Speaker 1: Australia's long standing housing shortage is making homes unaffordable. This
Speaker 1: challenge hits young workers and families hard, and we're addressing
Speaker 1: it from every responsible angle.
Speaker 2: It was a budget framed around fairness for workers and
Speaker 2: for young people locked out of the housing market. The
Speaker 2: Treasurer Jim Chalmer's fifth budget restricts negative gearing, though not
Speaker 2: for anyone who was already doing it, while also promising
Speaker 2: to increase housing supply and delivering a two hundred and
Speaker 2: fifty dollars tax cut for workers.
Speaker 1: Speaker, this is the most important and ambitious budget in decades.
Speaker 1: Important because the world is throwing a lot of us
Speaker 1: and this budget is about helping Australia deal with those challenges.
Speaker 2: Charmers wants this budget to be seen as ambitious, but
Speaker 2: is it. I'm Ruby Jones and you're listening to seven
Speaker 2: Am Today Press Gallery journalist Karen Middleton on what the
Speaker 2: Treasurer is promising and whether it delivers. It's Wednesday, May thirteenth,
Speaker 2: so Karen, hello and welcome back to the show.
Speaker 3: Thanks Ruby.
Speaker 2: It's eight point thirty at night on Budget Night, which
Speaker 2: is late, so let's get into it. I thought we
Speaker 2: could begin with the part of the budget that everyone
Speaker 2: has been talking about in the days and weeks leading
Speaker 2: up to tonight. Housing we know that now that negative
Speaker 2: gearing will be restricted to new homes as of tonight,
Speaker 2: and capital gains tax concessions are also going to be
Speaker 2: wound back. So tell me how all of this works.
Speaker 4: That's right, So as of budget night tonight, anyone buying
Speaker 4: a property will only be able to negatively gear it
Speaker 4: if it's a newly built property, not an established one.
Speaker 3: Anyone who's already got an established property will be able
Speaker 3: to continue to negatively gear it.
Speaker 4: In terms of capital gains tax, the fifty percent capital
Speaker 4: gains tax discount that exists now is going to be
Speaker 4: replaced by a return to what was the old system,
Speaker 4: an inflation based cost assessment system. They'll also have a
Speaker 4: minimum thirty percent tax applied now.
Speaker 3: People buying new properties.
Speaker 4: Will be able to choose which version of the system
Speaker 4: they access to minimize their tax again to try and
Speaker 4: boost the sale of new properties, but those with established
Speaker 4: properties are going to lose that fifty percent discount now.
Speaker 1: This will help rebalance the system, which is more generous
Speaker 1: to assets than it is to labor, and help rebalance
Speaker 1: a system where house prices have decoupled from incomes. Since
Speaker 1: nineteen ninety nine, house prices have risen over four hundred percent,
Speaker 1: more than twice as fast as average incomes. Our tax
Speaker 1: changes will help about seventy five thousand Australians achieve the
Speaker 1: dream of home ownership.
Speaker 2: Okay, So these changes to negative gearing, as you say,
Speaker 2: they come into effect now. So if you're buying a
Speaker 2: house as of tonight, no negative gearing unless it's a
Speaker 2: brand new property. That means, though, is that anyone who
Speaker 2: has already been negative gearing for the past few decades
Speaker 2: or years, they can just continue to do that for
Speaker 2: however long their loan goes for. So the intergenerational inequity
Speaker 2: that exists right now that the government says that it
Speaker 2: is trying to address, how much does that really change?
Speaker 3: Well, that's the.
Speaker 4: Question the government's going to have to answer, and I
Speaker 4: reckon I'll get that question quite a lot in the
Speaker 4: next few days, because there'll be people who argue that
Speaker 4: it's still inequitable.
Speaker 3: If the people already in the market who've had.
Speaker 4: The advantage and been able to access the housing market
Speaker 4: my investment properties can continue to negatively gear them whereas
Speaker 4: the people who had aspired to do that one day
Speaker 4: will only be able to do that on new properties.
Speaker 4: Now they will still be able to do that on
Speaker 4: new properties, but there will be this debate I think
Speaker 4: about whether it goes far enough to addressing the intergenerational
Speaker 4: inequity issue. The government argues that there was no perfect
Speaker 4: way to do this and that they had to have
Speaker 4: a transition arrangement because they couldn't sort of holdless bolus
Speaker 4: change the tax system for everyone already in the market.
Speaker 4: But it's going to raise those kinds of questions and
Speaker 4: maybe criticisms, Okay, And.
Speaker 2: This is of course something that Anthony Albanizi said that
Speaker 2: he wouldn't do. He went to the last election saying
Speaker 2: that there would be no changes to negative gearing because
Speaker 2: we've got a chance to rule it out now, and
Speaker 2: I think it's important you rule it out if you
Speaker 2: don't plan on.
Speaker 3: Doing it, well, I have no plans to do it.
Speaker 2: It's not our policy. His treasurer has now explicitly done
Speaker 2: the opposite, and a lot is being made of that
Speaker 2: broken promise. So why is the Albanesi government doing this now?
Speaker 4: Well, it's fascinating Ruby because you're right. They said it
Speaker 4: the election emphatically. In fact, the Prime Minister was quite
Speaker 4: forceful with journalists who were asking him about this that
Speaker 4: they were not going to make these changes. And they've
Speaker 4: changed and they say that things have changed since the election.
Speaker 4: And I think circumstances have changed, but there's going to
Speaker 4: be a question about whether people accept the reasoning and
Speaker 4: the argument in favor of breaking the promise. You've got
Speaker 4: these kind of competing constituencies. You've got the people who
Speaker 4: say we want the government to do something. It's got
Speaker 4: a huge majority, it needs to do something to fix
Speaker 4: a broken tax system. And those are people who don't
Speaker 4: want to wait till the next election to have the
Speaker 4: government come up with an idea and then get it indoors.
Speaker 3: They say that's too slow.
Speaker 4: Those people are putting pressure on the government now to
Speaker 4: do something. And then you've got the people who quite
Speaker 4: rightly say this is a broken promise. It's an egregious
Speaker 4: broken promise. They said they wouldn't do it. I believe them,
Speaker 4: and this is a breach of trust. And the government
Speaker 4: is choosing to act on the first lot of people's
Speaker 4: demands and thinks that it can manage the second lot
Speaker 4: and it's interesting because I think because of the size
Speaker 4: of their majority, that the number of seats they want
Speaker 4: at the election, A lot of people are telling, you know,
Speaker 4: focus groups, social researchers, polsters that they sort of were
Speaker 4: surprised by the size of the majority already the government
Speaker 4: got and that it now has the opportunity to do
Speaker 4: something like a once in a generation thing because of
Speaker 4: that majority, and it should act fast. So in some ways,
Speaker 4: the old rules or the standard rules of don't break
Speaker 4: a promise get flexibly interpreted even by voters. I think
Speaker 4: when they decide that there's something that warrants doing something
Speaker 4: about it right now, and that is what the government
Speaker 4: is looking to and pointing to in its decision to
Speaker 4: break the promise and make these changes.
Speaker 1: I think people will be most focused on the positive
Speaker 1: change that we're making in the tax system and in
Speaker 1: the housing market. It has obviously involved a level of
Speaker 1: political risk because we come to a different view. And
Speaker 1: I've said in recent days and I really mean it,
Speaker 1: one of the reasons I'm here taking these characteristically difficult
Speaker 1: questions from you, Sarah, is because I do understand when
Speaker 1: you come to a different view, you have to front
Speaker 1: up and explain why and that's why I'm doing so.
Speaker 2: Is the risk here, then, Karen, that no one is
Speaker 2: happy with this policy, that property investors and the housing
Speaker 2: lobby don't want the bubble to but for young people
Speaker 2: who are trying to get into the market, that this
Speaker 2: policy doesn't actually make a meaningful difference to them. So
Speaker 2: all this political capital is being spent on something that
Speaker 2: actually doesn't deliver.
Speaker 3: That is the risk.
Speaker 4: You know, what's the old saying that you can't please
Speaker 4: all the people all the time, but you try to
Speaker 4: please some of the people some of the time, and
Speaker 4: the risk is that you upset all of the people
Speaker 4: all at once. And that's what the government will be
Speaker 4: hoping that it isn't doing. I guess it depends on
Speaker 4: how effective its explanation is and how people receive that,
Speaker 4: whether they decide that this is an important move to
Speaker 4: fix the system, whether they accept that there has to
Speaker 4: be a transition which entrenches some of that unfairness for
Speaker 4: a while, or whether they think it doesn't go far
Speaker 4: enough and we're going to punish the government accordingly.
Speaker 2: Still to come tax cuts for working Australians parent A
Speaker 2: central concern of this budget has been how the government
Speaker 2: can weigh cost of living relief measures against the inflation risk.
Speaker 2: So given that, can we talk a little about what
Speaker 2: is in the budget that might help reduce costs for people.
Speaker 4: Yeah, So there's been some speculation in the last week
Speaker 4: or so that there might be some kind of extra
Speaker 4: tax measure, and we have in fact seen that in
Speaker 4: the budget tonight. It's called a Working Australian's tax offset
Speaker 4: of two hundred and fifty dollars.
Speaker 1: This offset is targeted to workers and it represents the
Speaker 1: most meaningful permanent increase to the effective tax free threshold
Speaker 1: since labor increased it more than a decade ago.
Speaker 4: It doesn't come in until the second half of twenty
Speaker 4: twenty seven and it won't be claimable until the end.
Speaker 3: Of that tax year.
Speaker 4: So really we're talking about an extra measure that people
Speaker 4: would get in their pockets after probably the next election,
Speaker 4: so it's a while away. But the other measure that
Speaker 4: the government's introduced is this one thousand dollars to instant
Speaker 4: tax deduction, and that's aimed at people who are claiming
Speaker 4: lots of work related expenses in their tax return. It's
Speaker 4: allowing them to claim up to one thousand dollars without
Speaker 4: having to provide receipts. And now, yes, that's going to
Speaker 4: be pretty welcome to a lot of people for whom
Speaker 4: doing the tax is a huge headache. If you want
Speaker 4: to claim more than one thousand dollars, you are going
Speaker 4: to have to provide receipts. But up to one thousand
Speaker 4: dollars you're be able to claim that instantly. It'll be
Speaker 4: a faster way to do your tax. So that's going
Speaker 4: to appeal to a lot of people. I think Treasury
Speaker 4: is saying that something like six million people, working people
Speaker 4: are going to benefit from that proposal that makes tax
Speaker 4: time a little bit easier. One of the key things
Speaker 4: the government is emphasizing is that all the money that
Speaker 4: it's saving from the tax measures that it's making is
Speaker 4: going towards funding other tax measures, like the tax cuts
Speaker 4: that it announced a couple of years ago. So it's
Speaker 4: talking about a broadly revenue neutral budget and it's trumpeting
Speaker 4: the fact that it's re employing that money to the
Speaker 4: benefit of the electric.
Speaker 2: And this budget also cuts the permanent migration intake, which
Speaker 2: is interesting. So is that an economic decision or a
Speaker 2: political one?
Speaker 4: Well, that's a very interesting question. On face value, it
Speaker 4: looks to me like a political decision. The government's setting
Speaker 4: the twenty twenty six twenty seven permanent Migration program planning
Speaker 4: level at one hundred and eighty five thousand places, and
Speaker 4: most of those over seventy percent are going to go
Speaker 4: to skilled migrants. They're also going to prioritize applications from
Speaker 4: people who are already on shore and those that are
Speaker 4: offered to offshore applicants that are going to be targeting
Speaker 4: high skilled migrants with high levels of education. But there
Speaker 4: is also an admission in the budget papers that the
Speaker 4: government's forecast net overseas migration levels have blown out. So
Speaker 4: they had forecast in the midyear budget update that the
Speaker 4: twenty twenty five twenty six level of net overseas migration
Speaker 4: would be two hundred and sixty thousand. In fact, they're
Speaker 4: now saying it's going to be two hundred and ninety
Speaker 4: five thousand, So that's a blowout of thirty five thousand.
Speaker 4: They say that's because not as many people are leaving
Speaker 4: the country as there had been before. But on the
Speaker 4: whole there's a new emphasis or an even greater emphasis,
Speaker 4: on skilled migrants, on highly educated migrants, and on people
Speaker 4: already here in Australia, so they're kind of pulling the
Speaker 4: drawbridge up a little bit on new migrants, and you've
Speaker 4: got to assume that that's at least in part response
Speaker 4: to the sort of political climate we're seeing that delivered
Speaker 4: paul En Hansen and her One Nation Party a seat
Speaker 4: in the electron of Parah on the weekend, and that
Speaker 4: is becoming a big issue around Australia, with the connection
Speaker 4: between the number of migrants since the COVID lockdowns and
Speaker 4: border closures and the economic pressures people are facing. Whether
Speaker 4: or not those connections are fair, that's certainly something that
Speaker 4: people are feeling. And the government is making a point
Speaker 4: of emphasizing a tightening of the migration system in this
Speaker 4: budget and it seems to be looking to those sort
Speaker 4: of sentiments.
Speaker 2: And the big message of this budget every budget has one,
Speaker 2: is around fairness. Yet the biggest cut has been from
Speaker 2: disability support thirty six billion from the NDAs, and when
Speaker 2: it comes to intergenerational inequality, there are these real questions
Speaker 2: I think about whether or not this budget will address
Speaker 2: that in any meaningful way. So what is your assessment
Speaker 2: of that messaging and whether the budget actually backs it up.
Speaker 4: I think it's I mean, I think it's certainly moving
Speaker 4: in that direction, and as we've been saying, there'll be
Speaker 4: debate about whether it goes far enough. Certainly there is
Speaker 4: some in new community that will point to what is
Speaker 4: still being spent on things like the Orcus submarine deal
Speaker 4: and things that weren't done, like the decision not to
Speaker 4: tax the gas industry in a more onerous manner, and
Speaker 4: say well, you know, why are you sort of doing
Speaker 4: these things and not doing those things? And there are
Speaker 4: places you could be saving money. But I think they
Speaker 4: have made some pretty hard decisions here that will probably
Speaker 4: ultimately be beneficial for the economy and fairer for the economy.
Speaker 3: But they're going to be hard to manage them in
Speaker 3: the short term.
Speaker 4: It's interesting going back to the point we discussed about
Speaker 4: the feedback they're getting from Australians about the desperation and
Speaker 4: the desire for them to do something to change the system.
Speaker 4: You know, I've got a piece in the Monthly this
Speaker 4: month looking at the levels of anxiety in the community
Speaker 4: and the sorts of sentiment that is delivering support to
Speaker 4: Paul Enhancement's One Nation and talked.
Speaker 3: To some polsters and social researchers about that.
Speaker 4: And one of the messages that came through there from people,
Speaker 4: which I thought was really fascinating, was the sentiment that
Speaker 4: if you've got two houses, the tax system helps you
Speaker 4: more than if you've got two jobs. And that is
Speaker 4: the sentiment really that we've heard from Jim Chalmers in
Speaker 4: the delivery of his budget, the press conference that he
Speaker 4: gave explaining the budget in the lock up to journalists,
Speaker 4: he was talking very much about that.
Speaker 1: This is about better aligning the taxes paid on these
Speaker 1: types of income with the taxes paid on wages. These
Speaker 1: changes will all the playing field for workers and first
Speaker 1: home buyers and support investment in productive assets including new
Speaker 1: housing supply, and they will find our new round of
Speaker 1: tax relief for more than thirty million Australian workers.
Speaker 4: He was saying, we want the tax system to be
Speaker 4: fairer to people who earn their income through working and
Speaker 4: not as generous to people who earn their income from
Speaker 4: passive investments and assets, because he says it's out of whack,
Speaker 4: it's out of balance and it needs to be rebalanced,
Speaker 4: and that's very much the emphasis. So in that sense,
Speaker 4: it's a very labor budget. It is really trying to
Speaker 4: shift that back to be fair to working people.
Speaker 3: But it's not going to be without some pain in
Speaker 3: the short.
Speaker 4: Term, and certainly there are some groups that are going
Speaker 4: to find it very difficult. I mean, there are some
Speaker 4: changes to the tax for business as well to try
Speaker 4: and protect business from the worst of the economic crisis,
Speaker 4: and there are some pretty dire forecasts in here.
Speaker 1: In this budget, Treasury also presents some more severe scenario
Speaker 1: where the your price peaks at two hundred dollars a
Speaker 1: barrel and takes three years to fall back down. We'd
Speaker 1: still avoid a recession, but unemployment would spike to pre
Speaker 1: pandemic levels and inflation would peak above seven percent.
Speaker 4: And so you know, there's a lot of sort of
Speaker 4: uncertainty about all of this, and the government.
Speaker 3: Has taken a big risk, a big political risk in.
Speaker 4: Making these changes in this tough budget at this time,
Speaker 4: but they've decided they've got the political capital they need
Speaker 4: to spend it and that Australians are calling out for
Speaker 4: something to change.
Speaker 2: Well, Karen, thank you so much for your time.
Speaker 3: Thanks Ruby.
Speaker 2: Also in the news, the government has been accused of
Speaker 2: trying to bury its response to the Peter Murphy Report
Speaker 2: on gambling reform by release it on Budget Eve. Leading
Speaker 2: advocate Tim Costello says it's very disappointing, particularly since the
Speaker 2: government is only tackling four of the thirty one recommendations.
Speaker 2: The official government response, released more than a thousand days
Speaker 2: after the report, ignores calls for an online gambling regulator
Speaker 2: and comprehensive ban of online gambling advertising, and a Canberra
Speaker 2: teenager has been charged with planning a terrorist attack in
Speaker 2: the Act. The seventeen year old is accused of planning
Speaker 2: an attack motivated by views aligned with nationalist and racist extremism.
Speaker 2: Counter Terrorism police say it's alarming to see young Australians
Speaker 2: exposed to violent extremist material and propaganda. I'm Ruby Jones
Speaker 2: and we'll be back with a special Budget Bonus episode
Speaker 2: this afternoon, where we'll break down exactly what the government's
Speaker 2: changes mean for house prices and people trying to get
Speaker 2: into the property market. Thanks for listening, you m