E&OE TRANSCRIPT
RADIO INTERVIEW
ABC 774 MELBOURNE
WEDNESDAY, 19 JULY 2017
SUBJECT/S: The current state of politics; housing affordability, negative gearing and foreign investment; Greens Senators’ resignations; Liberal division; clean energy target
RAFAEL EPSTEIN: We're calibrating the machine with a new guest, who I don't think has done Pollie Graph before - Jim Chalmers, Labor's Shadow Finance Minister. Hi Jim.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Hey Raf. I think I have but it was some time ago, so I appreciate the invitation. It obviously wasn't quite memorable enough! (laughs)
EPSTEIN: Kelly O'Dwyer joins us as well. She's the Minister for Revenue and for Financial Services and she's the Acting Minister for Women because I believe Michaelia Cash is on leave. Kelly, welcome.
KELLY O'DWYER: Thank you.
CHALMERS: Hey Kelly.
EPSTEIN: I'm actually going to go straight to a question. Allan in St Kilda has a question. Let's see precisely what it is. Go for it, Allan.
ALLAN: Thanks for taking my call. Last night I was watching television. I saw Peter Dutton being interviewed. He was being asked a question, it was coming from the Leader of the Opposition, who he characterised as the "spiv from central casting", that's direct quote. When's this going to end? Can't we address policies and issues rather than taking pot shots at people's personality? Kelly O'Dwyer, if she was referred to by her latest haircut or her latest dress, that would be outrageous. Why don't we talk about her policy?
ESPTEIN: I'll put it to the Government representative first, Allan, as it was directed at Peter Dutton.
O'DWYER: Allan, I think it's always better to address the policy issues and, frankly, I'd be very happy to talk about policy nonstop, because that's what really drives me. It's what motivated me to get into this job in the first place. I've had many occassions when people have commented on hair, dress, the whole lot. Frankly, it's not all that relevant. What matters is what is important to people every day and every day that I wake up and do my job, that's what I focus on.
EPSTEIN: Jim Chalmers, Bill Shorten's constantly making aspersions about Malcolm Turnbull's character. Do you think we need to have fewer personal attacks?
CHALMERS: I think it'd be wrong to single Bill out in that respect. We could probably all be better on that front. I think what Kelly said before is right. We get into this to change the country. We've got different ideas about how we want to change the country. From time to time, things get a bit heated. I think that's OK too in a robust political system like Australia's, but all of us need to work out the best balance between the times where we go quite hard and the times where we are more restrained. But I think the point that Bill was probably making - a point a lot of people have made since the announcement by the Prime Minster yesterday about Peter Dutton's new role - is that there are a lot of legitimate fears in the community that perhaps Peter is not exactly the right kind of character you want with those sort of increased powers.
EPSTEIN: I don't want to get too much into that because Peter Dutton will be a guest in the studio after 5. I want to ask you both a question though. I'll start with you, Kelly. You get more attention if it's a personal attack, don't you? Are you more likely to get a run?
O'DWYER: Well I think people do latch on to it pretty quickly if someone attacks somebody...
EPSTEIN: OK, you can blame the journalist.
O'DWYER: I've been attacked personally many times. Yes, it does get a run. I don't do it myself, because I think it's not particularly useful.
EPSTEIN: Oh, you must have done it sometimes.
O'DWYER: If I have, it's something I regret. But let me say, I usually try very hard to attack policy issues, because I think that's the thing that we all care about. But unfortunately, yeah, it does get a run.
EPSTEIN: Jim, is she right? You get more attention if you make it a little personal?
CHALMERS: I think you do. That's not just the fault of people who cover politics, it's probably all of our fault. I think the better way to look at it is to say that when you are making a serious point, which has some complexity in it or some policy detail, it is harder to get policy arguments up, with some exceptions and we have good debates about policy from time to time. But the more we can talk about those serious issues, even if they are complex and take a little while to sink in, the better off we'd be as a country.
EPSTEIN: I do want to talk about housing. The ABC has been focusing on house prices, the greater proportion of people renting, fewer people owning, all those sorts of things this week. And Abdul's called from Ringwood. What did you want to say, Abdul?
ABDUL: I just wanted to say that the negative gearing, it's just ridiculous - we can't buy a house. Me and my wife, we work and we can't save for it. It's impossible.
EPSTEIN: Where are you trying to buy a house, Abdul? What suburb?
ABDUL: Ringwood. Even Croydon is like 33km from the city and you can't get anything.
EPSTEIN: Is the difficulty saving a deposit?
ABDUL: It's just everything. Even very hard to save the deposit and also you're competing with those investors who are actually encouraged by the Government. Me and my wife, we work and we pay a lot of tax, but actually paying my landlord, subsidising his negative gearing.
EPSTEIN: Do you know for sure he's negative gearing?
ABDUL: I think so, yeah.
EPSTEIN: You can't know, surely. Have you asked him?
ABDUL: I can't know, but it's an investment.
EPSTEIN: Look Abdul, let me put it to both our representatives. Kelly, I'll start with you. He's having a go about negative gearing. I assume that's a bit of a dig at your Government's policies.
O'DWYER: Look Abdul, I totally sympathise with the position that you're in because I think there are a lot of Australians in that position, particularly here in Victoria. We've seen a huge increase in population down here, which means it is very competitive to get into the housing market and it's not just for people who are looking to purchase a home, but for those people who are renting as well and the point that you make about people who invest in property. I mean, it's actually important that we do have people who invest in property, because we do need to understand that there are some people who frankly are going to rent for a very long period of time and they also need to have affordable housing as well. Now there's no one silver bullet to fix this problem and the Government has looked at tackling this in a number of different ways. We want to make it easier for people to save for their deposit. We know that can be very hard and over the years it's blown out in terms of the amount of time it takes people to save for a 20 per cent deposit. It was 10 years ago I think something like four years and now it's around about six here in the heart of Melbourne. And we're doing that by allowing people the ability to access their tax concessions within the superannuation system to be able to save.
EPSTEIN: Is that going to make a big difference?
O'DWYER: It will make a difference. Will it be the solution? No. No one single thing will be the solution. We're also looking at encouraging people to downsize from big family homes as well, but again using the superannuation system structure to be able to encourage people to downsize people from their big family homes and to be able to put additional money into their superannuation so that we can free up more housing in that market place to encourage everybody to be able to compete. We also think that having a much more strengthened foreign investment framework is very important.
EPSTEIN: Can we hold that thought, because I want to get into whether foreign buyers are having an impact. But Jim Chalmers, we know Labor's in favour of negative gearing. It didn't get you over the line at the last election. But even people like the Grattan Institute, who support your idea, they don't think it's going to make a radical difference. It will make a difference, but it won't make a radical difference. Do you accept that?
CHALMERS: We're in favour of changing the negative gearing and capital gains tax arrangements. We've never said that it will be the only decisive thing that you can do. But we have said that it will be the most important thing that you can do as a Federal Government. And on what Abdul said before, I want to say to Abdul, you are spot on and you are not alone. The experience that Abdul described is precisely why we took what was a very courageous political decision in April of 2015 to say that these overly generous tax concessions, which are locking people like Abdul out of the housing market, cannot continue, especially when the Budget is in the mess that it is in. We've got an opportunity here to level the playing field for people like Abdul versus people who might own six or seven or eight properties, and at the same time do some work to repair the Budget bottom line. So that's a win-win for the economy and for the Budget and for people in the community.
EPSTEIN: Can I put something to you, Jim. And I'm happy to talk about negative gearing, because I understand it's an important policy and you've both got important things to say. I just don't want to repeat too many of the policy arguments that we've had. But I wanted to zoom out a little bit, Jim Chalmers, and I'll put this to you. House prices are just screaming up. I was very fortunate to get in in 2002 and within about five years, the apartments in my street were selling for the same price as the house.
CHALMERS: Yeah, right.
EPSTEIN: And that's the beginning of the century so, what's that? 17 years ago.
O'DWYER: Well the median price here in Melbourne is about $800,000.
EPSTEIN: So my question, and I'll start with you Jim Chalmers, can governments actually do anything about this anymore? Or has the horse bolted?
CHALMERS: I think governments can do something about it. They can't click their fingers and fix this big substantial problem overnight, but they can not just do things that will help, but they can also stop doing things that will harm people who are trying to get a foothold in the market. And negative gearing, I won't go through all the arguments again, but that really is the best example of something that Government can change so that they can stop being part of the problem and start being part of the solution. But there are other things as well. Again, nothing on its own is decisive. But there are other things we should be doing. We should be limiting direct borrowing by self-managed super funds, we should be talking with the Council of Australian Governments about vacant property taxes, we should be doing some more on foreign investor fees...
O'DWYER: Well we did that in the Budget.
CHALMERS: And where you've announced things that we agree with Kelly, we've said that. We don't agree with the example you raised before about superannuation. I think it's extraordinary to have a Minister for Superannuation arguing to diminish super and push up prices, but that will be the effect of that policy.
O'DWYER: But it's not diminishing super. These are additional payments people are paying in to the superannuation system to take advantage of the taxation...
CHALMERS: It's undermining the purpose of superannuation. And you're the superannuation minister. I just think that's an absurd situation that you're arguing for that.
O'DWYER: Well, no, no, Jim. I completely disagree with you on that. I mean, to give people the taxation benefits of being able to save at a more accelerated level, to be able to get together their deposit, to truth is the deposit and saving for the deposit is one of the big challenges that people often face. And look Jim, you and I are in a job that is paid pretty well for what we do. Yes, we work long hours, but at the end of the day we're paid pretty well and there are a lot of people out there who work incredibly hard and find it really hard to save and I think we've got to make it easier for people...
CHALMERS: Well let's try to help them out by levelling the playing field.
O'DWYER: Well, if you'd let me finish, we want to be able to encourage them to be able to save. This idea that your policy around negative gearing is somehow going to miraculously make a big difference, the idea that this will stop people having multiple investments in multiple homes...
CHALMERS: You're not listening, Kelly.
O'DWYER: ... it won't do any of that. Your policy actually won't change that in any way. There are a lot of people like mums and dads who are firies, who are policemen, who are nurses, who actually also invest in the property market. And it would have a big impact on them.
EPSTEIN: But the bulk of the benefits go to the wealthy.
CHALMERS: Exactly right, Raf. And the other point to make is Kelly is the only person in this national debate we have been having for two years to argue on the same morning that Labor's policy will push up house prices and push down house prices, so let's just keep that in mind.
O'DWYER: I think we're going into the personal attacks again, Jim.
CHALMERS: No, that's a policy issue. You can't argue that our policy has two opposite impacts in the same morning, Kelly.
O'DWYER: Is it going to push down prices then, Jim?
CHALMERS: You tell me, Kelly. You're the confused one!
O'DWYER: No, you're the one saying it's going to push down prices. Jim, will it push down prices?
CHALMERS: I've said over and over again, as have the experts, that we will still see increases in prices, but they'll be more sustainable and they won't be based on unreasonable tax concessions for people who are speculating in the market, we've said that 100 times.
EPSTEIN: It's coming up to 13 minutes to 5 o’clock. You can hear Kelly O'Dwyer and Jim Chalmers getting into it. Kelly O'Dwyer is the Minister for Revenue, Jim Chalmers is the Shadow Finance Minister, so he's part of Bill Shorten's team. Fiona's got a pretty specific question on an issue we glossed over, calling from Malvern East. What did you want to say, Fiona?
FIONA: Two things. One, with regard to what is the Government going to do about the level of foreign investment that purchases places and leaves them empty? There was an Age expose I think about four of five months ago where through Freedom of Information, they got access to the water usage in these properties and they were all using probably less than 10L in a month, which is just not possible if people are living there. And the other thing, in your own electorate Kelly, which is where I live, around my area in the last six to 10 years, every single property bar I think one or two has been knocked down and two brand new properties built in its place. And the majority of those are actually being sold to foreign investors.
EPSTEIN: Fiona, if I can, I want to try to narrow that question down. It's great to have your illustration, but let's try to focus maybe Kelly and I'll give Jim a try. How much of the problem is foreign buyers?
O'DWYER: Well, I'll say to you that not having a level playing field is a problem, actually for people who are competing to purchase a property. We had a foreign investment framework under the previous Labor Government that was never enforced. They didn't take one action that would divest people of their property, not one during the entire time that they've been in Government. We have not only strengthened the framework, we have also taken action to enforce it. So those people who have illegally purchased properties...
EPSTEIN: How many people have been prosecuted or asked to give back?
O'DWYER: So 70 properties have been divested...
EPSTEIN: There are tens of thousands of purchases.
O'DWYER: Well 70 compared to zero is actually pretty significant, ranging in property value from around $200,000 to $39 million right across the country for people who have made purchases that they're not allowed to make. We have increased the penalties on those people. Fiona makes a point that, which I think is a very good point, which is that properties that are left vacant, that is a big issue for people who have purchased those properies, who are foreign investors. The Government in this most recent Budget has said that those properties that aren't let out for rent for more than sort of six months, that we would actually apply in effect a tax on those properties, because we want people to be able to have residential properties.
EPSTEIN: Jim Chalmers, they have changed the rules, the Federal Government. So I'm interested in what you make of those changes, but also an assessment of how much of a problem, how much of the price rise is because of people buying from overseas.
CHALMERS: I think Fiona raised, a bit like Abdul, some good points that you hear right around the community and right around the country. Vacant property is an issue and we think we should be working on a vacant property tax. On foreign investment more broadly, it's only small proportion of the housing market itself, but it's a very fast-growing part of the housing market. I think foreign investment in housing has grown by 275 per cent over the last three years that we have numbers for. So I can understand that people see that foreign investment is growing. Where the Government has prosecuted people for doing the wrong thing, we support them and we saw good on them. And the more we can do that, the better; to send a signal to foreign investors that we do have very strict rules and that they need to comply with them. And we also announced as part of our most recent, very comprehensive housing affordability policy, we do think that the fees and penalties can be increased. Not just so that the Federal Government recoups more of the administrative costs of policing this regime, but also making sure that the penalties are a sufficient deterrent for people who might be tempted to do the wrong thing.
O'DWYER: So let me give an example on what of the penalty.
EPSTEIN: Kelly, forgive me. I'm happy to get into some more of the housing details, but I need to give people some traffic details. You'll be able to put more of your questions to Kelly O'Dwyer and Jim Chalmers in a moment. First, the roads with Chris Miller. Hi, Chris.
(traffic update)
EPSTEIN: Kelly O'Dwyer's with me, the Minister for Revenue and Financial Services and Jim Chalmers, Shadow Finance Minister. Kelly, just a bit of a quick change of topic. The Greens have lost two Senators in a week - Scott Ludlam and Larissa Waters, one from WA, one from Queensland - because they're foreign citizens without being aware of it they say. Do you feel sorry for them personally?
O'DWYER: Well personally, I do feel sorry for them because I think most people who go into this job, irrespective of the fact that I've got a different sort of world view to them on how I would want to change things in this country, I think most people who go in go in with very good motivations. But the truth is it's a pretty well known feature of our Constitution. You can't sort of have divided loyalties and as unfortunate as it is for them personally, clearly there needed to be a better mechanism for them to ensure that their party didn't put forward people who would be ineligible.
EPSTEIN: Just the fact that Larissa Waters breastfed, I think she was the first to both move a motion and say something in Parliament, are you sad to see her go for that reason as well? Another working mum in Parliament.
O'DWYER: I think the Parliament should have a diversity of people with different experiences and backgrounds and I worked very hard with Larissa to make sure that in the Senate they had the same sort of flexibility in terms of their working arrangements as in the House. There were certainly some arrangements that we had in the House that they didn't actually have in the Senate and I contacted the President to talk about that. I think it is a bit of a shame. She clearly is someone who has been a role model for other women who are aspiring to have a political career and to serve their community and I commend her for that. But again, you've got to stick with the rules. The rules are the rules.
EPSTEIN: Jim Chalmers, do you feel sorry for them?
CHALMERS: I do, yes I do. And yes, obviously the Greens as a political party have had a pretty shambolic failure of process here, but you can separate that from what you think about Scott and Larissa. They're not necessarily friends of mine, I'm not especially close to them, but as an observer of their work, they are a couple of pretty earnest, dedicated warriors for what they believe in. And you want people involved in the political process who believe in things and I think the system might be poorer for them. I don't want to overdo it, not being friends with them or anything like that, but I think it is possible to feel sorry for them and, at the same time, say to the entity, the political institution which is the Australian Greens, that they need to get their act together.
EPSTEIN: I think they've got that message.
CHALMERS: (laughs) That's right, indeed. The point that Kelly made, we do have serious common ground with what Kelly said, particularly about mums involved in politics and in challenging jobs right around the country. And I do want to commend Larissa, but also Kelly herself and on my side close friends of mine like Amanda Rishworth and Clare O'Neil and Kate Ellis and before them people like Nicola Roxon and Tanya Plibersek.
EPSTEIN: Christian Porter and Josh Frydenberg have had children while being in Cabinet as well, that can't be too easy.
O'DWYER: They're not breastfeeding though.
CHALMERS: That's exactly right. Both of my two young kids have been born since I've been in the Parliament, but it is much harder for our female colleagues. Given how this conversation started, Raf, I didn't want to miss the opportunity to commend Kelly, but also Larissa and Kate and Amanda and Clare and others for what they do to advance that important cause.
EPSTEIN: And as someone who's just been through having young children and completely acknowledging I did much less than half of the work and still stunned that a man or woman would be in Cabinet and have young children. Just briefly with both of you, that rules not going to change, is it? It's in the Constitution, no one's going to change that dual citizenship thing are they?
O'DWYER: No.
EPSTEIN: Jim, you agree that's not going to change?
CHALMERS: And nor should they. It's an important rule.
EPSTEIN: Kelly O'Dwyer, just probably a bad time to bring this up, but...
CHALMERS: (Laughs) This is going to be good, Raf.
O'DWYER: You've given some build up, Raf.
EPSTEIN: Tony Abbott constantly saying things, criticism is one thing, is he also adding fuel to the fire when it comes to energy policy. He can criticise you all he likes and that's his right as a backbencher. But if he starts talking about energy policy, that actually interferes with the way that you govern, doesn't it? It stops the Government going in a direction he wants to go in to bring in something like a clean energy target?
O'DWYER: Look I think my colleague Josh Frydenberg who is the minister responsible for energy is doing a fantastic job, he has set out a clear process to consider the Finkel Review, which has got some very sensible recommendations in it. We wanted to be able to deliver affordable, reliable energy and frankly this has been a really messy space at a state and federal level for quite some period of time.
EPSTEIN: But on the specific question, our time is brief, Tony Abbott's intervention makes energy policy harder, doesn't it?
O'DWYER: I don't think Josh has any trouble in getting the message out in what we're doing.
EPSTEIN: Jim Chalmers, do you think the Government will settle on a clean energy target?
CHALMERS: Not while they're at war with themselves internally. For as long as that continues, we're going to have power prices keep going up, pollution keep going up and jobs keep going down. They need to sort themselves out and provide the leadership that they were elected to provide.
EPSTEIN: Will you go for a clean energy target if it allows new coal, just to get the mechanism in? I know you don't like the idea of new coal, but that mechanism of the clean energy target is something that could be adjusted by whoever is in power. Would you accept that?
CHALMERS: The idea that coal can be redefined as clean energy, I don't think passes muster. But we've said throughout this whole process that we are prepared to make compromises on a clean energy target. It's not our preferred model, but if the Government can sort themselves out and come to us with a unified position, we'll talk to them about it.
EPSTEIN: Clean coal. Yes or no?
CHALMERS: Not subsidised by the taxpayer and yet to be proven and part of a broader conversation that the Government has not even been able to come to the table with so far.
O'DWYER: I think that was a no.
EPSTEIN: It might be. Who knows. Things might change. Your party certainly hasn't settled on a position. Jim Chalmers, Kelly O'Dwyer, thank you very much for your time.
O'DWYER: Great pleasure.
CHALMERS: Seeya Raf.
ENDS
