E&OE TRANSCRIPT
TV INTERVIEW
SKY NEWS KARVELAS
SUNDAY, 23 APRIL 2017
SUBJECT/S: Labor’s plans for housing affordability and jobs; Turnbull Government division and dysfunction; Budget repair which is fair; Citizenship test changes
PATRICIA KARVELAS: Opposition finance spokesman Jim Chalmers joins me now. I'm sure he's been listening in. Hello, welcome.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Hi, Patricia.
KARVELAS: The Prime Minister says that housing won't be the centrepiece of the Budget. You've just heard, no doubt, Michael Sukkar there. Does Labor think it should be the centrepiece? That it should be the most important policy announcement of this Budget?
CHALMERS: It's a crucial policy announcement. That's why we've got our policy out there already. We've had our negative gearing policy out for two years now and we've had a supplement to that policy out on Friday so that people can make their assessment of it. I'd say to your guest before, Patricia, that if you want a seat at the adults' table in a conversation about housing affordability, you need to bring your own policy. The Government's too divided and dysfunctional to even come up with a policy let alone agree whether it should be the centrepiece of the Budget or not, and now the Treasurer's gone missing too. So we have them reduced to these junior ministers with their daily sort of breathless and pathetic commentary about Labor's policy - a policy which is well considered, which has been in the works for some time. It's well supported in the community and it's been backed in by experts. So if the Government only spent as much time as they do fighting each other coming up with a housing affordability policy then maybe first-home owners in this country would actually have a chance.
KARVELAS: But isn't getting the Budget under control the central issue of this Budget? Economic management and turning around what is a pretty dire Budget position?
CHALMERS: We've always said that we need Budget repair and it has to be fair. The first thing the Government should do is ditch their plans to give a $50 billion big business tax cut, including $7 billion to the four big banks. Your guest before said that the Budget was about the economy, well thanks for that! And then he said it was about getting the deficit under control and paying down debt. We've had a deficit for this year which has tripled since the Government's first Budget; we've had net debt blowout by $100 billion for this year and now the AAA credit rating is in jeopardy. So on all of the credible measures in their own Budget papers - the Government says they're about paying down debt and getting the deficit under control - but everything is going in the wrong direction.
KARVELAS: Clearly we need more structural cuts in this Budget and no doubt the Government will unveil some new structural cuts I would imagine in a couple of weeks now. What approach is Labor going to be taking to that? Are you prepared to act in a bipartisan way around Budget repair, given it's been years and years and we're clearly not turning around the trajectory of this Budget in a way that's meaningful.
CHALMERS: Of course we'll be responsible about it, Patricia, and we'll be constructive, and we have been. Where we've opposed Government savings measures, we've pitched up alternatives, including that $50 billion tax cut I mentioned but others as well. Our negative gearing policy combined with our capital gains tax measures would raise something like $38 billion over 10 years and would be a good structural save...
KARVELAS: Sure, but if I could interrupt, Jim, they're not the policies the Government's going to adopt. Now you can make the political arguments about that and you're entitled to as the Opposition...
CHALMERS: It's a policy argument though, Patricia.
KARVELAS: But they're not their policies. We're talking about the Government is in power. Whatever policies it does announce, they need to get the Budget under control now, so you can argue forever that they should adopt your policies. They're not going to. What sort of attitudes are you going to take to the policies that they will broadly, including getting for instance the welfare Budget under control? That's one thing they have told us they want to do. Are you prepared to get behind that?
CHALMERS: The approach we take to the Government's savings measures is to agree with the Government when we can and to disagree where we must. And we disagree when the Government asks the most vulnerable people in our country to carry the can for this Government's Budget failures. It's not that well understood out in the community that we have supported some of the Government's savings measures. We have said all along that where the savings measure is a sensible one, where it doesn't ask the most vulnerable people to carry the heaviest burden, then we're up for a conversation about Budget repair. But Budget repair has to be fair. And we've taken it upon ourselves to lead this conversation about Budget repair so that when we do oppose Government measures we've put alternatives on the table.
KARVELAS: Just on your housing policy, a new tranche announced the other day I think, just at the end of last week. Will it make houses cheaper? Is that the idea?
CHALMERS: No, the idea is that there will still be price rises, but they will be more sustainable. What credible, independent institutions like the Grattan Institute, like the McKell Institute have modelled and what they have shown is when you make the sensible, prospective changes that we're proposing to negative gearing and capital gains, we'll still have price rises but they'll be more sustainable. They will take some of the heat out of the housing market. They will give first-home owners a chance in the market.
KARVELAS: What does your modelling actually reveal? Because you talk about these third-party think tanks and what they've come up with. Surely you've modelled a policy that would have such a dramatic impact on the housing market?
CHALMERS: The modelling has been done and is in the public domain from two of the most credible think tanks in the country. It's independent modelling. It's not cooked up by the Government. It's not made up by us. It's been modelled by people like John Daley and others; Saul Eslake, who you mentioned in your interview before with your previous guest. And what the consensus is, is that we will still have price rises, but they'll be more moderate. That will give first-home owners a chance in the market. The main problem right now is that they're competing with people who have multiple homes who are subsidised, in quite an expensive way when it comes to the Budget, by the Australian taxpayer.
KARVELAS: The policy that you announced the other day, new policies including limiting borrowing by self-managed super funds. Have you done any specific modelling on what impact that would have?
CHALMERS: What we know about borrowing by self-managed super funds is that about five years ago it was, in terms of total investment, about a tenth of the investment that we're seeing today. So it's growing very fast off a small base. What we know is that's concentrated in New South Wales and Victoria, particularly Sydney and Melbourne and that's where we're seeing the fastest growing house prices. So that's just one of the measures. There are a whole range of measures we've proposed on Friday. That's one of them. Together we think that they'll make an important difference, but the main focal point of our housing affordability is the changes to negative gearing and capital gains.
KARVELAS: Finance Minister Mathias Cormann said a one-size-fits-all approach to housing affordability was not the way to go, that taking a sledgehammer to those things could have a very negative impact on other parts of the market outside of Sydney and Melbourne in particular. Is that the risk here? You talk about taking the heat out, more moderate price rises for housing rather than this extreme growth we've seen. But that would be a disaster wouldn't it in north Queensland or Perth? Can you guarantee that wouldn't have that impact in those places where, of course, house prices in some cases are going down?
CHALMERS: Well that commentary from Mathias is another symbol of the sort of breathless, irresponsible commentary that we get because they don't have a policy of their own. Our policy is well considered, it's prospective rather than retrospective, and when it comes to individual measures like the one we were just talking about - self-managed super - the changes will be focused - or the impact of the changes - will be focused on those big capital city markets. So I don't think that the breathless commentary that we get from the Liberal Party in the absence of their own policy should be taken seriously at all.
KARVELAS: How can you be sure that it won't have an impact in Perth, for instance?
CHALMERS: When it comes to that self-managed super policy, the investments are concentrated very heavily in...
KARVELAS: No, I'm talking about your broader suite of policies.
CHALMERS: Because they're prospective. When it comes to negative gearing, they focus on the building of new properties, which will create jobs and new supply in the big markets. There are a whole range of reasons why we've been very careful and very methodical. We haven't just come up with this on the back of an envelope overnight. We've been thinking about it for two years when it comes to negative gearing and for months when it comes to the rest of the policies that we announced on Friday. We're very conscious of that criticism that's being made, but there's nothing in it.
KARVELAS: Just finally and very briefly on citizenship, which obviously was the Government's big pitch last week. The Government is re-drafting these migration laws - tougher citizenship test; tougher English language test; a longer period to wait to be a citizen, four years now. Will Labor back the changes?
CHALMERS: We'll take the time to go through them. We're certainly up for a conversation about strengthening these arrangements. The approach that we take to the proposal that's been on the table is if they genuinely strengthen the community rather than weaken it, if they have the capacity to unite the community rather than further divide it, then of course we'd be up for a conversation about that. We weren't consulted in advance, so we'll take our time to go through them. As I move around the community though...
KARVELAS: What is your initial take though? I mean, you've had a couple of days to look at this. This isn't the first day today. It's not announced today.
CHALMERS: Sure.
KARVELAS: What do you make of them? Will they strengthen the community and end division as you say?
CHALMERS: They have the capacity to if they're well motivated, but a lot of the things that have been mentioned are already a feature of our citizenship arrangements and that's why we want to go through them carefully. But I think in the community there's a lot of scepticism about Malcolm Turnbull. They want to know that this is well motivated; they want to know that this isn't just another effort to cuddle up to Pauline Hanson or to keep Peter Dutton at bay. So there are all kinds of political considerations for the Prime Minister. Our job in the Labor Opposition is to come at these in an objective way. That's what we'll do. We always come at citizenship questions with an eye to improving the arrangements - not for political reasons, but for good, well-motivated reasons when it comes to strengthening our citizenship arrangements.
KARVELAS: Jim Chalmers, many thanks for joining me on a Sunday evening.
CHALMERS: Thanks, Patricia.
ENDS
