PRICE:
Federal Treasurer joins me, thanks for your time.
TREASURER:
Good morning Steve.
PRICE:
I am not sure that you are getting a great reaction from the State Labor Governments however.
TREASURER:
Well, when we introduced the First Home Owners Scheme, which is a scheme if you have never bought a house before, you get $7000 to buy your first home, help you with the deposit. We wrote off to all of the States and we said, look this scheme is going to get people into the market. Also with low interest rates the price of houses is going to go up because people can afford to pay more. You are going to get a windfall out of stamp duty. Why don't you do your bit to help the first homeowner and reduce your stamp duty, so that the Commonwealth First Home Owners Grant doesn't get sucked up by increases in state stamp duty. We wrote to every single one of them and we said this is what is going to happen, and give these first homebuyers a go and from that date to this we still haven't had one positive response to our plea.
PRICE:
They are addicted to it, I presume.
TREASURER:
Well the thing about it is this Steve, that as prices go up you get kicked into higher and higher brackets for stamp duty. Now when these thresholds were set, in some cases decades ago, the price of your average house was a 1/3, 1/4, and the amount that you are paying for an average house now was the luxury rate of stamp duty when the thresholds had been set. Now as we all know the market has gone up, they have never adjusted their thresholds and they have not adjusted their rates. And you are quite right, there are people that are paying stamp duty which is almost enough to fund another house when they are having these transactions.
PRICE:
Well look, we have done a quick calculation on $400,000 borrowed on a purchase price of $420,000. You look at New South Wales, in that you have stamp duty on the amount borrowed, $1,540, $14,390 stamp duty on the property purchase, you have then got a transfer fee of $56.00, a total of $15,000. Same calculations in Victoria, $23,000.
TREASURER:
And you know, you know what a stamp duty is for, it used to be a simple stamp that is stuck on a piece of paper, now it is (inaudible) with the cash register. It is the filing fee, that is what it is. That's what it is, the fee to actually file the document, to stamp the document and file it, $15,000, it must be an expensive document.
PRICE:
Well $20,800 in Victoria on that purchase, now let's say four hundred in Victoria and Sydney an average price, $14,390 in New South Wales, so your Victorian mates are really getting their hand into people's pockets.
TREASURER:
Yes, they're...
PRICE:
They are (inaudible) the lot.
TREASURER:
...they are state of the art down there in Victoria but, my point is this, regardless of the (inaudible), the fact that price of the same house has gone up, it means that you are still buying the same house, but the stamp duty you were paying, which was a moderate stamp duty, is now the luxury rate. Now take New South Wales, when Carr was elected on the median house, that is the average house in Sydney you pay $5,420, today on the same house, and it is the same house, it is exactly the same house, you pay $16,190. But the point is the house hasn't changed, the house is still the same house.
PRICE:
The Telegraph is trying to suggest today that Bob Carr, they have found, has bought a three hectare property in New Zealand, has bought property there simply because of the fact that that property doesn't attract stamp duty, because they abolished it.
TREASURER:
Well I don't know, I don't know if it is right or wrong.
PRICE:
They don't have stamp duty. He has bought a property there, he is not paying it. If he bought a three-hectare property in New South Wales, and paid $300,000 for it, he would be up for about $18,000, $19,000 in stamp duty.
TREASURER:
Well that's right, if there is no stamp duty in New Zealand, you don't pay it, and if you buy a property in New Zealand you don't pay stamp duty, well that stands to reason.
PRICE:
I guess your critics would say that it is a little like bracket creep though in the income tax that you charge, you also, given that inflation has been so low and wage increases that keep pushing people into other brackets, you have not adjusted either.
TREASURER:
Well this is precisely the point I am making. What's the movement in wages, 3 percent, 4 percent? What is the movement in house prices now?
PRICE:
Well you have quoted 30.
TREASURER:
30.
PRICE:
It would be at least that in New south Wales.
TREASURER:
30. Now, let me make my first point is, that if wages went up year on year by 30 percent, you reckon we would get away without adjusting the rate or the thresholds?
PRICE:
I don't think you would have (inaudible)...
TREASURER:
We would be run out of town. My second point is this, of course we did adjust the thresholds. That is precisely what we did in the last Budget. We adjusted the thresholds, wages had gone up and we adjusted the thresholds so that people on the same wage after inflation did get tax relief, and people know it, it wasn't a large amount of money but that is because wages hadn't gone up that much.
PRICE:
Well that was the famous $4 tax cut.
TREASURER:
That was the famous $200 a year, and that is because the wage increases have been 3 percent. Now if it had been 30 percent it would have been ten times that, wouldn't it? But you see, we did adjust the thresholds, that is the whole point, and people are now getting that tax relief in their pay packets. Now the only point I am making is that I know Mr Carr hasn't adjusted the stamp duty threshold for the rates since he was elected in 1995, I am not quite sure when the adjustment before that was, but you go back...
PRICE:
Well we (inaudible) the property and found out.
TREASURER:
...well you go back in the Sydney property market and try and work out what the increase in house prices has been since 1995.
PRICE:
Rightly or wrongly, I think a lot of us were under the impression these sorts of state taxes would disappear with the GST.
TREASURER:
Well the ones that we agreed on did. The ones that we agreed on were bed taxes, stamp duties on shares, financial institutions duty, and bank account debits tax. We agreed on all of those, and they are all disappearing, but stamp duty was never on the list, and stamp duty was and always has been a state tax ever since it was invented which was a pretty long time ago.
PRICE:
Can I get a comment from you sorry, I know that you have to go, can I get a comment from you on this report this morning, the Democrats suggesting that you are going to take tax concessions away from charities that are involved in political activity.
TREASURER:
That is not the case. That is not right.
PRICE:
Will not happen?
TREASURER:
What we have said is, by the way, the current tax law says, to be tax deductible you have to be a charity. That is you have to actually work for the poor or the sick, or some charitable purpose. Under the current tax law, if you are a political lobby group, you are not a charity, that is the current law.
PRICE:
So you wouldn't be calling the Brotherhood of St Laurence a political activity?
TREASURER:
No, because the Brotherhood of St Laurence actually helps poor people and sick people.
PRICE:
So Senator Cherry is wrong when he says that the Australian Conservation Foundation, the Brotherhood of St Laurence and the Australian Cancer Fund might lose their tax free status?
TREASURER:
No what this law says is if you legitimately help the poor, or the sick, or education, or hospitals, then you are tax deductible, and what's more you can engage in lobbying, as long as it is ancillary or incidental. As long as it is not your sole purpose.
PRICE:
So you are not trying to gag people?
TREASURER:
No, not in the slightest. In fact this is the current law, as long as it is not, as long as it is ancillary or incidental. In other words as long as you actually do help the poor or the sick, the fact that in the course of that and as part of your work, an ancillary or incidental purpose, you lobby for a change of government policy, it doesn't matter. But if you set up an organisation which is a political lobby group, and it doesn't help the poor or the sick, and it doesn't have that as one of its purposes, then you are not a charity, and never have been a charity.
PRICE:
So you are signalling there are some organisations that have gotten in under the law on this and they will be identified and will lose that status?
TREASURER:
No. They haven't got in.
PRICE:
So the Australian Conservation Foundation (inaudible)?
TREASURER:
The Australian Conservation Foundation is under another, under another (inaudible).
PRICE:
(inaudible).
TREASURER:
No let me go to them. They are in under another heading. They are specifically named as an environmental group. They are not covered by this, they are not regarded as a charity. This doesn't apply to them. This is a charity, a charity is somebody who helps the poor or the sick, or an education or something like that. And I have heard that Catholic Health have been running around complaining...
PRICE:
Yes, they have.
TREASURER:
...well they ought to look at the legislation.
PRICE:
Catholic Health. Is you brother happy with change?
TREASURER:
I don't know, but Catholic Health as far as I know, if it provides help for sick people it's a charity.
PRICE:
I appreciate your time.
TREASURER:
OK, thanks.