MEMBER FOR MCMAHON
SHADOW ASSISTANT TREASURER
MEMBER FOR FRASER
FRIDAY, 13 MAY 2016
SUBJECT/S: Labor’s positive policy on housing affordability; real estate industry’s scare campaign; negative gearing; tax havens; Malcolm Turnbull in the panama papers; education funding dividend.
CHRIS BOWEN, SHADOW TREASURER: Thanks for coming. I'm here with the Shadow Assistant Treasurer, Dr Andrew Leigh and we'll both make some opening remarks before taking your questions.
It’s Friday the 13th and Malcolm Turnbull and the real estate industry have chosen Friday the 13th to launch their not-very-scary scare campaign. Now let's be very clear. Labor takes to this election a housing affordability policy to help first-home buyers get into the housing market. Labor believes in the aspirations of young Australians to buy their first home. And we believe in not just talking about it, we believe in doing something about it, in dealing with the housing affordability crisis in Australia. And we did so knowing that vested interests would campaign and complain. And that's exactly what's happening. But we are more than happy to run this election campaign based on our positive policies to assist first-home buyers. The real estate industry makes it clear even in the article in News Ltd today. They accept they have a vested interest in keeping the current arrangements. Well, I'll tell you who doesn't have a vested interest in keeping the current arrangements – hundreds of thousands of first-home buyers who are being locked out of the market.
It's very interesting that the real estate industry today is not launching or releasing any evidence, any modelling, not one little bit of support for their claims for this ridiculous and shrill scare campaign. Threatening recession, house price crashes. House prices will go down but rents will go up. Hordes of locusts will come on Australia should negative gearing actually be reformed.
Negative gearing needs to be reformed. Negative gearing needs to be reformed as a housing affordability policy. Negative gearing needs to be reformed for budget repair which is fair. Negative gearing needs to be reformed to create room for important investments in schools and hospitals. Labor has led this debate. Malcolm Turnbull and Scott Morrison used to believe that negative gearing should be reformed. We have the Treasurer who says there are excesses in negative gearing but he's not prepared – or allowed – to do anything about it.
Labor goes to this election with a clear policy of which we are proud. On which we will campaign for right up until Election Day and which I look forward to implementing in Labor's first Budget. Because it puts Australians first. It puts vested interests last and puts Australians first. That's what good policy is about. If Malcom Turnbull had any courage he'd do the same.
Dr Leigh's going to talk about some other issues today and then we will take your questions.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks very much Chris. As you know, Labor has been leading the debate over recent years about making sure the top end of town pays their fair share of tax. One of the critical issues in this is making sure that we crack down on tax havens. According to one estimate by Gabriel Zucman, there is $7.6 trillion of wealth held in tax havens. He estimates that four-fifths of that wealth is illicit. That means that the illicit wealth held in tax havens around the world amounts to around four times Australia's GDP. This is an issue that is taken seriously by the Tax Commissioner. Tax Commissioner Chris Jordan has spoken to the Senate inquiry on this. He's made absolutely clear that tax havens are a real risk to the Australian tax base. He's named some of the tax havens he's concerned about. And they include Panama and the British Virgin Islands.
The release of the Panama Papers has shown that many of those who used the Panamanian firm Mossack Fonseca were those engaged in illicit activities. They include crime bosses. They include drug runners. The work of tax havens in undermining tax systems around the world is ongoing and getting larger. It's estimated that around a tenth of US equities are now held in tax havens. Tax havens are like the woodworms, the white ants of the international tax system. Eating away at the tax base. And unless we do something serious to crack down on tax havens it is going to be harder and harder to get the taxes that we need to pay for schools and hospitals. That is why it is absolutely critical that given the latest revelations that a firm linked to Malcolm Turnbull used Mossack Fonseca - will the Prime Minister come forward and give an open and transparent answer to a range of questions to do with his dealings with the British Virgin Islands through the firm Mossack Fonseca ?
Simply put, the Prime Minister ought to tell Australians whether he considers the British Virgin Islands to be a tax haven. He should answer the question as to why an ASX-listed firm, with an interest in a Siberian gold mine, needed to set-up in the British Virgin Islands. He needs to account to Australians as to the briefings that he was provided during his time as director, as to the tax and revenue implications of setting up in the British Virgin Islands.
If it's good enough for David Cameron to front the British press and give a full account of his late father's dealings with Mossack Fonseca, it's good enough for Malcolm Turnbull to front the Australian press and give a full account of his dealings with the British Virgin Islands and Mossack Fonseca.
Malcolm Turnbull can't simply hide behind his spokespeople. He needs to come out and be absolutely clear about his past use of tax havens. What he's going to do in the future to make sure that tax havens don't white ant the Australian tax system and that the Australian tax system can work for all Australians, rather than being eaten away by the top end of town and by vested interests.
We are happy to take your questions.
JOURNALIST: In relation to the reforms on negative gearing, you're saying it is for housing affordability but many of those people who can't buy houses and need to rent – what are you saying to claims it is going to reduce the rental market?
BOWEN: Those claims are ridiculous, as has been pointed out by repeated independent experts. The important thing about Labor's reforms, of course, is that every existing investment is protected. That's what many in this scare campaign wouldn't want you to know. If you own a rental property now, you can continue all the current arrangements you currently have. Negatively geared. Without any question. Without any change. Indeed, if you buy a property between now and 1 July, 2017, that would remain the case.
Claims of landlords flooding the market to sell are just completely ridiculous. As the Grattan Institute has pointed out, for example, if one landlord leaves the market, that creates an opening for a first home buyer, which means one less renter in the market. So claims about rent are completely fallacious. Landlords will, under the system we operate in, charge what the market can bear. That's what they do now, that's what they'll do in the future. The fact that we're changing negative gearing arrangement prospectively into the future, and we're saying if you want to negatively gear that's fine but help us increase the housing supply by buying something new, means that that campaign and that claim is completely erroneous, and the completely mythical scare campaign that somehow rents went up last time has been debunked because it is just not true.
JOURNALIST: Just on the topic of education, why did Labor exaggerate the benefits of education investment? Do you concede that Bill Shorten is wrong to claim that there will be big economic benefits?
BOWEN: No, I completely reject the premise of that question. I find this debate astounding – only Liberals would say with a straight face that if you invest more in education, there's no economic dividend for the nation. Mums and dads around the country get that. Teachers know that. Principals certainly know that. If you lift the standards of students in Australia, particularly those who go to schools which don't have enough resourcing, of course it has an economic impact. Of course it has an economic impact. That is just beyond question. For the Liberals to argue with a straight face before TV cameras that there is no economic impact of lifting education outcomes is just laughable.
Of course, if you're educating students better today they will be more productive when they leave for the workforce in the years to come, of course that's the case. But we've made the point that if these investments had been made in the past, then we'd be getting more economic dividend right now.
JOURNALIST: You speak about the past. Why do you focus so relentlessly on education funding when it's well established that money is no silver bullet?
BOWEN: Nobody has said that money is the only issue when it comes to education. But I've got to tell you, again, teachers and principals around the country in under-resourced schools will point out to you, very clearly, and correctly, that it's the starting point. You can't expect a teacher in a school which is so massively under-resourced to get the same result as a school which has the right resources. When David Gonski and his team brought down their report, they weren't engaged in guess work. They didn't just pick a figure out of the air. They went through a very rigorous economic process to determine what level of funding was necessary to get the education result Australia needs. Go back and have a look at the Gonski report. David Gonski is a respected Australian. People right across the political spectrum know David Gonski and respect him. He would not recommend a figure for investment and education which wasn’t comple tely and totally rigorous. For Liberals to reject his work again shows that they just don't get it. We are delighted with this debate. We are happy to debate education right across the country. We are delighted that Liberal values are being so exposed as not believing in education and not believing that every Australian child deserves investment in their future, regardless of their parents' wealth, regardless of what school they go to. If Liberals really believe in the current school funding model, then we welcome this debate.
LEIGH: I find it particularly extraordinary that what Liberals think works for individuals - they don't think works for society. They're happy to spend more on their own children's education. They're happy to encourage their child to get more schooling because they know that individual will earn more in the labour market. And yet, when it comes to the society as a whole, they think that breaks down. They think that if we raise the standard across the board, we won't grow faster. It can't possibly be true. It must be the case that if education is good for individuals, as we know it is, it has to be good for society as a whole.
JOURNALIST: Just regarding your comments on the Panama Papers. Why are you attacking the Prime Minister when there is no suggestion of any wrongdoing for matters that occurred 20 years ago?
BOWEN: Dr Leigh can add, but at this point, David Cameron's given a full account to the British people what his father did. The Prime Minister of Iceland resigned for what, as I recall, his wife did. All we're calling for is that the Australian people get a full account of what Malcolm Turnbull did. And this claim that it was all 20 years ago – well, there have been Royal Commissions that have been held into things that happened 20 years ago, at taxpayer expense. So all we're asking for is Malcolm Turnbull to give a full and proper account of all the details of these arrangements and the Australian people can decide.
LEIGH: The only other point I'd add to Chris' excellent answer is to say that over the last 20 years, the role tax havens in undermining the international tax system has simply gotten worse and worse. It is very clear now in the way that it wasn't in the early 1990s that if tax havens grow unchecked, then the revenue base of advanced countries to fund schools and hospitals would be deeply undermined. It's vital that our Prime Minister is on the side of tax compliance rather than tax havens.
JOURNALIST: Just finally, when the Coalition attacks Julia Gillard over Ralph Blewett and the AWU - that was 20 years ago - and you accused them of dredging up the past?
BOWEN: Well, this is the point. There has been a tax payer funded Royal Commission. A former Prime Minister called to give evidence under oath about events more than 20 years ago which involved all sorts of allegations and in the end no findings of wrongdoing against her. We're not calling for a taxpayer-funded Royal Commission against Malcolm Turnbull. We're just asking him to answer questions.
JOURNALIST: So you’re not dredging up the past?
BOWEN: Well, these allegations have been raised by the Australian Financial Review. We are just pointing out that Malcolm Turnbull owes the Australian people the same explanation as David Cameron gave the British people. Nothing more, nothing less.