24 April 2016
Transcript - #2016058, 2016

Doorstop interview, Penshurst, Sydney

Joint doorstop interview with
The Hon Malcolm Turnbull MP
Prime Minister

PRIME MINISTER:

Well thank you very much. It is great to be here David and with Scott Morrison the Treasurer. The Mignacca family, Julian and Kim, are a great example of Australians who invest in order to get ahead. Julian and Kim bought an investment property in Cronulla which they rented out. They sold that and used it to pay down the mortgage here at their home. They bought another apartment here in Penshurst which they are negative gearing. It is costing Julian - he is deducting $300 a week on that. He has done that in order to buy a place for his little daughter Adison who we just met who is nearly one. He couldn’t afford to do that if Labor’s reckless change, its reckless new housing tax was ever implemented because he just couldn’t afford it. So he wouldn’t have been able to afford to buy the place in Cronulla. He wouldn’t have been able to afford to pay down his mortgage here at his home in Penshurst. See Labor’s reckless changes will reduce property values; they’ll devalue every home, every property, in Australia. They’ll result in increased rents because they will reduce the number of rental properties available. So it is an extraordinary trifecta of outcomes the Labor Party is proposing in their recklessness. They are going to drive down home values, drive up rents and discourage investment. That’s why we won’t have a bar of it. Scott.

TREASURER:

Thanks Prime Minister. It is great to be here in Penshurst today. I want to echo what the Prime Minister and David has said. Labor’s housing tax will push up rents. It will undermine the value of houses right across the country, your home, and it will target and attack mum and dad investors who are just trying to get ahead. A tax on mum and dad investors is not a good plan for families. It is not a plan for growth. It’s not a plan for jobs. And that is why we will have no bar of it because we want to see more people like the family here being able to have the opportunity to get ahead in the future. The other thing to remember about the value of your home is when you have confidence in the value of your home you have confidence in this economy. It has been the householders of Australia; it has been the mums and dads of Australia, who have been out there driving this economy through this very important transition we are going through. From the investment boom in the mining sector through to this more diversified economy that we saw grow at 3 per cent last year. Labor’s housing tax puts at risk the confidence of Australians in the value of their own home, which drives their confidence in this economy. That’s why it’s just a really, really bad idea and we won’t be doing it.

JOURNALIST:

Mr Turnbull why has it taken you so long to rule out any changes? Labor’s measures have been on the table since February.

PRIME MINISTER:

Well we announce our tax measures or our approach to tax in the lead up to the budget, but I don’t think today’s announcement comes as a surprise to anybody given the criticisms we have made on Labor’s reckless plan. But it is important for Australians to understand that there is going to be a big choice in this election. If you vote for Labor and Labor wins government that means higher rents, lower home values, less investment. Now we believe, Scott and I and David believe, that we need to see more investment in Australia. That’s why we are not putting up capital gains tax the way the Labor Party is. You want people to do less of something you jack up the tax on it. What Labor clearly wants is for there to be less investment in Australia because they are jacking up the tax on investment.

JOURNALIST:

Prime Minister what will you do to improve housing affordability particularly in Sydney and Melbourne?

PRIME MINISTER:

Well look I will ask the Treasurer to add to this but can I just say the key, there has been a huge amount of work done on this over many years. The key to improving housing affordability is more houses, more dwellings, houses and apartments. So our Cities policy is focused on delivering city deals which will encourage the right type of development that produces greater amenity, more liveable cities, and more affordable housing. This is a supply and demand problem. There has not been enough supply. There has been a tonne of work done on this for well over a decade. Scott, do you want to add to that?

TREASURER:

What we have seen over the last year or so, particularly in this city, is we have seen an increase in the construction of new homes and that has been critical to ensuring there has been there is the pipeline of supply that is coming on which really addresses this issue. That has been a product, particularly here in this State, of a State Government that has been reforming land use sale practises. They have been opening more land. They have been dealing with the supply issues. At the same time late last year APRA the regulator brought in new rules which has seen the house prices particularly here in Sydney and in Melbourne and in other places moderate by dealing through proper and targeted regulation the rules on the banks in terms of how they lend money. So you have the regulator doing its job, you’ve got particularly here in States like NSW, the State Government doing its job, and what we have to do is ensure that there continues to be mum and dad investors who are out there willing to invest. Ensuring there are rental properties like right here in Penshurst that people can rent. If you take one in three buyers out of the market this is what happens, under Labor’s proposal when you buy a new home and you put the key in the front door and you turn it, it’s like buying a new car, once you drive the new car off the lot it depreciates in value because you’re selling it into a different market. This is what will happen under Labor’s proposal; the second you buy a new home and you turn the key in the door, it turns into an old home and the market you are selling it into will be a lot softer. That is why it is such a bad plan.

JOURNALIST:

You spent a lot of time looking at the GST and what any changes would do, and you released modelling to show what those changes would mean. Where is your modelling for your position on negative gearing?

PRIME MINISTER:

Well there have been a number of studies released about it but can I just say to you this is an issue of common sense. Around a third of the buyers in the residential property market alone are investors. What Labor is proposing to do is to take one third of those buyers out of the market. Now if you take one third of the buyers out of the market, all other things being equal, prices are going to fall. That is obvious. So it’s, what Labor is proposing is a huge reckless shock to the market. This is not fine tuning. This is a big sledgehammer they are taking to the property market. Now the residential property market is the biggest single assets class in Australia. For most Australian families it is overwhelming their biggest asset. So this is putting all, the value of every Australian home at risk. There is no question about that. If I may just go on. Labor’s ban on negative gearing proposal, goes well beyond residential property. It applies to commercial property as well. So under Labor you would not be able to negatively gear a shop or a factory or an office. You also wouldn’t be able to negatively gear shares. So we were just talking to Kim and Julian about starting businesses and how often people will borrow some money, invest in a company that might run a restaurant, or a trucking business or any number of small businesses. That is how small businesses start, people borrow some money, capitalize the small business, and get going. You won’t be able to negative gear that. So what Labor is doing is standing in the pathway of enterprise and small business and entrepreneurship. Now we believe that the future of our economic growth and the jobs of our children and grandchildren depend on more investment, more entrepreneurship, more people like Kim and Julian having a go. That is why we are not having a bar of Labor’s proposed changes. And as you’ll see in the budget that Scott will bring down on the 3rd of May you will see a budget that is designed to drive growth and jobs.

TREASURER:

It’s the Labor Party who is proposing a housing tax not the Government. We have the common sense to know that we need to leave the system as it is. We have the common sense to know that. So it’s for the Labor Party who are proposing a housing tax to explain their policy and why they think it will be good for people who are just simply trying to get ahead. See what the Labor Party doesn’t understand about their housing tax proposal is this; the overwhelming majority - some two thirds of people who are engaged in the sort of investments that we see here - are people on incomes of less than $80,000 per year. It’s also, its nurses, its teachers, its police officers, it is certainly plumbers in terms of Julian here, and these are the people who engage in investing in property for their own future. Now it is Labor that is proposing a housing tax. It is Labor. So it is for them to produce the modelling on their policies.

JOURNALIST:

Prime Minister on a related topic, if you provide income tax relief will that makes it too expensive to then provide company reductions?

PRIME MINISTER:

Well you are asking me to speculate on the contents of the budget.

JOURNALIST:

How about we come on May 3?

PRIME MINISTER:

Yes come on May 3. We’ll make sure you’ve got a seat.

JOURNALIST:

Eight per cent of borrowers in Sydney are first home buyers -

PRIME MINISTER:

Just start again if you could.

JOURNALIST:

Just 8 per cent of borrowers in Sydney are first home buyers. What are you going to do to make housing more affordable to them?

PRIME MINISTER:

Well the critical thing is more supply as I said. The reason why, the reason that housing has become less affordable in Sydney for example, but especially, has been because there has not been enough supply. Now what Scott said just a moment ago is absolutely right. The Baird Government has changed planning laws, changed planning procedures to make it faster basically to get DAs so that projects can get approved, subdivisions can be affected. It has been a supply side problem. Look can I say to you we want to see more houses built, more apartments built, we want to see more construction and more construction jobs. What Labor is proposing on negative gearing will absolutely put the brakes on that because you pull the rug out of the property market.  The other reason, the other thing that we are doing of course, is restoring the rule of law to the construction sector. You know restoring the Australian Building and Construction Commission will mean that we will see the rule of law once again applying to the building industry because that lawlessness on building sites has been another very big brake on construction. It has added according to the construction sector, 30 per cent and more to the cost of construction. So that’s every apartment building, every school, every road, and every hospital. So everything we are doing is pulling the same direction, more jobs, more growth, more construction, more affordable housing, more jobs in construction. That is our commitment. Labor’s policies, what we have seen of them so far are absolutely calculated and designed to slow that growth, discourage investment, and reduce the number of jobs. That is a policy that Australians, I’m sure, will not choose. What Labor is proposing undermines the prospects of every child, every grandchild, the future of every Australian and it certainly undermines the value of every home and reduces the availability of rental properties. So house values down, rents up.

JOURNALIST:

Mr Turnbull you were on the record a few years back supporting changes to negative gearing. Was that a mistake?

PRIME MINISTER:

Well look I think you are taking some comments out of context. Let me say to you quite clearly the changes that Labor is proposing to negative gearing will devalue every home in Australia. That is what they are designed to do. They are designed to undermine home values. But what they will also do is they will jack up rents. So you, Labor has a trifecta. They want to discourage investment, jack up rent and reduce home values. Thanks very much.