LESTER:
Treasurer first, how far has State stamp duty on home purchases, come from its originally intended purpose do you think?
TREASURER:
Well, as the property market has moved up, the States have not adjusted their thresholds or their rates. So that in Sydney or Melbourne, a standard which in the mid-90s was attracting a stamp duty of $5,000 is now attracting a stamp duty of $16,000. So that's a tripling, a 300 per cent increase over the term of the State Government. And now it has just become a milch cow for State Government revenue.
LESTER:
You must envy it as a Treasurer, looking at what State Treasurer's can do in terms of income from housing booms?
TREASURER:
I can't believe they get away with it. We have just cut income taxes at the Commonwealth level, because we believe that you should return taxes to people and adjust the scales. There has been no adjustment in New South Wales and Victoria for decades. And in that time, you have seen house prices going up, in some cases 30 per cent per annum.
LESTER:
On that question, why do you think house prices are accelerating so fast when inflation and earnings growth are relatively, accelerating so slowly?
TREASURER:
I think there are two factors here. One of course is that interest rates are low. Because interest rates are low, people can afford to buy a more expensive house. I think there's another factor too, which is you have just been through one of the greatest world stockmarket crashes, and people realise that a house is a pretty safe investment, in difficult times. Money is coming back into the property sector and with low interest rates people can afford more, and what that means is that prices have risen. Now this is actually good if you own a house. For the overwhelming majority of Australians they are sitting back watching their prices going up, feeling that they have got a good investment. It only works against those people that are not in the market because it produces a barrier to getting in.
LESTER:
And what policy options does the Federal Government have to try and increase housing affordability, for first homebuyers particularly?
TREASURER:
Well, we are not going to reverse our low interest rate policy. I can assure you of that. We are not going to do that. So, people can rest assured. What we did, is, we introduced the First Home Owners' Scheme for people who were outside the market and trying to get in. It has now gone to 482,000 Australians - $7,000 grant for the buying of the first home. I think that was a pretty big commitment. When we introduced the First Home Owners' Scheme we pointed out to the States that getting more people into the market would push up prices, and they would get a windfall on stamp duty and we asked them to reduce their stamp duties to help those first home owners. We didn't want a situation where the Commonwealth grant was eaten up by increases in stamp duties. Unfortunately that is what has happened.
LESTER:
Is stamp duty, or a reduction in stamp duty, the single greatest step government could take in Australia to increasing housing affordability?
TREASURER:
I think it's the most practical step that could be taken at the moment. As I say, nobody is going to be pushing for a high interest rate policy. So, what are the practical steps that can be taken? Well, one obvious one, hand back some of the windfall on stamp duty.
LESTER:
Your critics say that in fact you have your hands, or the Federal Government at least, has its hands on some of the important levers, particularly for example, migration into the Sydney Basin, that that's been a major spur on cost increases in housing. What's your comment to the suggestion that the Federal Government could have calmed housing price rises in that way?
TREASURER:
I think it's a bit unfair to blame house price rises on migrants. In my experience migrants that are coming into Australia are not the kind of people that are likely to be bidding up house prices. They generally come in with not very much, and if anybody is suggesting to you we can blame migrants for house prices, I think that's a bit unfair.
LESTER:
The Acting Premier in New South Wales I think is suggesting it, and he is also suggesting that if Peter Costello had been committed about a reduction in stamp duty he would have raised it in 1999 in the context of the GST negotiations. Couldn't you have put stamp duty on the table back then and forced some concessions from the States in the context of those talks?
TREASURER:
Well, I will make a couple of points here. The first of course is, the States did not ask for stamp duty to be part of the GST package. Did not ask for it. And the reason they didn't ask for it, is, they wanted to hold onto it. It is one of their revenue bases. They wanted it. The second point is, for a Labor Premier to say that we should have picked this up in the GST negotiations, when he opposed the GST hook, line and sinker is a bit rich, don't you think?
LESTER:
That said, you could have made an issue of it then, couldn't you Treasurer?
TREASURER:
The States wanted stamp duty. You can see why. It is a big revenue base for them. Now, what I would say to the State Governments is this, that if you want to run a Government, you have got to be responsible for a tax policy. The State Governments are responsible for a tax policy. There is no point in saying, if the State Government is being held accountable on its tax policy, the Commonwealth should fix it. They're a Government, they have got a revenue base, it's their decision, they can fix it.
LESTER:
Is there a need for a Federal Housing Affordability Inquiry?
TREASURER:
I think there are some things that would be worth looking at to get more detail on. For example, the release of land - this is again within the province of State Governments. I think it would be worthwhile having a look at whether enough land is being released, whether it's being released at the right price and some of those technical issues, I think that would be worthwhile, yes.
LESTER:
Might you push for one personally?
TREASURER:
Well, I will seek to have some work done on it, absolutely.