The Turnbull Government needs to get serious on household debt - Transcript, Sky News Agenda




MONDAY, 26 JUNE 2017

Subjects: Record household debt, curtailing hate speech, fair school funding.

KIERAN GILBERT: With me now is Shadow Assistant Treasurer, Andrew Leigh. The debt Bomb puts Nation in Danger", the front page of The Australian today and it refers to Australia and Canada as nations where personal debt is a risk. What do you make of that when there has been talk of a risk to the economy, there has been a property bubble that people have referred to this BIS report released suggested it is personal debt more broadly. What are your thoughts on those findings, is it a worry?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: They are two sides of the same coin. The rapid run up in house prices has meant Australians are more indebted than ever before. That has big implications for the economy. When you've got a lot of debt you don't feel like spending. Philip Lowe, the Reserve Bank Governor has highlighted this as one of the factors that might be dragging back the economy at the moment. The thing is, Kieran, we have these tax settings right now that encourage people to take on too much debt. The negative gearing and capital gains tax discount together act to encourage Australians to take on debt because they can deduct investment losses against wage income. You can't do that in Britain, you can't do that in the United States and that's why Bill Shorten and Chris Bowen have announced that we would restrict negative gearing to new built homes. It's important for financial stability as well as for housing affordability because if we allow this debt run up to continue then we are putting strains - 

GILBERT: So what is the risk then that Philip Lowe and those referred to these elevated levels of personal debt recently but what's the risk; that rates go up, property prices go down or both at the same time?

LEIGH: Both of those. Certainly a house price correction would pose significant risk to the Australian economy. The more debt you've got the more fragile your circumstances are to a shock. I think it's vital that the Federal Government starts taking this seriously. Those who have called for a reform of negative gearing include economists across the political spectrum. Organisations like the Grattan Institute, the Government's own Financial Systems Inquiry, the Reserve Bank has called for this, prominent Liberals: Mike Baird, Jeff Kennett, Joe Hockey in his outgoing speech to Parliament. It's not a radical idea, it's important in terms of making sure that we don't see the home ownership rate to continue to decline - it's now the lowest it has been in 60 years. 

GILBERT: But isn't it a risk then as well that you'd threaten the one industry that's propping up a lot of the growth recently? If you look at the NSW budget, their stamp duty is huge.

LEIGH: Not at all, Kieran. I think it's important that we grandfather the existing stock and so Labor's policy says that if you have enjoyed the benefits of negative gearing from an existing investment you can continue to do that. But after the policy comes into effect then it will be restricted to new built homes. So that means you're not going to get a substantial change in the short term, but in the long term we will start to move away from these hideous debt loads.

GILBERT: And the BIS report again points to the importance of China, this seems to be the same theme that we see in every report not just internationally but about our local economy. So much rests on the reforms being undertaken by the Chinese Communist Party and the Chinese Government?

LEIGH: Well, indeed. As Chris Richardson said recently, when China sneezes, Australian catches pneumonia. We are more engaged with the Chinese economy than any other economy at the moment, though tourism, through immigration and through trade. So it’s important for us that we encourage our Chinese friends to maintain stable economic policies that see them move from these rapid rates of growth – seven to 10 per cent – down to more sustainable growth. They’ve got significant challenges around their own housing sector and around state owned enterprises and hopefully they will manage those with care and deftness.

GILBERT: Finally, on the issue I touched on with Peter Jennings and General Peter Leahy – tech giants and their capacity to help governments and security agencies. What are your thoughts on that? Are they doing enough and where is this balance between our civil liberties and right to privacy and use of protected communication apps and encrypted technologies and that of the security agencies which need to be monitoring those who pose a risk?

LEIGH: Well, the tech giants are certainly doing a lot in this space. In the last six months of the last year, Twitter shut down nearly 400,000 accounts for terrorist use. Facebook’s just announced it’s going to double its number of content monitors and look at artificial intelligence. I’m pleased to see the Government is talking about this space, remembering that it’s only three months since we had Malcolm Turnbull talking about watering down race hatred laws and saying that free speech was an absolute value. So if the Government has sensible proposals, Labor will certainly consider those.

GILBERT: And in terms of the tech giants, you’re satisfied that they are doing enough? You’ve said Twitter, that sounds like quite a number, but this morning General Leahy suggested you search one very simple search about how to make a bomb and a whole heap of information came up.

LEIGH: I’m sure there’s more the tech giants can do and naturally the Government will continue to work with them. Labor’s in this together. We’ll support constructively any ideas the Government has.

GILBERT: And finally on schools reform, will the opposition diminish now that it’s through the Parliament? Many in your party believe you should have accepted this as a win anyway and moved on.

LEIGH: Kieran, I don’t see why it’s a ‘win’ when 85 per cent of public schools don’t reach their fair level of funding within a decade.

GILBERT: That’s the state governments though, that need to lift their 80 per cent. It’s 20 per cent provided by federal government.

LEIGH: The Government’s own budget papers show that they’re taking money out of schools. We’ll have to wait and see exactly how much, but certainly on budget night, this was $22 billion taken away from schools, most of that taken away from public schools. Labor supports fair funding for schools and we don’t support a corporate tax cut to the big end of town. The Government wants to give tax cuts to millionaires and multinationals. Labor wants to see our schools funded fairly for the economic interests of the nation.

GILBERT: Are you sure that you can spend the $22 billion though? First of all you’ve got to come up with it and then you’ve got to have the capacity to spend it. Where do you put that money?

LEIGH: Kieran, when I go to my local schools, I see examples in which they’re using those resources really well. Great teachers, literacy and numeracy coaches, making sure they’re looking after all students in the class. All of those investments are well made, not just for those kids, but for the prosperity of the nation.

GILBERT: Andrew Leigh, appreciate your time.


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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.