Speaker 1: I'm Ruby Jones and you're listening to seven AM. For
Speaker 1: two decades we've had a tax policy that pushed up
Speaker 1: house prices, gave landlords huge advantages, and ultimately created an
Speaker 1: intergenerational wealth divide. A week ago the government said it
Speaker 1: wanted to do something about that and announced changes to
Speaker 1: negative gearing and capital gains tax. But the budget hasn't
Speaker 1: gone down well. For some it doesn't go far enough
Speaker 1: to make a real difference to the housing market. For others,
Speaker 1: particularly in business, changes to capital gains go too far.
Speaker 1: Today the Treasurer Jim Chalmers defends his budget. It's Thursday,
Speaker 1: May twenty one. Treasurer, welcome to seven AM. It's great
Speaker 1: to have you on the show.
Speaker 2: Thanks very much, Ruby, thanks for having me back.
Speaker 1: So it's been just over a week since you release
Speaker 1: the budget and fair to say a lot of people
Speaker 1: don't like it. Pole suggests that more than half of
Speaker 1: Australians believe that your changes will make them worse off.
Speaker 1: It was given the worst approval score since nineteen ninety three.
Speaker 1: You've already own a home, or an investment or an asset.
Speaker 1: This budget doesn't really affect them, so why would they
Speaker 1: ever sell their asset, you know, and then for new
Speaker 1: buyers it's like now I lose those benefits if I
Speaker 1: buy it.
Speaker 3: I'm terrified though over the future it doesn't seem to
Speaker 3: be getting any better.
Speaker 4: I'm a single one on a pension.
Speaker 1: There's no way for me.
Speaker 3: To own home.
Speaker 4: I don't understand how this is going to free out
Speaker 4: properties for the younger generation, because as an investment property
Speaker 4: owner myself, I'm going to either hang on or sell
Speaker 4: it for more.
Speaker 5: I think it will take a lot so treasure.
Speaker 1: It's not going well, where do you think you've gone wrong?
Speaker 3: Well, first of all, I think it's important to acknowledge
Speaker 3: that when you're making a significant change, a controversial change
Speaker 3: to the tax system, and obviously not everybody is going
Speaker 3: to be supportive of that. We had realistic expectation when
Speaker 3: we came to these views expressed in the policies in
Speaker 3: the budget, that they would be contentious, and so I
Speaker 3: think in the midst of a pretty full on scare campaign,
Speaker 3: in the midst of a big global oil shop which
Speaker 3: is putting extra pressure on people, and in a budget
Speaker 3: which is full of hard decisions rather than handout, so
Speaker 3: I think the kind of reaction is not especially surprising.
Speaker 3: Our job is to try and do the right thing
Speaker 3: for the right reasons, even if it means paying a
Speaker 3: short term political cost.
Speaker 2: In the polls that you.
Speaker 1: Reference, I want to talk in a bit more detail
Speaker 1: about the changes to negative gearing. So existing investors are protected.
Speaker 1: They'll keep the old arrangements, which means that the impact
Speaker 1: of this is going to be limited, especially in the
Speaker 1: short term. So how worried are you that you've taken
Speaker 1: this big political hit for a policy that really only
Speaker 1: nudges the housing problem.
Speaker 3: Well, first of all, I thought it was really important,
Speaker 3: or we thought it was really important that we wreck
Speaker 3: ignize and respect investment decisions that people have taken already,
Speaker 3: and so that's why there's those transitional arrangements in negat gearing.
Speaker 3: So if you're negatively gearing now, you can continue to
Speaker 3: do that. It's important to remember there as well, that
Speaker 3: at some point properties become positively geared, and so some
Speaker 3: of those investments will exit the negative gearing system, and
Speaker 3: if you want to make a new investment, you can
Speaker 3: negatively gear a new build. So we think that's the
Speaker 3: right balance encouraging people to invest in more housing, supplier
Speaker 3: recognizing and respecting the decisions that people have taken already. Now, obviously, Ruby,
Speaker 3: there's going to be some people who think we should
Speaker 3: have gone further. There will be some people who much
Speaker 3: prefer the existing arrangements. They might be doing well out
Speaker 3: of the existing arrangements. Our job is to try and
Speaker 3: strike a series of fine balances, and I think we've
Speaker 3: struck the right one because this is all about housing.
Speaker 3: This is all about recognizing that the way that the
Speaker 3: housing market and the taxism intersex is working to get
Speaker 3: that have shut out a whole generation of Australians from
Speaker 3: from home ownership and from aspiration more broadly, and so
Speaker 3: that's why we've taken these difficult decisions. There will always
Speaker 3: be strong views about policies like this, big economic reforms
Speaker 3: like this, but we're prepared, as I said before, to
Speaker 3: wear some of that criticism if it means getting too
Speaker 3: the right outcome.
Speaker 2: We didn't want to be the government.
Speaker 3: That left that can signed another generation to being locked
Speaker 3: out of housing because of the way that the tax
Speaker 3: system and housing market is broken.
Speaker 1: Sure, but it's a modest increase that we're talking about
Speaker 1: when it comes to new homeowners seventy five thousand households
Speaker 1: over ten years. But there are millions of young people
Speaker 1: who say that they can't get into the housing market.
Speaker 1: So is there a part of you that wishes that
Speaker 1: you'd gone further, perhaps abolish negative gearing altogether.
Speaker 3: No, I'm pretty confident in the balance that we struck,
Speaker 3: and you know, not everybody would agree that it's a
Speaker 3: that it's too modest to change.
Speaker 2: As I said, there's always a range of views about it.
Speaker 3: Seventy five thousand households which were rental households becoming homeowners.
Speaker 3: I think that's a substantial number, and it's also not
Speaker 3: the only thing we're doing in housing. The budget had
Speaker 3: important steps on youth homelessness. It had billions of dollars
Speaker 3: of investing in more housing supply, as well as making
Speaker 3: the tax system fairer for younger people who work and
Speaker 3: also in the housing market. So across the board, we're
Speaker 3: doing a lot on housing and we think it will
Speaker 3: shift the needle on a problem which has been a
Speaker 3: really difficult problem, not just in our economy but in
Speaker 3: our society for a long time.
Speaker 6: Now, more than forty business founders have written to the
Speaker 6: Prime Minister urging him to walk back controversial capital gains
Speaker 6: tax changes that could hit them when they decide to sell.
Speaker 1: And one of the other big criticisms that you're facing
Speaker 1: at the moment is around the impact of the capital
Speaker 1: gains tax discount changes on business. So there is this
Speaker 1: growing campaign from the business community. There's been burrel memes,
Speaker 1: there's a joint letter from forty young founders who say
Speaker 1: that this is an aspiration ambush that's going to affect
Speaker 1: every growing business in Australia because if we tax risk
Speaker 1: taking in the same way that we tax ordinary income,
Speaker 1: then we left with the question why take the risk
Speaker 1: in the first place. So when you were designing these
Speaker 1: changes to capital gains, why didn't you limit it to
Speaker 1: just property, Well.
Speaker 3: Because we didn't want to replace one big distortion, which
Speaker 3: has been turbo charging house prices, with another distortion.
Speaker 2: You know, there was a.
Speaker 3: Big policy mistake made about a quarter of a century
Speaker 3: ago by Howard and Costello when they changed these arrangements
Speaker 3: away to what we are proposing now. Away from what
Speaker 3: we're proposing now, it made an investment in established housing
Speaker 3: way more attractive, and so we saw the decoupling of
Speaker 3: house prices and incomes around the turn of the century
Speaker 3: and which we're trying to fix that, and not by
Speaker 3: replacing one distortion with another distortion. But the really important
Speaker 3: thing to understand about that, Ruby, is if you look
Speaker 3: at a twenty year period in between when that policy
Speaker 3: change was made, on average, what we saw is that
Speaker 3: investment in established housing was overcompensated for by the old arrangements,
Speaker 3: and investment in shares and medium density units and a
Speaker 3: whole bunch of other types of assets was actually under compensated.
Speaker 3: So by removing this distortion, we hope to rectify that.
Speaker 3: Now there is a campaign being run. I understand that
Speaker 3: there's also unfortunately a fair bit of misinformation being pushed
Speaker 3: around by our political opponents. You know, the forty seven
Speaker 3: cent campaign, for example, pretends that there's no CGT discount anymore.
Speaker 3: That's obviously not true. We're just calculating the discount differently.
Speaker 3: There's a whole bunch of exemptions for small business. There
Speaker 3: actually four different exemptions, carve outs and concessions for small business,
Speaker 3: and all of them are staying in place. And so
Speaker 3: my job, one of the reasons why I'm grateful for
Speaker 3: this opportunity, Ruby, is to point out where there is
Speaker 3: misinformation about the changes that we're we're actually making it
Speaker 3: easier for people to make an investment based on good
Speaker 3: economic outcomes and not just the distortion introduced into the
Speaker 3: tax system in nineteen ninety nine.
Speaker 1: And you've spoken about having further consultations these exemptions. So
Speaker 1: is there more on the table here exemptions being considered
Speaker 1: for startups?
Speaker 2: For example, we are talking with the startup sector.
Speaker 3: We actually began those conversations before the budget, and we
Speaker 3: made it really clear in black and white in the
Speaker 3: budget papers themselves that we understood that when it comes
Speaker 3: to calculating the cost base for startups that they are
Speaker 3: a bit of a different case. And so we were
Speaker 3: doing some private consultation before the budget and now publicly
Speaker 3: I've done a bit of that myself. My department, the
Speaker 3: Treasury Department's been doing that in a more formal way
Speaker 3: to see if we can find a way through which
Speaker 3: recognizes first of all how important startups to our economy,
Speaker 3: providing that dynamism in our economy which we really cherish
Speaker 3: and value, and making sure that we can recognize that
Speaker 3: startups can be a bit of a different case in
Speaker 3: the tax system. So if we can find a way
Speaker 3: through there that would be good, but those conversations that
Speaker 3: consultation is still happening right now.
Speaker 1: Still to come is the government using gas industry figures
Speaker 1: to justify its decision not to.
Speaker 5: Introduce a gas tax.
Speaker 1: You've introduced a gas reservation policy, but not a stronger
Speaker 1: gas export levy. And there is again another very strong
Speaker 1: online campaign around this, around the need for a gas tax.
Speaker 2: No significant additional funding for nature. There is absolutely no
Speaker 2: way labor can deliver on their promise of knowing your
Speaker 2: extinctions with this level of funding.
Speaker 1: Our entire budget on nature is less than a week
Speaker 1: of what a gas export tax would bring in.
Speaker 2: We don't have a shortage of supply. We have a
Speaker 2: glut of greed. We maybe ed you sick.
Speaker 1: And others have also argued that Australia just isn't getting
Speaker 1: a fair return from gas exports. So I mean, couldn't
Speaker 1: the budget have used that money?
Speaker 2: Well, there's a bit of a tick up.
Speaker 3: I've been prt receipts in the budget, but I understand
Speaker 3: that people have got strong views about taxing the gas
Speaker 3: companies more. I introduced some reforms in our first term
Speaker 3: in office so that the gas companies we're paying more
Speaker 3: tax sooner. But again I acknowledge that people would prefer
Speaker 3: we go further, and some people would prefer we go
Speaker 3: much further. I get that, I understand their arguments. From
Speaker 3: our point of view, we think there are good reasons
Speaker 3: to prioritize that gas reservation policy that you're right to
Speaker 3: point to in your question, which is all about decoupling
Speaker 3: the Australian gas market from the roller coaster of international
Speaker 3: prices so that we can get more supply at cheaper
Speaker 3: prices for Australian industry. That's the first thing. But the
Speaker 3: second thing as well is we've got to make sure
Speaker 3: that we can secure this these two way supply arrangements
Speaker 3: with our refining partners in Asia, and so we prioritize
Speaker 3: those two things. And again I understand that's contentious. I mean,
Speaker 3: you do pay very close attention to the arguments being
Speaker 3: run about different gas tax arrangements. But those are our
Speaker 3: two priorities for the time being, and I think they're
Speaker 3: really important priorities.
Speaker 1: In the lead up to the budget, when this idea
Speaker 1: of a gas tax was being canvassed, your government was
Speaker 1: hosing down calls for it by saying that the gas
Speaker 1: industry already pays twenty two billion dollars in tax.
Speaker 3: Well, look, they pay around about twenty two billion dollars
Speaker 3: and importantly as well, and I.
Speaker 1: Noticed that figure, that twenty two billion that actually comes
Speaker 1: from the gas industry. They are quite proud of it.
Speaker 1: So why was the government taking the lobby group's word
Speaker 1: for how much tax they pay. I mean, you're the treasurer.
Speaker 1: So have you asked Treasury about that figure?
Speaker 2: Yeah?
Speaker 3: I think that was just our way of reminding people
Speaker 3: that the PRT is not the only tax that the
Speaker 3: gas companies pay.
Speaker 5: I know that.
Speaker 3: Again, I know it was controversial when those figures were announced.
Speaker 3: The figures I focus on in the PRRT went up
Speaker 3: a little bit in the budget, but again I acknowledged
Speaker 3: that for a number of a lot of people who
Speaker 3: might be listening to us or watching us today, I
Speaker 3: acknowledge that people would prefer us to go further. I've
Speaker 3: tried to explain why we've got these two other priorities
Speaker 3: at the same time. As the PRRT has gone up
Speaker 3: a bit, I know that people would like it to
Speaker 3: go up by much more.
Speaker 1: You've spoken about people feeling disconnected and disregarded by the
Speaker 1: political class and anxious about the lack of opportunity that
Speaker 1: they see for themselves, and you've said you want to
Speaker 1: address those concerns. That's part of what this budget is
Speaker 1: about for you, addressing people's fears for the future. A
Speaker 1: week on from the budget, it doesn't feel like that's working.
Speaker 1: So do you think that you've underestimated people's grievances? Do
Speaker 1: you think that you still are?
Speaker 5: Well?
Speaker 2: I'm not sure. I think about it exactly like that.
Speaker 3: I mean, I take the feedback inherent your question seriously,
Speaker 3: but I don't think anyone expected a week or week
Speaker 3: and a bit after the budget of any budget, that
Speaker 3: people would necessarily that there would be some kind of
Speaker 3: unanimous agreement about it. Obviously, these things are big and contentious,
Speaker 3: they're controversial. But that point that you made at the
Speaker 3: start of your question is really.
Speaker 2: Important to me. I look around the world and I.
Speaker 3: See whole generations or whole cohorts of people who are.
Speaker 2: Feeling disconnected and disregarded.
Speaker 3: I think this is a big, serious question for all
Speaker 3: of us, not just in our economy, but in our society.
Speaker 3: More importantly, this sense of people feeling like the economy
Speaker 3: is working in somebody else's interests and when you try
Speaker 3: and change that or address that, try and avoid that
Speaker 3: situation in Australia that we're seeing in other parts of
Speaker 3: the world, there will be resistance to that. We're seeing
Speaker 3: that resistance play out in some of our newspapers, we're
Speaker 3: seeing it in the language of our opponents. But that
Speaker 3: doesn't mean you shouldn't try. And when I look around
Speaker 3: the world and see the way that communities are fracturing,
Speaker 3: particularly in an intergenerational sense, I take responsibility for trying
Speaker 3: to address that, even if it means that we cop
Speaker 3: a bit of political turbulence or a bit of grief
Speaker 3: or a bit of feedback about it, or even these
Speaker 3: misinformation scare campaigns, I think it's worth it to try
Speaker 3: and avoid the situation that we're seeing around the world.
Speaker 1: Now.
Speaker 3: Not everybody sees what's happening around the world and wants
Speaker 3: to take a different path to that. Some people, including
Speaker 3: our opponents, they want to kind of copy the very
Speaker 3: divisive politics that we're seeing in other parts of the world.
Speaker 3: I don't want to, and I think that one of
Speaker 3: the reasons people feel disconnected and disregarded is because of
Speaker 3: this sense that the economy.
Speaker 2: Doesn't work for them. Anymore.
Speaker 3: And that's why we're taking some of these difficult decisions,
Speaker 3: particularly in the housing market and where it intersects with
Speaker 3: the tax system, because we care enough about it to
Speaker 3: do something about it.
Speaker 1: Treasure At, thank you so much for your time.
Speaker 2: Appreciate it.
Speaker 5: Ruby, thank you.
Speaker 1: Also in the news, health officials across the country are
Speaker 1: working to control Australia's largest ep theoria outbreak on record.
Speaker 1: More than two hundred and twenty cases have been recorded
Speaker 1: across the country so far this year, with the vast
Speaker 1: majority in the Northern Territory and Western Australia. Diphtheria is
Speaker 1: a contagious bacterial infection that's preventable through vaccination, and authorities
Speaker 1: say crowded living conditions and low immunization rates in remote
Speaker 1: communities of fueling the outbreak, and Australia's Special Envoy to
Speaker 1: combat Islamophobia, Aftab Malik, is calling on the federal government
Speaker 1: to respond to his recommendations to combat Islamophobia in Australia.
Speaker 1: Following a deadly shooting at a mosque in the United States,
Speaker 1: three people were killed at the Islamic Center of San Diego,
Speaker 1: with authorities saying the two teenage attackers had expressed broad
Speaker 1: hatred towards different religions and races. Their writings also reportedly
Speaker 1: referenced the twenty nineteen christ Church Mosk attack, in which
Speaker 1: fifty one people were killed and another forty shot. Alex
Speaker 1: says Australia cannot wait for a christ Church style attack
Speaker 1: before taking action on Islamophobia. I'm Ruby Jones. This is
Speaker 1: seven am.
Speaker 4: Thanks for listening.