THURSDAY, 22 FEBRUARY 2018
SUBJECT/S: GST distribution, Malcolm Turnbull’s $65 billion handout to big business; IMF support for reforms to negative gearing and the capital gains tax discount; the Greens’ economic incompetence on housing.
CHRIS BOWEN, SHADOW TREASURER: Well, it’s good to be here in Adelaide and be joined by my friend and colleague Andrew Leigh. I’ll deal with just a couple of matters before handing over to Andrew to deal with housing and the Greens.
Firstly, here in Adelaide again, it’s important to note the Productivity Commission’s review into GST distribution would see $557 million taken away from South Australia – the equivalent of 5,340 teachers or 5,000 nurses employed by the South Australian Government. Of course, as I said in Hobart earlier in the week, I’ll say the same in Perth as I do in Hobart or Adelaide – the people of Western Australia have very legitimate grievance when it comes to GST distribution and the Labor Party is the only party with a plan to fix it by topping up West Australia’s Budget through an allocation from the Commonwealth Budget, without taking a single dollar away from South Australia or Tasmania.
I can come here to South Australia and say that, Scott Morrison cannot. I don’t know if the Treasurer is going to make a special guest appearance here during the South Australian election campaign, but he should be ruling out changing the GST distribution for South Australia and he should also be trying to fix Western Australia’s problems just as Bill Shorten and I have announced he will do.
Just on another matter, I see the Acting Prime Minister today backing in the Government’s corporate tax cuts as well. It’s quite a day when it’s a story that the Acting Prime Minister supports Government policy. But what’s even more interesting than that is of course yesterday we had the IMF report into Australia. The IMF report of course backed negative gearing reform and capital gains tax reform. They said “on the investment side, the combination of high capital tax discount rates and unlimited negative gearing can encourage leverage real estate investment and in market upswings”. They also said that “capital gains discounts on housing should be reduced and other tax incentives limited”. Very clear, very clear and this adds to the very long list of groups and organisations that have called for negative gearing and capital gains tax reforms, including the OECD, the government’s own financial systems inquiry, the Grattan Institute, ACOSS, the Committee for the Economic Development of Australia, the Institute of Company Directors and of course Glenn Stevens.
Now I’m going to invite Andrew to say a few words about the latest thought bubble form the Greens on housing affordability.
Of course, the Labor Party has a very well developed housing affordability policy and of course we have still yet more to say. The party which has no hope of forming government doesn’t need to worry about the sustainability of their policies, but that doesn’t mean they shouldn’t be held to account for their thought bubble. So I’m going to ask Andrew to say a few words about that.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks very much, Chris. There’s no doubt that there’s a huge challenge in Australia around housing affordability and home ownership. The home ownership rate is now as low as it’s been in six decades. Around Australia, every Saturday morning sees would-be first home buyers beaten out at auctions by investors. Bill Shorten, Chris Bowen and Doug Cameron have announced a series of important measures which would tackle the housing affordability crisis in Australia.
But today we’ve seen the Greens throwing out a policy which simply does not add up. While the Liberal solution to housing affordability is you should have rich parents or rich mates, the Greens solution is you should go and get yourself a magic pudding. While the Liberals’ solution is unfair, the Greens’ solution is innumerate.
Let’s be clear – what the Greens are proposing is you would increase Australia’s total housing stock by 500,000 dwellings. That’s something in the order of a 5 per cent increase in the total housing stock in Australia. They propose to do that with a government expenditure of $7 billion. The value of an additional 500,000 dwellings – the true value – is in the order of hundreds of billions of dollars. The nation’s housing stock if worth $7 trillion, so the notion you can increase it by 5 per cent for $7 billion dollars is just ridiculous. Indeed, the amount that the Greens are costing to build another 500,000 homes is less than you would require to maintain that many homes for four years.
The Greens’ announcement simply doesn’t add up. They’re not a party that is serious about housing affordability. No party has done more work on housing affordability than Labor. We have worked carefully with expert groups, with states and territories. The Greens have done none of that work – they’re simply chasing a quick headline.