LEIGH SALES:
Scott Morrison, thank you for joining us.
TREASURER:
Thanks, Leigh.
SALES:
If you want to make housing affordable, you either have to get prices to fall or you have to make people richer. Which is your goal?
TREASURER:
What we want to do is make sure that people can keep up with the housing market. Now what that means is supply needs to be responsive to demand and when you get a mismatch, then you get prices rising faster and one of the challenges we've had, particularly whether it is in Sydney, or Melbourne or Brisbane, has been that supply has been not keeping up with demand. That is the old law of supply and demand that means the prices go up. So the way to deal with that is to ensure that all levels of government are working together. It is not about putting anyone on notice, it is about an invitation to work together to ensure the market and the supply is responsive to the changing levels of demand.
SALES:
But it's not just a supply question, because if you look at housing pricing they have risen absolutely exponentially compared to wages for example. There are some other issues at play here too, that are making housing unaffordable.
TREASURER:
Well, I don't think you are suggesting that wages should be falling in order to deal with this problem. You don't go and fix the housing affordability problem by crashing your economy or crashing the housing market. What you do is you make sure, as I said, supply can keep pace with demand. The increase in housing prices is driven by population growth, it is driven by the fact there are two incomes in households, it is driven by, you are right, improvements in wages over a long period of time. It is driven by access to credit for owner occupiers, as much as anyone else and all of that is to call demand. It is important that supply can keep pace with that demand and one of the problems we've had, is not only has the supply not come, but when it's come it has come too late and there is a mismatch between these things. It is a very complicated area, as the Reserve Bank Governor has said and to simplify it all down to one issue, I think, really does not give the issue the attention that is necessary to get real solutions that will help people get into their home because that's what it is about.
SALES:
Nonetheless, you are mostly talking about boosting supply. What about the costs associated with that new increase? Crowding, you add to traffic congestion? What about the consequences of increased supply?
TREASURER:
Well, this is why our city deals are so important as a part of a solution to this issue. The city deals in Western Sydney, which are dealing with rail and they're dealing with development, and they're dealing with roads and infrastructure. When I talk about supply, it's the supply of housing and not just at the city fringe, it can be a single bedroom apartment in the middle of the city, it can be a two-bedroom terrace in the inner ring suburbs, it can be a new lot out there on the fringe. It is diversity of supply, it is its timing, it's all of these things which has not proving responsive enough and then it is about infrastructure and it's about employment. So for Labor to suggest that it is all about negative gearing, which would only drive rents up and actually cost the economy, I think that's a very simplistic analysis and one that really doesn't understand what's happening in the housing market.
TREASURER:
You mentioned in your speech that one of the barriers to people owning a home is transaction taxes. You take stamp duty, for example, which for a lot of people can run into the tens of thousands of dollars. But given what a massive source of revenue it is, particularly for the New South Wales Government, what possible incentive would they have to reduce stamp duty?
TREASURER:
Well, I haven't suggested that specifically at all. I have just listed a whole host of things which actually add to the supply challenge that exists and the cost of developing…
SALES:
But stamp duty is one of those. A lot of people would find stamp duty crippling.
TREASURER:
That's true and people have contacted my office and raised that particular issue. And so this is just one of the many things we have to try to work through. Already some state governments, Leigh, actually do provide some concessions in the area of stamp duties and that is a response that they've made. I think the states have made some progress on this. I think they have made progress on this, Leigh but we obviously have to go a lot further.
SALES:
Would the Federal Government be willing to give the states some sort of financial help to make them make the transition from stamp duty to something else given they would have to take a hit to their balance sheets?
TREASURER:
What I have already said in the outcome of the Harper Review is we need to look at those sorts of innovation payment, competition payment type reforms that look not only in the areas of planning and land use regulation, but more broadly on regulation reform across all the states and territories. We're currently spending between the state and federal governments some $11 billion a year on addressing housing issues and I don't think it is being spent very well. So it is not a question of how much money is being spent, it’s how it is being spent and how coordinated that expenditure is. So I think there are the resources there, we have just got to come up, I think, with more integrated ways of pulling the levers that we each have to get the best outcome, not just for those who are trying to buy a home, but also those who are renting, those who are in social or affordable housing assisted accommodation and of course, those who regrettably, are homeless.
SALES:
Your Government's been talking though about housing affordability since you came to office and here we are four years later and housing is less affordable than ever.
TREASURER:
Well, this has been the case for many decades. It's been a challenge that I don't think any particular government has been able to make a great stride upon, partly it's because of our growth, Leigh. Our economy has been growing. There isn't another advanced economy in the world really, that is growing at 3.3 per cent a year. I don't want to exchange places for an economy that isn't experiencing some of the growth problems that we have for an economy that isn't having growth and growth in employment. But what we have done and Prime Minister Turnbull, in particular, in what he's brought to the table on these city deals, whether it is in Townsville, whether it's in Western Sydney or other parts of the country, these deals are about a new partnership between the private sector, transport providers, state and local governments and the Commonwealth. They're the type of package responses that we're already starting to implement which we think can have a real contribution to getting the result.
SALES:
Alright, a couple of other issues before we go. The Solicitor-General has resigned because his relationship with the Attorney-General has irretrievably broken down. He has raised serious concerns in doing so about the Attorney-General's approach to his job. Should there be now some sort of public inquiry into that so we can get to the bottom of it?
TREASURER:
Well, the former Solicitor-General put himself in an untenable position when he engaged with the opposition during the middle of an election campaign. Now he's taken what I think is the honourable course of action here. I think the only one that's been available really to him now...
SALES:
But he said, sorry, if I...
TREASURER:
Given the way that this was conducted and ...
SALES:
If I can just..
TREASURER:
and I think that's where the matter rests.
SALES:
But if I can just stop you there, you've got a situation where the second highest law officer in the land claims that the highest has made an unlawful order. Surely that requires some further investigation?
TREASURER:
Well, we don't share that view. The Government has to be able to trust its own lawyer and sadly, I think the course of events we have seen over the various months has led to the position where the former solicitor-general has taken what I think was the only course of action ...
SALES:
You say the Government has to be able to trust its own lawyer.
TREASURER:
... available to him and he's taken that. Of course we do.
SALES:
You say the Government has to be able to trust its own lawyer. The public has to be able to trust its own Government. So, why not be transparent?
TREASURER:
They have every reason ...
SALES:
Why not be transparent about exactly what's gone on?
TREASURER:
They have every reason and the Attorney-General, I think, has set these matters out very clearly, Leigh.
SALES:
And did you as Minister ...
TREASURER:
The former solicitor-general concealed the fact that he engaged with the opposition during the course of an election campaign. Now, Leigh, where do you go from there?
SALES:
I'm asking you why don't we have a public inquiry so it isn't simply he said/he said?
TREASURER:
Well, I think the matters are clear on the record, Leigh and the Government has explained these matters and the solicitor-general, on a decision of his own, has decided to resign his position, and I think that settles the matter.
SALES:
Last quick question. We all witnessed a public disagreement last week between the Prime Minister and his predecessor, Tony Abbott. There seems to be a small group, Tony Abbott, Eric Abetz, Kevin Andrews among them who think that Tony Abbott could become Prime Minister again. How would you rate the prospects of that?
TREASURER:
Well, I don't commentate on these things, Leigh. That is what you and others do. All I know is that all members of the parliamentary Liberal Party and as part of the Coalition with the National Party, all members should be judging themselves on are they adding to the Coalition's cause and case in providing good and effective government or are they subtracting from it and I think we all have to apply that rule to each and every one of us and that is what I seek to do and I encourage all members to do the same.
SALES:
Scott Morrison, thank you very much four joining us this evening.
TREASURER:
Thanks a lot, Leigh. Good to be with you.