KIERAN GILBERT:
Another internal drama for the Coalition to have to navigate.
JOSH FRYDENBERG:
Well look, matters of preselection have always been, in the Liberal and National Parties, matters for the local branch members. That being said, Barnaby Joyce has been a hardworking and effective Member for New England. He had a thumping victory in the by-election last year and he is doing some really good work as a special envoy with the drought-stricken communities. So I’ll leave those matters to the preselectors in New England, but certainly he has my support and the Prime Minister’s support.
LAURA JAYES:
Yes, this is up to the Nationals and the preselectors in New England, you’re right. But, what could be the net effect here, Josh Frydenberg? Barnaby Joyce sits on the crossbench if he’s not re-endorsed by the Nationals. That’s real risk, isn’t it?
JOSH FRYDENBERG:
Look, you’re asking me to speculate on speculation. Let this play out, but as I said, Barnaby is working hard as the Prime Minister’s drought envoy and is doing some good work in that regard.
KIERAN GILBERT:
The Treasurer, this is speculation on fact though. As we’ve reported this morning via Laura Jayes’ sources within the National Party, there are some who are trying to block his renomination. This is embarrassing isn’t it for the Coalition, that their, you know, the National Party’s best asset in a political sense is trying to be blocked?
JOSH FRYDENBERG:
Well, Kieran and Laura, you can ask me seven times in seven different ways the same question, but the answer is preselections are a matter for local branch members. But, Barnaby Joyce has been an effective, hardworking Member for New England and he’s doing good work with the Drought Summit.
What the viewers of your show and indeed 25 million Australians across the country are more interested in is their job security, is the economic growth of the country, is the trade deals that we’re undertaking and how our economic plan is working.
LAURA JAYES:
And no doubt negative gearing you would argue as well, Treasurer. So let’s get to this government analysis we see today. Why is this relevant at all given Labor’s slated policy change would be grandfathered, so it wouldn’t affect current investors?
JOSH FRYDENBERG:
Well, everybody who owns equity in their home today would be worse off as a result of Labor’s policy and everybody who rents their home today would pay more as a result of Labor’s policy. That’s because when you sell your currently negative geared property or one into the future, you'll be selling it into a market with fewer buyers. And not only is Labor abolishing, Laura, negative gearing as we know it, it is also halving the capital gains tax discount including for new builds whether they are apartments or houses.
So this is a massive tax grab by the Labor Party, it was a policy designed at a time when the housing market was going up. Over the last twelve months, prices have been coming consistently down. The Reserve Bank of Australia says the property market has now reached more sustainable levels. And groups such as Citi, CoreLogic, RiskWise, indeed the Master Builders Association and others have warned of the job losses, the economic cost of Labor’s big new property tax.
KIERAN GILBERT:
So, as you rightly point out there, the property market has come off the boil. You’re accusing Labor of having a policy that will reduce house prices. But, how many homes in Sydney and Melbourne, for example, have had their values reduced under the Government’s tighter APRA rules in terms of credit?
JOSH FRYDENBERG:
Well we’ve seen properties in Sydney come down about eight per cent, about just over half that in Melbourne and this is from the peaks that we saw just a few years ago. And again, this is a managed transition and this has been applauded by the rating agencies…
KIERAN GILBERT:
So your policies have brought down those home prices in part, they’ve contributed to that haven’t they…
JOSH FRYDENBERG:
The work of the…
KIERAN GILBERT:
…in terms of the APRA credit tightening?
JOSH FRYDENBERG:
Kieran, the work of the prudential regulator has been designed to change the dynamic in the housing market away from investor led growth, to owner occupier led growth. And what, as a result of this policy of APRA supported by the Government, has been that over one hundred thousand first home buyers have now got a loan approval over the last year, the highest level since 2009.
But what is so outrageous about the Labor Party’s policy, in particular, and what a shambles it is, is their own frontbenchers can’t even explain the detail. You have Chris Bowen, the Shadow Treasurer, and Bill Shorten saying that prices will go down, you have Jim Chalmers, the Shadow Finance Minister, saying as a result of Labor’s policies, prices will go up. And then you have shadow frontbencher, Joel Fitzgibbon, saying prices will neither go up nor down. I mean, how shambolic is that?
LAURA JAYES:
But, Treasurer, the fact is that the Coalition has presided over these changed housing market, the property prices in Melbourne and Sydney, Sydney down seven per cent. Do you take credit or otherwise for that? Do you take credit for these house prices going down, as you argue, to get more homebuyers, first homebuyers into the market?
JOSH FRYDENBERG:
Well, the economic policies of the Government and the initiatives of APRA that we have supported have been applauded by the credit rating agencies and by economists from various quarters. But, what they have warned against is a massive drop in investor demand in the housing market and the impact that that could have. Now that could only come as a result of Labor’s policy which is to abolish negative gearing as we know it. And these are not rich people who necessarily negative gear…
KIERAN GILBERT:
Well, there’re not abolishing it, that’s, that not [inaudible]...
JOSH FRYDENBERG:
They are abolishing it. No, no…
KIERAN GILBERT:
It will continue…
JOSH FRYDENBERG:
Kieran, they’re abolishing…
KIERAN GILBERT:
…for new homes.
JOSH FRYDENBERG:
No Kieran, they are abolishing negative gearing as we know it. And when it comes to new homes they’re halving the capital gains tax discount. So don’t take their lines, which is that for new homes there are no changes, that’s not right. They are actually halving the capital gains tax discount that is currently available. They can’t explain their own policy…
KIERAN GILBERT:
[Inaudible] third party analysis by economists, that various economists are saying, that this is the right time in fact to introduce Labor’s policy, because it will have a more muted effect in the sense that the market’s already come off the boil.
JOSH FRYDENBERG:
It’s designed to smash house prices, that’s their policy. Now, while Jim Chalmers tells you it will increase prices and Joel Fitzgibbion will tell you it will have no effect, Bill Shorten and Chris Bowen have said it will decrease prices. So, everybody who owns their home will be worse off and more importantly for a lot of people, if you rent your home, you will pay more, because you will have less investors who are prepared to charge lower rents in order to get subsequent capital gains.
LAURA JAYES:
Treasurer, can I ask you about the Belt and Road strategy? You’ve resisted signing on, but the Victorian Government has not. Were you consulted by the Premier Daniel Andrews or anyone in his Government before they signed on and do you think the details of this should be made public?
JOSH FRYDENBERG:
Well, I don’t know what Daniel Andrews has got to hide here. I mean, the Federal Government signed an investment facilitation agreement with China and the details are available on the DFAT website. Daniel Andrews doesn’t make Australian foreign policy, the Federal Government does and what was interesting in the papers today was anonymous Labor members highly critical of what Daniel Andrews has done here, including one who has put their name to the story, which was Stephen Conroy.
So, I think this is as much about an internal Labor brawl over Daniel Andrews engaging in a secret deal on the eve of an election. And I don’t know what he has to hide here, he should make those details public and leave foreign policy to the Federal Government.
KIERAN GILBERT:
But, the MOU signed by the Trade Minister Steve Ciobo last, or the then Trade Minister, last September, was not released publically immediately. In fact, he was criticised at the time for keeping it secret at the request of the Chinese as well. So, the Federal Government has, you know, its own form in this sense.
JOSH FRYDENBERG:
Well, Kieran if you go to the DFAT website you can go and see the investment facilitation agreement with China and all the details are there. When it comes to the Belt and Road initiative the Prime Minister has set out our position.
LAURA JAYES:
Ok.
JOSH FRYDENBERG:
We welcome investment in infrastructure, there is an infrastructure deficit in the region. But, we also encourage transparency and governance and Daniel Andrews should have been more closely aligned with the Foreign Affairs Department in making this decision.
LAURA JAYES:
Just super quickly Treasurer, the Indonesian free trade agreement, I know you met with your counterpart this week, will that be signed in the next fortnight?
JOSH FRYDENBERG:
Look, I’ll leave those details to the Trade Minister and to the Prime Minister, other than to say this is an important bilateral relationship. I had an excellent meeting with the Finance Minister this week, I know a lot of my colleagues are meeting with their Indonesian counterparts. It’s a $16 billion a year, two-way trading relationship. It will go strength to strength under the Coalition. Whereas Labor has raised question marks about all our free trade agreements, even though one in five Australian jobs are related to trade. .
LAURA JAYES:
Well, it sounds like it is close. Treasurer, Josh Frydenberg, thanks so much for your time this morning.
JOSH FRYDENBERG:
Good to be with you.