We've got to tilt the playing field back towards first home owners - Transcript, Triple J Hack

E&OE TRANSCRIPT

RADIO INTERVIEW

ABC TRIPLE J HACK

WEDNESDAY, 2 AUGUST 2017

SUBJECT/S: Inequality; HILDA survey results; Housing affordability; Labor’s plan for a fairer tax system for all Australians.

STEPHEN STOCKWELL: I want to bring in the Shadow Assistant Treasurer who is also an economist, Andrew Leigh, thank you so much for joining us on Hack.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure, Stephen. Great to be with you.

STOCKWELL: It's lovely to have you here now to start with, from the stats we've just heard it is very likely that if you were a young person today you would be living with your parents, would you like the sound of that?

LEIGH: Well I think young Australians want options, just as the generation before them had. The real risk that we've got today is that we might have a generation that for the first time since the 1930s, are worse off than their parents were.

STOCKWELL: So what are you going to be doing to fix that?

LEIGH: Well our view as the Labor Party is that Australia has got in place some of the most generous tax concessions for housing investors anywhere in the world, and that's why this Saturday across the country investors will be beating out first home buyers in a bunch of auctions. While we've seen house prices rising in some cases ten times as fast as wages. Young Australians are told by boomers that they should forgo a few chai lattes and smashed avocado breakfasts. But we've had house prices in Sydney and Melbourne rising $140 a day. You can't save for those sort of house prices based on austerity. We've got to tilt the playing field back towards first home owners, and raise the homeownership rate - a rate which is as low as it has been since the 1950s.

STOCKWELL: There's a bit of a double whammy in this as well because one of the things that we've seen in the HILDA report today is that wages aren't going up either. Now that's something that kind of stopped happening, the wages went up pretty well until 2009 where it flattened off. Now 2009 was a Labor Government, so why should we trust you to fix this seeing that the numbers that you've essentially caused the problem with wages?

LEIGH: Well we did have a thing called the Global Financial Crisis, the biggest global downturn since the Great Depression. Under Labor, Australia was one of the very few countries that didn't experience a recession thanks to what Nobel Laureate Joseph Stiglitz called one of the world's best designed stimulus packages. Labor recognises that it is absolutely critical now to fix negative gearing and the capital gains tax discount. The things that we are doing in areas like superannuation, negative gearing and trusts that we announced on the weekend are designed to tackle inequality across society. But they'll also address generational inequality because each of those tax loopholes has been going disproportionately to grey-haired Australians at the expense of Generation Y.

STOCKWELL: You mentioned negative gearing, under your policy, investors are still able to negatively gear newly constructed homes. So you're still going to let them build rather than be an investment so the cycle keeps going right?

LEIGH: The idea there, Stephen, is that we want investors to be adding to demand. It's essentially the same approach that both political parties take towards foreign investors. We steer foreign investors towards new-built homes because we want them to add to the housing stock. It's the same approach that we take with the first home buyers grants and again that's a bipartisan policy across states and territories. First home owner grants either don't exist or are much lower if you're buying an existing home. So Labor has just taken the same principle that we apply to foreign investors, to first home buyer grants and we're applying it to negative gearing as well.

STOCKWELL: Let's talk a little bit about foreign investors because one of the things that you'll be doing there is doubling the foreign investment fees that are under a million dollars so that's a whole $5,000 to $10,000, if you're wealthy enough to buy a home - something that potentially is under a million dollars if you're looking somewhere in Sydney - that's going to be six or seven hundred if you're lucky I guess, $5,000 isn't a lot?

LEIGH: The Treasury work has shown that foreign investors are a very small portion of our house price rises we've seen.

STOCKWELL: In that case then, why are the measures behind foreign investment part of your plan to deal with affordable housing?

LEIGH: Well you're talking about a measure that was in Malcolm Turnbull's Federal Budget that Labor has said we won't oppose. The Treasury work on house price rises suggests that of that $140 a day rise that I spoke about before, about $1 of that is due to foreign investment.

STOCKWELL: Now one of the things that you want to do as well is you'll say you'll construct 50,000 new homes in Australia over the course of three years. PWC say that Sydney alone needs 525,000 homes over the next twenty years to cope with projected population growth. When you use the number 725,000, 50,000 doesn't sound like very many at all?

LEIGH: Let's not let the perfect become the enemy of the good. We've got to add to the housing stock, that's absolutely right. But we also need to make sure that when we talk about who gets the homes that they're more equally distributed. Robert Menzies had this idea of the nation of homeowners back in the 1950s, but I worry that today's Liberal Party has become very much the nation of housing investors. When Malcolm Turnbull does press conferences with families that boast having just bought their one year-old child an investment property, you get a sense of just how out of touch the modern Liberal Party is with the desires and needs of Generation Y.

STOCKWELL: I've got Lauren calling from Penrith in Sydney, Laurie you've just bought your first home, how'd you manage that?

LAUREN, CALLER: The only way we were able to do it was my partner's Mum had to give up some of her superannuation money.

STOCKWELL: That doesn't sound ideal at all. I'm going to bring Brendan in here for a second. Do you think that is the best way for someone to be able to afford a house?

BRENDAN MARKEY-TOWLER: Absolutely not. It's really not a great idea to be relying on other people to put up the collateral for your house, it creates more obligations on you. The best thing that you can possibly do is to be able to get a loan from the bank the normal way. I think these are stop-gap measures to try and rely on other people to put up money that really in a functioning market you should be able to have.

STOCKWELL: And Brendan, you've been listening to what Andrew Leigh has been talking about, certainly about housing affordability, what do you think of the claims put forward?

MARKEY-TOWLER: With all due respect, Dr Leigh, I think the Labor Party have kind of missed the point here and to be fair so has the entire Australian intelligentsia. On the whole there are very important exceptions. There is a lot of talk about this negative gearing issue and frankly that's not the core of the problem. The core of the problem is simply that there are too many people wanting to live in too few houses  too close to the city centres. It's not just a supply problem, it's a demand problem. So we need to be talking about much more radical reform than just eliminating a tax code, I will agree with Dr Leigh that that is quite important.

STOCKWELL: Thank you so much for joining us on Hack, Brendan. Andrew thank you for joining us on Hack as well.

LEIGH: Great to be with you, Stephen. Thank you.

ENDS


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