Jim Chalmers:
It’s the week after Budget and we’ll be in 4 cities in 4 days, talking about a budget which is all about helping people through this global oil shock, at the same time as we take some difficult decisions to reform our economy for the future. It’s really important that we start the week here with a very important announcement from Clare. I’m going to throw to Clare to make the announcement and then I’ve got a few other contributions to make, then happy to take your questions.
Clare O’Neil:
Thanks Jim and thanks everyone. I’m sorry for bringing the Melbourne weather with me to this beautiful state of our country.
This is a huge day for housing in Queensland as the Albanese government and the Crisafulli government sign a deal to build 50,000 homes for Queenslanders, 21,000 of which will be reserved just for first-home buyers. Australians see a housing system stacked against them and we want to help them out, we want them to get ahead, we want them to do it in a home of their own and our government is throwing everything at this challenge.
You saw in the Budget last week some big historic reforms that will level the playing field for first-home buyers and build more homes for our country. Now we’re here in Queensland announcing yet another 50,000 homes. This is going to be a really important part of the building of opportunity for Queenslanders. It gets us more homes, it gets us affordable housing and it gets us homes for the people who need them most and that is Queensland first-home buyers.
Chalmers:
Queensland is a very big winner from Tuesday night’s Budget when it comes to housing and when it comes to infrastructure as well. Queensland is getting more money for infrastructure over the forward estimates and over the 10‑year pipeline than any other state or territory in the Commonwealth. $16.9 billion over the forward estimates is $3 billion more, almost $4 billion more than the mid‑year update, and the GST payments are up as well. Another $2.6 billion next year compared to this year, and a very big part of our very big investments in more homes. They will be built here in Queensland, as Clare has said. We are especially proud of the deal that we are announcing today on housing for Queenslanders. This deal means an extra 50,000 homes for Queenslanders, it means 20,000‑plus for first-home buyers in this state as well.
This is a budget which makes hard decisions to get more Australians into homes. It’s a budget for workers, a budget for first-home buyers and a budget for future generations who would otherwise be locked out of the housing market. The status quo in housing and in tax is broken and we are fixing it, and we’re coming at this housing challenge from every responsible angle – difficult decisions, but the right decisions to get more Australians into more homes. We’re fixing that broken status quo in housing over the years to come and that is worth any near‑term political cost that we might pay.
We understand that people will have strong views about the politics of this, but it’s the substance of the changes that we are making that matters most and the substance of what we’re announcing today. Tens of thousands of new homes for Queenslanders, including tens of thousands of homes for first-home buyers. This is how you make a tangible difference to the housing market in this country – taking difficult decisions, building more homes, making more of those homes available to first-home buyers. That’s what the Budget was all about.
Happy to take a few of your questions.
Journalist:
Disabled Australians and minors will be among those most impacted by tax changes to the discretionary trusts. How does that sit with you when you consider carve outs?
Chalmers:
There are a whole range of carve outs. Disability trusts are carved out and if you look at the other exemptions, we’ve made it very clear that deceased estates are exempt, existing discretionary testamentary trusts are exempt. There are a whole range of exemptions which recognise that trusts have a legitimate role to play in some instances. In other instances, where they’re being used often by people who have the most money to avoid their obligations in tax.
We’re taking these sensible, common‑sense changes because what it means is more closely aligning the taxes paid by people who work with people who make their money in other legitimate ways, but there are responsible exemptions which recognise some special cases.
Journalist:
Treasurer, testamentary discretionary trusts are used often to protect the inheritance of more vulnerable people like children affected by disability or divorce. Why will you not carve out new discretionary trusts as the Bill Shorten policy did back in 2019?
Chalmers:
As I said yesterday, and I said in answer to your colleague’s question a moment ago, there are appropriate exemptions. Deceased estates for example are exempt, existing discretionary testamentary trusts are exempt, fixed trusts are exempt as well, and that recognises that there are some legitimate purposes.
When it comes to some of the conjecture that we’ve seen in recent days, we need to remember as we said yesterday, there’s no tax on inheritances or inherited assets in the Budget. We’ve been clear about the exemptions in the Budget papers. People can still set up fixed testamentary trusts after 2028. I think in this regard it’s best not to listen to the scare campaigns from people who have a partisan or a commercial interest in this. We’re making sensible, common‑sense changes. People are entirely free to set up fixed testamentary trusts after 2028 if that’s how they would like to avoid paying the minimum tax.
But overall, this is about better aligning the tax system for workers and people who earn their income from assets and that’s why we’re making this difficult change.
Journalist:
Treasurer, voters delivered a pretty scathing assessment of your Budget, rating it the worst in 3 decades. Did you make a mistake by breaking those major tax promises?
Chalmers:
I don’t believe so. I understand that some people will focus on the politics of it, but it’s the substance that really matters and I’m confident that the substance of what we’re doing is the right decision taken for the right reasons. It would surprise me more if we got some sort of bounce in the polls from the difficult decisions that we took in the Budget. The Budget was full of hard decisions and not handouts, and we don’t hand down budgets expecting to make some kind of big near‑term positive difference to an opinion poll 5 days later. We make these decisions to make a big positive difference to the housing market over time, particularly for young Australians who’ve been locked out for too long.
I think in the middle of a global oil shock which is putting pressure on people, in the middle of an unhinged scare campaign from people with a partisan or a commercial interest in this, and in the context of a budget which is full of hard decisions and not handouts, I don’t think it’s especially surprising to see the sorts of polls that we’ve seen in recent days.
Journalist:
So are people wrong when they say that they feel worse off with the result of the Budget?
Chalmers:
I don’t make judgments about people’s opinions expressed through opinion polls from time to time. Our job is to take difficult decisions for the right reasons. I’m confident that we’ve done that. I do understand that when a government changes its position on some contentious issues as we have, the onus on us is to explain why we’ve made that change.
We’ve made that change because, for too long, too many Australians and particularly younger Australians have been locked out of the housing market. The status quo at the intersection of the housing market and the tax system is broken and we’re fixing it. There are no easy decisions left when it comes to making a genuine difference to housing in this country and so we’ve taken some difficult decisions. We’ve taken a political hit for that – we expected that – but more important to us is the substance of what we’re doing, rather than the politics of what we’re doing.
Journalist:
Treasurer, some younger Australians are concerned about the changes to CGT extending to shares, given that’s where they can afford to invest rather than buying houses. Are you open to making changes in that space?
Chalmers:
A couple of important things about that. When it comes to people under 35 with shares, we think about one in 10 people under 35 have shares. It’s important to remember that if you take the average impact over a 20‑year period with some reasonable assumptions about that 20‑year period, shares have actually been under-compensated in the existing capital gains tax regime. Existing housing has been over-compensated and shares have been under-compensated if you look at that 20‑year period on average.
That’s because what happened in 1999, and what Alan Kohler and others described as a very substantial policy mistake made by Howard and Costello, is they introduced the distortion into the market which made existing housing much more attractive and some of these other asset classes much less attractive. That was a mistake that they made, and it’s driven this situation where house prices have grown more than twice the rate of incomes. There was a big decoupling from house prices and incomes around the turn of the century because of that mistake that they made.
What we’re doing is introducing a fairer, more neutral treatment of different kinds of assets in the capital gains tax regime, taking out that distortion which has locked too many young Australians out of housing in the first place.
Journalist:
Treasurer, just one more follow up from me. You were Bill Shorten’s Shadow Finance Minister. Why did you decide to carve out testamentary discretionary trusts then?
Chalmers:
I’m not revisiting the decisions that we took some parliaments ago. Our job is to make the right decisions on policy in 2026, not to re‑do the policy decisions taken in 2018 or 2019, or whenever it was. This is about aspirational Australians, particularly younger Australians who’ve been locked out of the housing market for too long. It’s about better aligning the tax treatment of people who work and people who earn their income legitimately from assets, and we’re confident that we’ve struck the right balance here.
Obviously, there will be reactions from people with a partisan or a commercial interest in this. We understand that and we expected that. Obviously, some people will take a political view of the difficult decision that we’ve taken. But overwhelmingly these are a set of right decisions taken for the right reasons. We’ve explained why we’ve come to a different view and that’s because the substance of what we’re doing matters much more to us than the politics of what we’re doing.
Journalist:
There are a few polls out now and they’re all saying the same thing – your Budget is as unpopular as the infamous 2014 and the 1993 iterations. Voters aren’t yet convinced your measures will reduce inflation or address intergenerational inequity. In that case, does that make yours and the Prime Minister’s Budget roadshow moot?
Chalmers:
No, I don’t believe so. I think it would be surprising if in the midst of a big global oil shock putting pressure on people, in the midst of this big scare campaign, in the midst of some difficult decisions which required us to change our view on some contentious issues – I think it would be surprising if the government got some kind of poll bounce out of it.
But we’re not doing this for the polls, we’re doing it for people who have been locked out of housing for too long, and I couldn’t be clearer about that. There’s nothing about these polls or the political reaction to the difficult decisions that we took and announced on Tuesday night which is especially surprising to us. To finish where I finished a number of these other answers to these questions today, it would have been the easiest thing in the world to leave everything as it was. To leave in place this busted status quo which operates in tandem in the housing market and the tax system to make life harder for more Australians, and particularly younger Australians. We could have left that in place and it would have been politically easier to do so. I acknowledge that.
But we would rather do the right thing even if it’s difficult. Even if we take a near‑term political hit for it, we’d rather do the right thing. It became increasingly clear to us that the longer we left these arrangements in place, the more people would be locked out of the housing market and that’s why we’ve changed our position. It’s why we’ve come to a different view. It’s why we’ve fronted up I think every day, or almost every day since the Budget, to explain why we think that change in policy was necessary.
I think people are a little bit sick of governments which prioritise politics over outcomes, and we’re prioritising the outcomes here. The outcome that we seek, the outcome that our policies are all about, is making the tax system fairer for aspirational Australians desperate to get into the housing market that has locked them out for too long. If you look at all of our housing across the board, and here I pay tribute to Clare O’Neil and our colleagues – a $47 billion investment in housing. All of these efforts on supply: 50,000 new homes in Queensland announced today in this deal, 20,000 of them for first-home buyers, 5 per cent deposits helping Queenslanders into their first home. Yes, some difficult decisions on tax as well because we came to the realisation that all of our efforts on supply are the main game, but not the only thing that we need to be doing. That’s why we’ve made these changes.
Journalist:
Auction rates in Sydney dropped below 50 per cent over the weekend, which is the lowest level since COVID. Are you concerned that the market’s been spooked?
Chalmers:
I don’t think you get an accurate sense from one weekend of auctions. We’ve made these changes and people are dealing with a lot of information about the potential impacts of the changes that we have taken. I think it will take some time before we get a proper rational sense of the impact on things like auctions.
Our intention here is to fix this situation where so many young people trying to buy their first home roll up to an auction and they’re competing with people who might already have half a dozen homes. That’s one of our motivations here. It hasn’t been fair for first-home buyers for some time, and we’ll see how those numbers play out over time. I’ve obviously seen those reports, we’ll see how those numbers play out over time. But our intentions are clear, which is to make it easier for younger people in particular to get a toe‑hold in the housing market.
I’m just going to make one other statement, and then unless Clare wants to add anything, we’ll let you get on with your day.
I wanted to let you know that I’ve issued orders for 6 shareholders to divest their holdings in Northern Minerals. Some of you have been following the Northern Minerals case in our Foreign Investment Review Board system. I’ve issued orders for 6 shareholders to divest their holdings in Northern Minerals. This decision was entirely consistent with advice from Treasury and the Foreign Investment Review Board. It’s about protecting our national interest and ensuring compliance with our foreign investment framework. We operate a robust and non‑discriminatory foreign investment framework and we will take further action if it’s necessary to protect our national interest in relation to this matter.
Thanks very much.