Interview with Laura Jayes, AM Agenda

25 September 2024

LAURA JAYES: Well, it's election speculation season, and this is when we start to get an idea of what both sides are doing to shape policy and where they might be headed. How it might be headed. Housing is, of course, central. Everything old seems new again when it comes to Labor. It seems negative gearing and capital gains are back on the table. We're about to hear from Anthony Albanese. Will he shut it down, or will he allow this balloon to keep on floating? Joining me now is the Shadow Finance Minister Jane Hume. Jane, is negative gearing still fit for purpose? Is this a good time to revisit it?

JANE HUME: Laura, it was revisited in 2019 by Bill Shorten and it was resoundingly rejected by the Australian public. This is not a policy that they want, and it's certainly not a policy that the Coalition wants to see happening, because it can have some pretty detrimental effects to the housing market, particularly during a housing crisis. If you remove a tax incentive from investors, it actually discourages new supply into the system, and moreover, it can push rents up, because you'll find that people that are using negative gearing, once they have that tax incentive removed, compensate by raising by raising rents. So it's no good for investors, it's no good for renters. Why on earth the government is considering this again, is beyond me. It does seem to be a symbolic gesture. I think that was one of the phrases used by one of the journalists this morning, rather than something that's actually going to shift the dial on housing supply. But I wouldn't put it past Labor. They said that they weren't going to make changes to the stage three tax cuts, and then they did when they were in government. They said that they weren't going to make changes to superannuation, and then they did when they were in government. Now, you know, what can you, you can't believe a word that Anthony Albanese says on this one. It does feel like this is coming directly out of the Prime Minister's office, Prime Minister and Jim Chalmers, collectively, they seem to have bypassed the Housing Minister entirely on this; she seems to know nothing about it, as does the Social Services Minister. So, you know, I wonder where this is going.

LAURA JAYES: I wonder too, there's two elements to this, as there was in the debate back in 2019 if you want to raise revenue and you want more money, if you're a government, you have to do, you know, if you're going to touch negative gearing, it would be across the board, limiting it or abolishing it. But if you want to impose a fairness test here, you could limit the amount of properties you can negatively gear. What would be wrong with that?

JANE HUME: Well, I'd push back and say, if you want to raise revenue, the best thing you can do is to grow the economy, rather than just slicing the pie up differently, and the way to grow the economy is to inject productivity back into our economy by doing things like lowering energy prices, putting more energy supply into the system, making your industrial relations system more flexible for workers and for and for employers, and cutting red tape and making sure that our tax system is simpler and fairer and lower to inject that sense of aspiration back into our economy. That's what you do, to increase revenue, to grow the pie, rather than cut it up differently. But negative gearing, as we know, is one of those policies that can actually have negative effects on a market, particularly a market that is already a tight rental market. Moreover, it tends to affect mums and dads. Mum and dad investors. This isn't the top end of town stuff. This is people that have, maybe don't have enough in their superannuation, so they've decided to make investments outside of superannuation that will give them a steady income. They tend to be people that have saved all their lives, maybe they're finished paying their school fees, and so they buy that investment property to help them plan for their retirement. That's who Anthony Albanese is targeting here. That's unacceptable.

LAURA JAYES: Self managed super funds, people that definitely invest in property for a way to future proof their, their retirement, absolutely. Let me ask you about the rates decision yesterday, not a surprise, but we did hear from Michele Bullock, and she's kind of taken the wind out of the sails of this potential good news on inflation today. What does steady underlying inflation look like?

JANE HUME: Yeah, unfortunately, it seems that that headline inflation, even if that comes down, Michele Bullock's made it very clear that that's artificial, that it's essentially been manipulated by government policy, and we'll see what the actual headline inflation figure is today. But she said that the RBA looks through that, to core inflation, that underlying inflation, which she says is both homegrown, so that means you can't blame anybody else for the problem, other than policy settings and sticky, and that means that it's harder to get down than anticipated. Now, the RBA are doing everything that they can with the tools that they have, but they've only got the one tool, and that's interest rates. That's why we've been calling on the government to use its fiscal firepower to work in conjunction with the RBA, alongside the RBA, using monetary and fiscal policy together, rather than having that one foot on the brake, one foot on the accelerator approach. What concerned me most about the Michele Bullock's statement yesterday was that she said that we weren't expecting to see that core inflation come back to band now until 2026 now, that's 15 months after, 15 months from now, and a year after Labor's own forecasts said that they expected to see inflation come back to band. That's a real concern, and will be cold comfort for mortgage holders who are desperately hoping to see an interest rate cut sometime soon.

LAURA JAYES: Okay, just finally, we are going to hear from Anthony Albanese and Launceston, who will be asked about negative gearing if he unequivocally rules it out. Is that good enough for you?

JANE HUME: I think the question's got to be asked. If he's ruling it out, why is it that Treasury are looking at this? Who asked the Treasury to look at this and really, can we believe what he says, if he ruled out changes to Stage Three tax cuts, if he ruled out changes to superannuation, but both of those have gone ahead, I don't think we can believe that. We can’t take the Prime Minister at his word on this.

LAURA JAYES: So anything that's modeled through Treasury, anything that's modeled through Treasury, is something that that a government or a future government is looking at doing. I mean, that's, that's a pretty dangerous precedent, is it? You got to look at these things?

JANE HUME: Well, I, let's face it, I think Jim Chalmers belled the cat back in April, when he said that there needs to be a national conversation about the fiscal settings in our country, including tax concessions. All roads lead to negative gearing. We know that Labor wants to do this. They've wanted to do it since 2019. This seems to be Déjà vu all over again.

LAURA JAYES: Jane Hume, good to see you. We'll see you soon.

JANE HUME: Thanks Laura.