cent, may be contributing to the housing crisis? I’ve seen the numbers in the Budget papers tonight. 295,000 migrants this year. This is net, Treasurer which means the people leaving subtracted from the people arriving. 245,000 migrants in 2026–2027, 225,000 migrants in 27–28.
Now, that number I’m sure you’re going to say, is coming down, and you’ve made changes to that but I think people are catching on and realising that whether it’s rent, whether its buying new homes, migration is having an impact on the housing market as well?
Chalmers:
Well, you’re right to anticipate that I’ll point out to your viewers that net overseas migration has come down very substantially since the surge that we inherited from our predecessors. It’s come down 45 per cent from its peak, actually. And the revisions in the Budget today reflect more fewer departures rather than another spike in arrivals like we saw a few years ago. So, we’ve been managing the net overseas migration numbers down.
The changes today are about fewer departures, but we’ve also been building more homes. Building commencements are up 26 per cent in our economy, and that represents genuine progress. We need to build a heap more homes in our communities. This has been a long‑standing challenge. We’re getting net overseas migration down over time. We’re building more houses over time as well. We know that people will try, and play very divisive politics about this, but our job is to make the right economic decisions for the right economic reasons. And I’m confident in this Budget that we are.
Willis:
Okay. In relation to the capital gains tax discount and the changes in the Budget. Is there a carve‑out here for enterprise, for startups? You would have read these articles in the Financial Review over the last week. There is a concern here that the next entrepreneur, the next Atlassian, the next Canva, might end up offshore if there is not a carve‑out. Is there a carve‑out for them?
Chalmers:
I totally understand the very real issues that people are raising with us. We were actually consulting privately with the sector before tonight, and now we’ll consult with them publicly. We specifically say in the Budget papers today that we do recognise that startups and venture capital are a different category. The way that they calculate the cost base in the capital gains tax system makes them a little bit different.
The Budget overall is really encouraging of the tech sector, startups, and small business, and venture capital. We’ve got a bunch of new initiatives in the Budget to support that part of the economy because it’s the dynamic part of the economy. We want it to grow over time. So of course, we will continue to consult with the sector to make sure we get to the best possible arrangements which recognise they are a little bit different.
Willis:
But no carve out? So, the tax that they’re going to be paying on capital gains in Australia will be far higher than other parts of the world. Aren’t you worried about what that does for competition for the next entrepreneurs? I mean we’re in a situation, Treasurer, where we’re sort of in this AI, this tech, this data centre race. And the concerns over the last week has been that people will invest in Singapore, they’ll invest in America, they’ll invest in the UK, I don’t know, the Middle East, anywhere instead of Australia because of these changes?
Chalmers:
You’re making a series of assumptions James, about the consultation with that part of the economy which I don’t necessarily share.
Willis:
Well, it’s pretty hard for small businesses as it is on a range of fronts?
Chalmers:
Well, we’re making the instant asset write‑off permanent. We’ve got loss carry back. We’ve got a whole bunch of incentives for venture capital and start‑ups. And when it comes to capital gains tax, which is what you’re asking me about, I’ve tried to make it very clear James, that we are consulting with the sector to try and find a way forward that they can live with and that we can live with. That’s how good governments work through these sorts of legitimate issues which are raised with us from time to time. I’m a big supporter of the sector, and I’m confident that we can get to a good landing position.
Willis:
Treasurer, just lastly, before we let you go on a busy night, to use your words why won’t you cut the excise on darts – on cigarettes – which is costing the economy, whether people listening have had a smoke or not in their life, tens of billions of dollars in lost earnings?
Chalmers:
It is a big substantial challenge in our Budget, James. I’ve been upfront about that for some time. I’m not convinced that substantially cutting taxes on tobacco, as Big Tobacco would like us to do, would necessarily –
Willis:
$1.50 a smoke, it’s $30 a pack. It’s got nothing to do with Big Tobacco. It’s the fire‑bombings and the criminal gangs. I mean, you know, it’s out of control.
Chalmers:
Just trying to get to that James. In answering your question, the issue here is the illegality, the issues around law and order. We’ve invested hundreds of millions of dollars in cracking down on the crooks who are making this an industry in our country. We do acknowledge it’s a problem. It’s not just a problem in a Budget, it’s a problem in our communities, in our society. We want that number of tax taken on cigarettes to go down because more people are giving up the darts, not because of organised crime. We’re spending a lot of money, time and effort trying to crack down on this illegal industry.
Willis:
Treasurer, we really appreciate your time from Canberra. Thank you.
Chalmers:
Me too James, all the best.