The release by BIS Shrapnel, a very damming report into the impacts of Labor's negative gearing policy, I think bears out what the Government has been saying. It is going to hit growth, it is going to hit house prices, it's going to force rents up – some 70,000 people forced into rental stress and it is going to require compensation potentially greater than what the revenue raises.
This is a policy where the Shadow Treasurer has rushed out there to failure on. He has gone out there all hairy chinned and all hairy chested, banging the drum on this issue and they have failed to contemplate and consider what the implications of their policy is.
Now, that is in stark contrast to what the Government has been doing in this whole area on tax. It has considered matters, issues were put back on the table by the Prime Minister last September, they have been worked through methodically, answers are being identified, where we have landed on positions such as on the GST we have released our modelling, we have released our reasoning and been in, I think, an adult conversation with the Australian people to explain our decisions.
The Labor Party have just gone out there with a growth destroying, home price destroying and affordability – particularly for renters – destroying set of tax measures. This just demonstrates very clearly that Labor cannot be trusted to manage the transition in our economy which the National Accounts demonstrated was happening. Three per cent through the year growth yesterday. Stronger than the G7. Stronger then the OECD. Putting us up there with the likes of South Korea and others who are growing at the same rate.
Now, that transition has to be well managed and you don't manage it well by rushing it out there with the sort of ill-considered policies which the Labor Party has done.
Treasurer, are you now less inclined to touch negative gearing than you were, say, a week ago?
In September last year the Prime Minister put negative gearing back on the table. It has been the job of the process, which as Treasurer I have been looking through, to examine all of these options. Examination of options doesn't suggest enthusiasm for options or any lack of enthusiasm for options either. It is the job to work through the details of this analysis.
People know that I have always been a strong advocate for those engaged in negative gearing. When I was Social Services Minister I put out one of the strongest defences of negative gearing at the time when it was under attack. We look through the issues, we look at the distribution of how the negative gearing practice is being employed out there but as I said yesterday and as Peter Costello said last night, it is a general taxation principle about being able to offset the cost of incurring an income with the measures you have to be able to offset your income. So, that is an established principle. Where we finally arrive on that will be based on the process we have been engaged in but what we know is you have got to look at the impact and what we are seeing very clearly are the impacts of the way Labor is fiddling around with this policy.
Can you just clarify, changes to negative gearing are still on the table? There are reports today they have been dumped.
The Government is just going to continue working through our process. That is the disciplined, mature way we have been going about considering these questions. You don't go out there and just rule something out on the basis of politics. What you do is you do the work and that is what we have been doing.
I think we have been very clear in our statements about the great risks to the way Labor's policy would impact on the economy. As I said it is going to hit your home, it is going to hit the economy and it is going to hit rents. That is what the modelling – independent of the Government and independent of the Labor Party – has shown.
Do you admit that it is now quite hard for the Government though to come up with a negative gearing policy because you have been slamming Labor's policy for so long? Is it really difficult now to come up with one of your own?
Well, we have been examining the area and we are very aware of the great risks and always have been throughout this process. Where others may be suggesting changes should be made is a matter for them. We have looked at some options but you are right to say that the dangers of making changes in this area are very real. They are very real and we have always been aware of that. That's why we haven't rushed out there like the Labor Party has. We will continue our process and we will conclude that and then we will move on from there. Look at what this BIS Shrapnel report says - BIS Shrapnel have been around property economics for a very, very long time.
I'm not trying to ask you to rule anything in or out but is it more appealing now to touch negative gearing than it was a week ago or is it less appealing?
Well, you are actually doing exactly that. I think I have given you a very clear answer on this. The Government has been going through a process to examine the options that were put on the table by the Prime Minister in September of last year and when we are in a position to make announcements on what that analysis has produced then we will do so, as we did on the GST. There is a Budget in May. That is when any final announcements around tax policy, that is the back end marker for those to be out there in the public domain and there is nothing unusual about that.
But I think it is very important that in this context of where the Australian economy is transitioning positively, this is the most important economic challenge the country faces, how we continue to successfully manage the positive transition in our economy. The risks that are posed against that, the risks against the transitioning economy being successful, are the sort of ill considered, foolhardy, negative gearing tax proposals that have come from the Labor Party.
Do you believe Tony Abbott when he says didn't leak the Defence White Paper?
Of course I take Tony Abbott on his word on that. I am very pleased that the Prime Minister has taken the right decision, in the interests of national security. This is what has been driving the Prime Minister, you have got to do the right thing on national security and where there are breaches such as that then they need to be investigated without fear or favour and it is important for the integrity of how national security matters are handled that that process is undertaken. The Prime Minister has moved very swiftly to do that and I think that should give Australians a lot of confidence about where he sees the integrity of national security in the way he seeks to run his Government. Playing politics with national security I think is a very, very dangerous and disappointing thing to have occurred but it is, I think, very reassuring that the Prime Minister has risen above, as he does on these things, and is ensuring the integrity of the process. The integrity of the process is paramount whether it is on national security or whether it is considering issues in relation to tax. That is the sort of mature government that Australians expect and I believe they are getting.