Sally Sara:
Well, federal MPs return to federal parliament today with the lower house set to debate the government’s proposed changes to negative gearing and the capital gains tax discount. But the prospect of a downturn in the housing market has complicated the pitch to young voters.
Jim Chalmers is the federal Treasurer. Treasurer, welcome back to Radio National Breakfast.
Jim Chalmers:
Thanks very much, Sally.
Sara:
So let’s look at what’s happening. If house prices fall a few percentage points and the result is more first‑home buyers, is that a good thing?
Chalmers:
Well, first of all, to begin where you began, Sally, this is a really big week. This week is all about higher wages and lower taxes for workers and a fair go for first‑home buyers. We had seen the housing market already softening a bit before the Budget. The budget decisions, the tax reforms in the Budget, are not the only factor when it comes to the housing market. But what we want to see is we want to see first‑home buyers getting a fair chance at auctions. And so we’re seeing that increasingly, and to the extent that we’re seeing that, that’s a good thing.
Sara:
So if house prices keep growing but more slowly than they did previously, is that a good thing?
Chalmers:
Well, that’s the assumption from all of the Treasury numbers that we released with the Budget. They’re assuming that house prices continue to grow, but a bit more slowly. Our job here is not to target a particular price outcome; our job here is to make sure that there are more affordable options for first‑home buyers to get a toehold in what has been historically a really difficult market. So that’s what our policies are all about.
For too long, the intersection of the tax system and the housing market has locked too many Australians, particularly young Australians, out of housing. And that’s why we’re taking some of these difficult decisions to address that problem.
Sara:
Do you think the low auction clearance rates that we’ve seen in the past few weeks, is that a temporary phenomenon as investors wrap their heads around the changes, or do you think it’s going to continue?
Chalmers:
Well, again, the really important point here is that the tax changes aren’t the only factor here. You know, the last few decisions from the independent Reserve Bank are playing a role, the softer economic conditions are playing a role as well –
Sara:
But the past couple of weeks since the Budget, we’ve seen those clearance rates stall significantly, haven’t we?
Chalmers:
Well, first of all, clearance rates were coming down before the Budget, and, secondly, since the Budget some markets have actually come up a little bit. Some have gone down a little bit. But the overall direction of travel has been clear for some months now, and that’s because the Budget is not the only factor here.
Sara:
Are you concerned that first‑home buyers who use the 5 per cent deposits in a falling market could end up with negative equity in the first few months of – in the first few years of ownership?
Chalmers:
Well, no, because housing is long‑term investment. And, as I said, the Treasury is still assuming that prices continue to grow but a bit more slowly. That 5% Deposit Scheme is a really important way that we’ve been helping first‑home buyers into the market. And now we’ve got another way to do that by making the tax system fairer for people who are trying to get a toehold in this difficult housing market. So I’ve heard that point be made in recent days, but housing is a long‑term investment. To the extent that we can get more first‑home buyers into the market, that’s a good thing.
Sara:
So they may end up with some negative equity in the first few years?
Chalmers:
Well, people don’t typically only hold on to houses for a year or 2. Housing is a medium‑term investment usually or a longer term investment. And overwhelmingly what that policy is about and what the Budget is about is making things fairer for first‑home buyers.
And if you think about just this week, Sally – just this week in the parliament – and when it comes to the decision that the Fair Work Commission will take today, this week is really only about 3 things: it’s about high wages and lower taxes for workers, it’s about a fairer go for first‑home buyers in the housing market and in the tax system. And so our opponents will have to make a choice – will they vote against tax cuts and vote against housing again, as they did in the first term, or have they learned from that mistake?
Sara:
A Redbridge poll published on Sunday suggested 51 per cent of millennial voters believe your Budget would be bad for them personally. Has your sales pitch failed?
Chalmers:
Well, I don’t think anybody was expecting in the current climate that any Budget, let alone a Budget which is full of difficult decisions, would see some kind of boost to any government’s primary vote. It’s not surprising when you consider the Budget’s got hard decisions in it, people are under pressure from this oil shock and the war in the Middle East, we’ve got this scare campaign full of lies running right now, it would be surprising if the government’s primary vote did go up. But we didn’t do this to boost our primary vote; we did this to boost home ownership.
And from my point of view, I would rather get the policy right and take a political hit for that than to take a much easier decision politically, which is to leave everything exactly as it is. But leaving everything as it is would consign another generation and the generation after that to this very substantial challenge we have when it comes to intergenerational equity where more and more younger people are finding it almost impossible to buy their first home.
And so we’ve stepped in, we’ve taken some difficult decisions to try and address that challenge. Of course there’ll be the usual scare campaign that always accompanies economic reform, particularly when there are people who would rather we leave things exactly as they are. That would be the easier thing to do politically, but it wouldn’t be the right thing to do.
Sara:
On Radio National Breakfast I’m speaking with the federal Treasurer Jim Chalmers. The Redbridge poll also showed One Nation overtaking Labor on primary vote. You said yesterday that people were being driven to One Nation by ‘legitimate concerns’. What are those concerns?
Chalmers:
Well, not being able to get a toehold in a difficult housing market is one of them. The different treatment between taxes on people who work and people who earn their income from assets. You know, people do have legitimate concerns about how the war in the Middle East is playing out and the hefty price that we are paying for it in inflation here at home. And so we don’t dismiss for one second, or disregard for one moment, the very legitimate concerns that people have about where they fit in our economy and in our society. The difference between us and the 3‑ring circus on the right of politics is that they want to benefit politically from this sense of dislocation, whereas we want to address it.
You know, as hard as it is to believe, they look around the world and they’re trying to replicate the social dislocation and the political division that we’re seeing in other parts of the world. We’re trying to avoid it. And that’s why we are not just observing these very real concerns that people have – these very real anxieties that people have – we are responding to them. And that’s what make us different to those other parties who are just trying to benefit from them politically.
Sara:
The new MP for Farrer will be sworn in today, David Farley. In the lead‑up to the Farrer by‑election, the Prime Minister Anthony Albanese was talking about the issue of giving preferences to One Nation and said that doing so was legitimising One Nation. Is One Nation not already a legitimate party?
Chalmers:
Well, I think there are 2 points there. I mean, first of all, we take our opponents seriously, no matter what political party they’re from. And from a personal point of view, it’s no small thing to be elected to the federal parliament, so I congratulate him on his swearing in today. But I think what we’ve seen when it comes to Liberals and Nationals in particular, whether it’s their preference strategy or in other ways, they have gone out of their way to legitimise One Nation, and they’ve been repaid for that by being more or less consumed by One Nation.
And if you compare that to the leadership that Howard and Costello showed in the 90s when they rejected One Nation and refused to preference One Nation, that’s how a real leader on the conservative side of politics should behave. Instead, Angus Taylor is embracing One Nation and the consequence of that for him is he’s found a way somehow to be running third in what’s always been a two‑horse race.
Sara:
Just finally, when are we expecting to see some more details about possible carve‑outs, particularly around capital gains tax?
Chalmers:
We’re doing a lot of that consultation right now as we said we would in the Budget papers and on Budget night. That consultation is real and meaningful and genuine, and that’s why we won’t pre‑empt the outcome of that, including the final timing.
Sara:
Is it months away, weeks away?
Chalmers:
Well, we’ll do it as swiftly as we can but making sure that we get it right and that people have the opportunity to make their views clear to us. I’ve been doing some of that consultation myself. The Treasury has as well in a structured way, and other ministers. But the most important thing is that we pass this core legislation through the House of Representatives as soon as we can. And that’s because the changes to negative gearing and capital gains will fund another couple of tax cuts for millions of Australian workers and make the tax system fairer for first‑home buyers.
And once again, I call on the Coalition to vote for tax cuts and vote for first‑home buyers. If they vote against tax cuts again like they have before, if they vote against housing as they have before, that will prove beyond any doubt that they haven’t learned a thing from the last couple of years, they haven’t changed a bit. No wonder they’re faring so badly.
Sara:
Jim Chalmers, thank you for coming in.