ABC RN DRIVE
MONDAY, 19 NOVEMBER 2018
SUBJECTS: Levelling the playing field for first home buyers, Labor’s commitment to a National Integrity Commission.
PATRICIA KARVELAS: As house prices in Melbourne and Sydney continue to fall, there are fresh calls for Labour to abandon its planned changes to negative gearing. The opposition has proposed limiting negative gearing on existing dwellings, although the change would not apply to those already using the tax break. The government says the policy would hurt mortgage holders who've already seen the value of their home drop and they’ve won the backing of Aussie Home Loans founder John Symond, who described the impact as a nuclear bomb this morning. Andrew Leigh’s the Shadow Assistant Treasurer. Welcome back to RN Drive.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks, Patricia. Great to be chatting with you.
KARVELAS: John Symond’s comments on your policy are - he’s used very strong language. But at a basic level, do you acknowledge that house prices are falling and there are people with large mortgages who would be hurt if they fall further?
LEIGH: Patricia, I don’t accept that and certainly Treasury’s analysis doesn’t support it either. The government commissioned Treasury analysis, which shows very clearly the impact of Labor’s policy on house prices would be modest. That’s because if you’re negatively gearing right now, you'll be able to continue to do so under Labor’s policy. Our policy applies to new purchases post-election, and after that we’d simply restrict negative gearing to new built homes. John Symond was arguing for reform into negative hearing back in 2014, saying negative gearing ‘wasn't designed for people who can go afford to buy a $1 million home’, that ‘it does need to be looked at’. He seems to have changed his tune since. We’ll listen to the experts, the vast bulk of whom strongly support Labor’s policy to reform negative gearing and the capital gains tax discount.
KARVELAS: Okay, so you say you reject this, but I remember the announcement of this policy. One of the reasons you announced this policy is to get house prices down so you can make housing more affordable.
LEIGH: It's about rebalancing the system-
KARVELAS: Yes, so when you say we won't have that impact, it will because that's what you want it to have.
LEIGH: It’s about rebalancing the system, Patricia, so we’re not seeing first home buyers always being beaten out at auction by investors. Right now we’re got so much more tax assistance for investors than first home buyers. That’s why our home ownership rate in the bottom third of advanced countries. It’s why our home ownership rate now is the lowest it's been in 60 years. It's just not right. We can't keep running a country in which we say houses are just for a fortunate few and the others can go out and be lifetime renters. That's not the right way to be running our economy. The reason we've got ourselves into this pickle is these immensely generous tax concessions Australia has set up for people to invest in property. It doesn't contribute to future financial stability. In fact, it makes the system much more vulnerable. It’s one of the reasons why our household debt ratio is among the highest in the advanced world.
KARVELAS: So do you accept that house prices will fall under your policy?
LEIGH: Patricia, I don’t. It is about taking some of the excess increases, making sure that house prices don’t continue
KARVELAS: So you’re telling me that your policy, which was introduced to make housing more affordable, will not decrease house prices?
LEIGH: Patricia, with respect, we’ve gone through this. What I’m making clear is this is about rebalancing. This is about moving tax incentives away from investors and towards first homebuyers. The focus is on making sure young Australians can afford a home. We used to be a country which really valued that. Remember, Menzies was committed to home ownership. Menzies boosted homeownership considerably. There’s no Menzies in the modern Liberal Party. They are the party of the housing investor, the party that doesn't believe that average Australians should be able to buy a home. Labor’s policy is supported by organisations such as the Grattan Institute, respected independent economists such as Saul Eslake. Reform of negative gearing was called for by former treasurer Joe Hockey, by Jeff Kennett. There's been a range of voices across the political spectrum, including I’ve got to say John Symond, who said ‘we've got to reform negative gearing’. We just can’t-
KARVELAS: Ok, you've previously told me that house prices wouldn’t grow at the same rate that they're growing now under your changes. But now you're telling me something different, that you're saying that there'll be no change.
LEIGH: No, Patricia. I’ve simply said that this is predominantly about making sure that we don’t have a system constantly biased towards investors and this is about, as I said before, containing the growth in house prices, making sure that we don't see this sort of stratospheric increases in house prices over the next generation that we’ve seen over the last. Houses used to cost twice average incomes, now it's up to five times the average income, even after some of us some of the recent drops in the housing market.
KARVELAS: So don't you want further drops then, to make them more affordable?
LEIGH: [laughter] Patricia, we're going around in circles.
KARVELAS: Yeah, because I think what you’re saying lacks a bit of logic.
LEIGH: What I've been clear about is that this is about rebalancing who's buying into the market. This is about ensuring that first home buyers are buying of the homes and investors are taking a smaller share of the market, ensuring that we don't have housing concentrated in fewer and fewer hands, that we've got an even spread of houses right across the community. We used to have that. If you go back to the 1970s, households in the bottom fifth of distribution were just as likely to buy a home as households at the top of the distribution. That’s been ripped away over the course of the last couple of generations, so now you have this situation where households in the bottom fifth of income really struggle to get into the housing market.
KARVELAS: Just on another issue, Bill Shorten has written to Scott Morrison asking for bipartisanship on legislating a federal anti-corruption body. Was giving the letter to the media before the PM had received it very bipartisan?
LEIGH: We’ve been calling for this for quite a while. Bill Shorten wrote to Malcolm Turnbull at the beginning of the year, wrote to Scott Morrison after he became the prime minister. It's no secret that Labor supports a national integrity commission, as do most Australians. These anti-corruption bodies exist at state and territory level. It's time to bring one in at the federal level. I don’t know why Scott Morrison would be surprised to know that Labor supports a national integrity commission. But the real surprise to most Australians is that he’s arguing against it, just as he argued against the banking royal commission, which he voted against 26 times and only supported it after the big banks themselves that they wanted a royal commission. Let’s hope he can do the right thing on a national integrity commission.
KARVELAS: The crossbench are pushing the government to get this legislated by the end of the year. Cathy McGowan's office has drafted legislation. Have you been in talks with Cathy McGowan? Will you vote for her legislation?
LEIGH: I chat to Cathy all the time, her office is just around the corner from mine, and I know many of my colleagues who enjoy conversations with her as well. We’ll have those constructive, positive conversations with the crossbench because we believe we need it done. There's just been a loss of public faith in government and in Commonwealth institutions. The revolving door in the Prime Minister's suite under the Liberals hasn't helped that. It’s really eroded Australians’ sense of trust in politics, and we need good parliamentary support for a national integrity commission.
KARVELAS: Thank you so much for your time, Andrew Leigh.
LEIGH: Thank you Patricia.
Authorised by Noah Carroll, ALP, Canberra