STATEWIDE DRIVE ABC WESTERN PLAINS
PARLIAMENT HOUSE CANBERRA
TUESDAY, 23 FEBRUARY 2016
Subject/s: Negative Gearing, Capital Gains Tax, Safer Schools Program, Polls.
HOST: Now to two federal politicians from each side of the political divide. Our only requirement is that they must come from electorates representing Regional NSW and this week we are joined by Joel Fitzgibbon, the ALP Member for Hunter and Shadow Minister for Agriculture, Fisheries and Forestry and Angus Taylor, Liberal Member for Hume and Assistant Minister to the Prime Minister for Cities and Digital Transformation. Good afternoon gentlemen.
ANGUS TAYLOR: Good afternoon Fiona.
JOEL FITZGIBBON, SHADOW MINISTER FOR AGRICULTURE, FISHERIES AND FORESTRY, SHADOW MINISTER FOR RURAL AFFAIRS: Fiona, great to be with you. Can I congratulate Angus on his promotion and say members from rural and regional Australia should be running the country.
TAYLOR: You’re dead right Joel.
HOST: I think it’s fantastic, I reckon we can sort these cities out in no time.
FITZGIBBON: We have a unity ticket here on this issue.
TAYLOR: We sure do.
HOST: Well I was going to ask you about negative gearing and I guess I should because a lot of people in the cities have houses worth a fortune and in respect to negative gearing Angus Taylor, why has your government been opposed to any changes to this as an economic reform measure? Is it all about the value of those city houses?
TAYLOR: Well, we’re opposed to Labor’s policy because we think it will a have big impact on housing prices across the board, not just in the cities and certainly not just in the inner cities, in outer suburban areas and even in regional areas. Look, about a third of demand at the moment is coming from investors who can take advantage of negative gearing and we know if you take a third of demand out of a market; which is a market which is quite fragile in a lot of ways with a lot of debt behind, there’s a huge household mortgages on average across Australia, then you really are taking a very very big risk. I think the banks will have more to say about this, I’m sure their credit people would be terrified about this prospect because this has been a market that been on the precipice for a little while a there’s been some real worry about how sustainable house price levels are and they are absolutely central to our financial system and our economy so we think this is a very big risk for Labor to want to take.
HOST: Just on that, there has already been so major changes for those people, property investors that have got to have now a certain cash deposit to start off with and you know, we’ve seen them already back out of the market.
TAYLOR: Yes, we’ve seen some of that but this is much more significant and look you couldn’t pick a worse time to do it because of the scale of the household debt. We’re really at the top of the pops on this worldwide. There is no other Country…
HOST: Because our houses are so expensive.
TAYLOR: Well it’s partly that but partly also because we didn’t have our day of reckoning back after the Global Financial Crisis. Most other Western Countries OECD Countries did; we didn’t, and so this is a very very serious risk to take and we think at this time it’s very bad policy.
HOST: Joel Fitzgibbon, will the Labor negative gearing policy which isn’t on new houses reduce the value of the average Australian home?
FITZGIBBON: Well Fiona, Angus is arguing against his own proposition. When he says we didn’t have a day of reckoning he means that we have a housing bubble in Sydney, that’s what he is saying. The heat didn’t come out of the market but there are three components to this. The first is budget savings. All of your listeners know that we need to find substantial savings in the Budget, that’s why Malcolm Turnbull wanted to bring in a GST, he has backed down from that, we’ve given an alternative proposal which we think is fair which brings me to the second point. It’s a question of equity. About 70 per cent of the gains from these investments are enjoyed by 10 per cent of the wealthiest people in the country so it’s a fair place to go hunting for savings but third; and it goes to this housing price issue, what we’ve done is not only made it prospective which means it doesn’t affect existing investors but -
HOST: So people who are now negatively gearing will just keep on doing that
HOST: If you were elected for how long?
FITZGIBBON: Well, if you purchased or invest after July 1, 2017 - if we were to be elected - then the new rules would apply to you. But if you have an existing investment - an existing negatively geared property - you are unaffected.
HOST: So you can keep doing it as per now.
HOST: for ?
FITZGIBBON: Forever, ad infinitum for the rest of the life of that investment but also we’re saying that you will retain the current benefits if you are investing in new housing stock. See, prices are through the roof and people in Sydney and in regional areas can’t afford to buy their first home because prices are under pressure because demand is out-stripping supply. But we want to make sure new housing stock is coming forward that’s why we are going to allow people to continue to enjoy the current benefits if they are investing in new properties.
TAYLOR: Look I just don’t accept that analysis. There are a couple of parts of it that are quite wrong. First is that it is just wealthy people getting the advantage of this, you know we’ve got the analysis here now: we have 58,000 teachers; 39,000 nurses and midwives; 19,000 police and emergency service people; 35,000 general clerks; all taking advantage of negative gearing. But you know the notion that we’re going to crash the market through some kind of aggressive tax measure as a way of making housing more affordable is absolutely ridiculous. The way you make housing more accessible to everybody is to bring more supply on and the real challenge we’ve had here and this is something that I’m very focused on in my new role, is how do we get more supply coming onto the market and crashing the price is absolutely not the way.
FITZGIBBON: Fiona that’s why we are allowing people to continue the current benefits if they are building new houses.
FIZTGIBBON: New supply.
FITZGIBBON: That’s exactly what it’s about.
HOST: I think you’ve both had a fair say on that, but I just have to ask you in your new role Angus Taylor, as the Assistant Minister to the Prime Minister for Cities and Digital Transformation, did you see that photograph of a new block of units going up in Bulli Creek near the airport in Sydney ? Its 30cm from the terrace, or the verand,a of this house to this block of units and it’s like, how does the fire brigade get in there if they have to between the buildings?
TAYLOR: Yes, so look, the important thing to understand about my role and the Federal Government’s role is we don’t do detailed planning, that will always be the State and Local Government. What we do do though is we invest in infrastructure, we make significant policy decisions in education and industry policy that have big implications for job creation, Free Trade Agreements and jobs are at the heart of any successful city whether it’s a capital city or a regional city so that’s where our focus needs to be. I won’t be the Minister for inner cities or capital cities, I’ll be the Assistant Minister for all Cities including regional cities and that’s where our focus has to be.
HOST: Ok what about populations ? Can our cities just keep growing?
TAYLOR: Well look they are and they have been and you know we are a country that I think has done very very well out of having a well ordered Immigration policy; that’s been a big policy of this government, I think we’re quite bipartisan on wanting to continue with that but what it does mean that we have to find ways for our cities to grow without losing amenities, without creating congestion and making sure people live close to jobs. One of the great advantages of regional cities is that people can live close to jobs but we’ve got to have job creation happening in those regional cities and that’s going to be a real focus for me.
HOST: You’ve seen your own city of Newcastle Joel Fitzgibbon change dramatically from being a steel town.
FITZGIBBON: Yes it has changed dramatically. I think there is debate about whether we can be a bigger Australia or a smaller Australia is a false one in a sense. We will, or should be, as big as our natural environment allows us to be. Now things like water resources being the obvious example. But some regional cities have changed dramatically. When BHP finally closed in Newcastle in 1998, there was a lot of doom and gloom, people crying the sky is falling but indeed the departure of that industry and the removal of that smoke-stack image if you like, allowed a real transformation for Newcastle and indeed on that basis the whole Hunter Region. So if governments become engaged - as they did in both of the phases when BHP - both started to withdraw and then finally withdrew - they became engaged in the right way and took advantage of what in the first instance seems a problem for a local community.
HOST: Last week I spoke about Capital Gains Tax, it was a suggestion for the group of charities that if we just introduced it for the very richest people in Australia, a lot of money could be collected and there was outrage from the farming sector. Senator Bill Heffernan rang up and said you know Joh Bjelke-Petersen saved the country from death duties before, don’t bring it back or people will torch Parliament House. Your thoughts on Capital Gains Tax. What’s Labors proposed changes Joel Fitzgibbon?
FITZGIBBON: Well, sorry Fiona I apologise, I’m not exactly sure what debate you are talking about. You said a debate emerged last week? We are having a debate here about the generous nature of Capital Gains and the discount rate but you seem to be talking about death type taxes?
HOST: Yes, this one just sent people crazy, the idea of a tax, a death tax.
FITZGIBBON: Not even in our thinking Fiona and unlike Malcolm Turnbull, when we say that we mean it - and if your listeners don’t know what I’m talking about - in Question Time yesterday with respect to Capital Gains he said “not even in our thinking”. And then we learned over night that it’s very much in his thinking. But it’s worse, because he is talking about attacking the superannuation savings of ordinary working Australians which would be a very very big mistake.
HOST: So you have no, not a thing on Capital Gains Tax – nothing in your policy so far.
FITZGIBBON: Our policy is to reduce the discount people receive on a capital gain, we are talking about normal investments now. We are not talking about the death-type taxes you are talking about.
TAYLOR: So what that effectively means Fiona is that Australia will be paying one of the highest Capital Gains Taxes in the world; I had a look this morning – I found Venezuela was higher actually – but it was very hard to find anyone else that was higher. So people will be paying up to 52% Capital Gains Tax and this is extremely high. Look what we need is more than ever a real focus on investments, great investments that are going to drive jobs and innovation and productivity. If you whack up Capital Gains Tax at the moment the way Labor’s proposing and you hit asset markets, housing markets, in the way Labor’s proposing you do exactly the opposite.
FITZGIBBON: Fiona, people in this country basically pay taxes in three ways; they pay it on consumption with GST when they spend money on a good or on a service. They pay it on income, that is via the sweat of their brow - whether they are pushing a wheelbarrow or a pen. And of course, they pay it on capital gains. So this is a false comparison trying to compare what we pay in capital gains with other countries. The important comparison is the overall tax burden and of course a lot of very wealthy people in this country are getting away with a very very nice arrangement on big investments and capital gain, while average workers in this country - say the guy who is doing the bricklaying - is now creeping into the second highest marginal tax rate. That is a problem.
HOST: I am talking to Joel Fitzgibbon, the Federal member for the Hunter and Shadow Minister for Agriculture, Fisheries and Forestry and also Shadow Minister for Rural Affairs and with us this afternoon the Federal Liberal member for Hume and also he is now the Assistant Minister to the Prime Minister for Cities and Digital Transformation, Angus Taylor. Thank you both for being here on Statewide Drive. Now look earlier we talked about the “Safer Schools Program”, we had the National Program Director of the Safer Schools Coalition and I was criticised for not putting the other side of the argument what the Coalition, their concerns about it – Angus Taylor can you explain why this Program is up for review?
TAYLOR: Well look, it is pretty simple, we have had local MPs, not universally, but a number of local MPs who have had a lot of complaints from parents about it. I have to say I don’t know the Program well, and it hasn’t been a major issue in my Electorate yet, it may be in the future.
HOST: There is only about 100 schools across the State that have introduced it.
TAYLOR: Sure I understand that, but certainly in some places where it has been introduced it has caused parents a lot of concerns and I don’t want to get into the merits of the Program or otherwise, because I don’t have a personal view on that, but what I do know is that those concerns need to be listened to and as a result the Prime Minister and the relevant Minister, Simon Birmingham, has said there will be a review.
HOST: And your Leader, Joel Fitzgibbon, has actually come out and said, oh bad choice of words, that he supports this Program.
FITZGIBBON: Well he has Fiona, and Angus pointed out himself, this is a voluntary program and schools do not have to participate and this is a natural progression of us as a modern society - allowing and teaching kids to be more conscious of the needs and aspirations of others. But this is just another example of the extreme right of the Party - like Senator Cory Bernardi - dictating to the Prime Minister what should be the Government’s policy. When Malcolm Turnbull took the leadership people were expecting a government with a more progressive approach after dealing with the antics of Tony Abbott, but here we are many months into his leadership and we see that the same extreme right-wingers dictating to the policies of the…
TAYLOR: [interrupts] That is just rot! I sat in the Party Room and I know which MPs were saying that they had parents who were concerned, and I can tell you it was a broad base. Look the issue with the Program is not whether it is voluntary – [disruption to broadcast] voluntary for the kids and for the parents. There are a number of parents who send kids to these schools who don’t [inaudible] on the Program and it is a question of what happens.
FITZGIBBON: Well why review it?
TAYLOR: Well because, no no like any program, to satisfy parents with legitimate concerns Joel, and that [disruption to broadcast].
FITZGIBBON: There was a time Fiona when we were not fully aware, and again this is just another natural progression [disruption to broadcast] teachers are best placed to determine what is the best option in their circumstances.
TAYLOR: Look the reality is with any program, and this is a program designed, but the question is not that [disruption to broadcast]
FITZGIBBON: Not make decisions without fully consulting with the parent group would you?
TAYLOR: Well, that may well be right Joel but I think it is quite appropriate given we have [disruption to broadcast]
HOST: Boys come out at your school Joel?
FITZGIBBON: Well no one did of course Fiona. I’m 54, my God, it just didn’t happen. And that’s the reality. When the big stick [disruption to broadcast] principals work with parent representative bodies when deciding whether these programs are embraced or otherwise.
HOST: And your school Angus Taylor?
TAYLOR: It tended not to happen at school [disruption to broadcast] Still we should have very very low tolerance of bullying- it is not acceptable. But that is not the question here, the question is.
HOST: [interrupts] and on that question [disruption to broadcast] 50 – Joel Fitzgibbon is Labor buoyed by these results, thinking they’ve got a chance?
FITZGIBBON: Fiona, the polls reflect two things: one, we are on the front foot talking positively while Malcolm Turnbull continues to make mistakes, I am very confident he will continue to do so.
HOST: He is still the preferred Prime Minister by a very long way though. Any rumblings about Bill Shorten? [disruption to broadcast]
TAYLOR: I think we have got to look at these in a longer term context, we get too caught up in the here in Australia which makes no sense [disruption to broadcast] Labor carrying on about how they want to see them tomorrow.
HOST: I would like to thank you both, I have got a question, some homework for you Joel Fitzgibbon, but I think it might be a State issue, [disruption to broadcast] fisheries issue, has it got anything to do with you?
FITZGIBBON: It has got nothing to do with my jurisdiction, but I can say -
HOST: I don’t know anything more about it [disruption to broadcast] Shadow spokesman for Agriculture, Fisheries and Forestry and for Rural Affairs, and Angus Taylor the Federal Liberal Member for Hume.