ABC 7:30

19 February 2016

ABC 7:30

SUBJECT/S: Negative Gearing; Economic Reform; Senate Reform

MATT WORDSWORTH: Gentlemen, thanks so much for joining us tonight on 7.30. Zed Seselja, can I start with you? The Prime Minister describes Labor's plan as dangerous. Why is it dangerous?

SESELJA: Well it's dangerous because it attacks one of our most important industries, the property industry. It effectively attacks the wealth of millions and millions of Australians and that's just not investors, that's also anyone who owns a home will potentially see the value of that home go down. The Grattan Institute I think has said it could be up to 10 per cent. The Grattan Institute of course supports the policy, but they're arguing that. I think if you own a home, particularly those who have taken out very large mortgages in the last few years, don't have a lot of equity in their home, they can't afford to see the value of their home going down. So that's why it's a dangerous policy. It attacks all home owners, it attacks people aspiring to get ahead, it potentially attacks renters. It hasn't been thought through and it's a very, very dangerous policy.

WORDSWORTH: Jim Chalmers, I guess what he's getting at here is from 2017 you'll only about - be able to sell your investment property basically to an owner-occupier. For people out there tonight with an investment unit, what's going to happen to the value of their investment unit in that situation when they want to sell it and what effect does it have on their ability to sell it?

JIM CHALMERS, SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION: Look, the Government has had every conceivable position on negative gearing over the last seven days since Chris Bowen and Bill Shorten announced our position and today we've seen from Malcolm Turnbull, we've seen him cling to a sort of a Tony Abbott-style scare campaign about negative gearing. The truth is that we expect house prices to continue to rise, but to rise in a sustainable way with less of the speculation which is dangerous sometimes to house prices. In Malcolm Turnbull's interview today he talked about an auction and I think that's a good way to think about it because what we're doing is we're saying when there's a first home buyer at an auction and an investor at an auction, they should been on a more equal, more level playing field. As it stands right now -

WORDSWORTH: Do you concede though - do you concede though if you're taking out investors as a potential buyer from the equation, it makes it less likely to sell your investment unit?

CHALMERS: Well we still expect prices to rise, but in a more sustainable way. What we don't want is at those auctions to have an investor subsidised heavily by the taxpayer competing unequally with a first home buyer and that's what this policy's about. But not just that; also boosting supply of housing in this country, creating construction jobs, funding health and education and underwriting the nation's future.

WORDSWORTH: Zed Seselja, do you agree that it will boost the supply of housing?

SESELJA: Well, no. What it will do is it will boost demand for new housing and drop demand for existing housing. Now the Master Builders Association, who you would think would support anything that would lead to more building and construction, have expressed their grave concerns. The biggest - the biggest break on new houses in this country is land release at a state and territory level. It's been there for years and shifting the investment mix to new homes won't suddenly magically see lots more land on the market. It simply won't happen. We've seen states and territories - now that is the way to work on housing affordability. They haven't been very successful in recent years and simply throwing a lot more demand at new houses won't do it, but what it will do to existing properties, it will see those values drop. Now Jim might deny it, but when the Grattan Institute, who I think helped frame the policy and certainly support the policy, are saying possibly drops of up to 10 per cent and of course it stands to reason with that lower demand that you'll see those drops on existing properties.

WORDSWORTH: I do want to talk about what the Government's planning, but Jim Chalmers, just an opportunity to respond. Do you agree that the Grattan Institute is saying price drops of up to 10 per cent?

CHALMERS: No, I don't. I think we'll still see house prices rise, but in a more sustainable way and I would prefer to rely on the informed commentary of the Reserve Bank of Australia or the Financial System Inquiry, which said that negative gearing is one of the issues which is making housing unaffordable in this country and it's an area ripe for reform and I think it's great that Labor, under Bill and Chris and others, is getting the credit they deserve for taking such a bold and courageous step.

WORDSWORTH: Zed Seselja, the Government's policy, which we haven't heard yet, but the early mail is that we're talking about capping the number of properties you can negatively gear or capping the maximum amount that you can claim as a deduction - how close to the mark is that?

SESELJA: Well look, that's really a question for the Treasurer and the Prime Minister. I've expressed my views that we should be very, very cautious about going near negative gearing. I think we should be very cautious that any policies in that space, if we are to go down that road, need to be very, very carefully thought through because I think the Labor Party policy has not been carefully thought through, I think there are terrible unintended and foreseeable consequences of that policy and so I would urge caution. That's what I've urged and I'm sure we will come to a good landing in terms of tax policy.

WORDSWORTH: Now, the Treasurer said this morning on radio that he's going to outline some of these ideas for his major economic policy in the Budget, maybe before we get to the Budget. How much time is fair between then and an election, because we're all talking about double dissolution in July?

SESELJA: Well look, there are some people talking about double dissolution, but, you know, the expectation is that we'll be having an election at the usual time in September or October and, you know, there's always that option, but that's not the Government's preferred option. We would like to go full term. When it comes to the timing, I would much prefer that we got the policy right rather than rushed out bad policy as the Labor Party's just done. I'm very comfortable with us taking the time to get the right policies and being criticised for taking a little bit longer rather than going out with policies that will damage the economy, damage confidence and hit every home owner in this country.

WORDSWORTH: Jim Chalmers, Scott Morrison says it's a spending problem. The Government is spending too much. Do you agree?

CHALMERS: Oh, look, the reason why Zed doesn't have a clue what the Government intends to do on negative gearing or any of these other key economic questions is because Scott Morrison doesn't have a clue what the Government's going to be doing. It's two and a half years into a term, we should have these key threshold questions answered. That's the more fundamental point and Zed can say all he likes about taking the time to get it right. They've been in government for two and a half years now. We need to see these plans on the table so the Australian people can evaluate them.

WORDSWORTH: Just quickly on Senate reform, Zed Seselja, how feral do you think the crossbenchers will go if you try and reduce the chances of microparties getting back into the Senate?

SESELJA: Well look, that's a matter for the microparties. What I would say is any Senate reform is not about getting rid of microparties. Senate reform is about giving choice back to voters. I don't care if you are a microparty, a minor party, major party. If you can convince enough people to deliberately vote for you, then you deserve to be in the Senate. The problem with our system at the moment is people don't know where their 20th, 30th and 100th preferences go and it's often those preferences that see people get elected. I don't think that's a good system, so I think it is ripe for reform and optional preferential is a really good reform.

WORDSWORTH: I'm afraid that's all we've got time for. Gentlemen, thank you very much for joining us on 7.30. 

SESELJA: Thanks very much, Matt. Thanks, Jim.

CHALMERS: Thanks, Matt. Thanks, Zed.