Interview with Michael Rowland, ABC News Breakfast

25 September 2024

MICHAEL ROWLAND: For more reaction following the RBA's decision to keep official interest rates on hold, let's bring in the Shadow Finance Minister, Jane Hume. Jane, very good morning to you.

JANE HUME: Good to be with you, Michael.

MICHAEL ROWLAND: Get to interest rates in just a moment. But let's talk negative gearing. The government is reportedly looking at winding back negative gearing concessions. I know that Amanda Rishworth, the Social Services Minister, with you on another breakfast program, which we won't name a short time ago did not specifically rule out the changes. What is wrong with the government considering changes to a system that costs Australian taxpayers close to $3 billion a year?

JANE HUME: Well, there's nothing wrong with the Government considering anything. But lying to the Australian people about whether they're considering it is another issue entirely and as little, as soon as last week, recently as last week, the Prime Minister was talking to one of your journalists, Patricia Karvelas and saying that her questions about negative gearing, whether the government were considering it were not very clever questions and yet, only this week we find out that now there is some secret plan to look at negative gearing. The question is, of course, is who is commissioning this secret plan? Is it the Prime Minister along with Jim Chalmers and Katy Gallagher? Are they doing it in conjunction with the Housing Minister, Clare O'Neil? Are they letting their Cabinet know? Because this is the first that we've heard about it.

MICHAEL ROWLAND: Okay. Well, the trick here, the Treasurer's office tells us this morning the Labor Party's housing policy is clear. It does not include negative gearing. So they're being pretty straight up upfront about that. But my question is and who's to say, well, they'll land with their housing policy towards the next election. My question again, what is wrong with considering changes that will save Australian taxpayers close to $3 billion a year?

JANE HUME: Well, in fact, the Coalition did look at this policy back in 2019 when the then Shorten led Labor Opposition was, had a policy around negative gearing and the problem is, of course, is that negative gearing, when you remove those tax incentives for investors in property, two things happen. One is investors leave the system, so that we have fewer rental properties and those that stay in the system push their rents up so that they can compensate for the loss of that tax incentive. Now, at a time when we've got a rental crisis, that's a real problem. I was down in Western Victoria just this week, earlier this week, I walked into a real estate agent on Monday morning, and there's a sign up that says no rental properties available and that's something that we're seeing right around the country, but particularly in regional and rural Australia. Why at a time when there is so little in the way of rental property available, when rents are sky high and can continue to increase, would you remove a tax incentive that would keep rents lower?

MICHAEL ROWLAND: Okay, so the Coalition considered it in 2019. Do you now rule out any changes to negative gearing ahead of the next election?

JANE HUME: I'm very interested to see exactly whether the Government's ruling out changes.

MICHAEL ROWLAND: We'll ask the Government, but does the Coalition rule out changes to negative gearing?

JANE HUME: Well, we will rule out anything that reduces housing supply and that pushes rents up in the middle of a housing crisis.

MICHAEL ROWLAND: Do you rule out changes to negative gearing?

JANE HUME: I want to know what the Government are proposing because quite frankly they should rule out changes to negative.

MICHAEL ROWLAND: It's a simple question, Jane. It is a simple question. Does the Coalition rule out changes?

JANE HUME: We rule out anything that reduces supply, we rule out anything that pushes up rents and if negative gearing and if the proposal that the Government has this secret plan to change negative gearing does that, well, then we will oppose it.

MICHAEL ROWLAND: I'll give you one last opportunity. Does the Coalition rule out changes to negative gearing?

JANE HUME: I can't rule out a policy that I haven't seen. This is the Government's policy.

MICHAEL ROWLAND: But you know how negative gearing works. Negative gearing has been in place for decades.

JANE HUME: This is the government’s policy. They need to come clean on what their policy is so that we can have a look at it. But at the moment, all we're hearing about is a policy that is going to push up rents and that is going to limit housing supply. That's not good policy.

MICHAEL ROWLAND: Interesting. Okay. What about the 50% capital gains tax discount? Does the Coalition, will the Coalition keep that if you win power?

JANE HUME: Again, if it's a policy that the Government wants to propose, propose it. Let's be straight with the Australian people.

MICHAEL ROWLAND: It was policy under the Coalition government in the past, as was negative gearing. You know this and you know what your non-answers will do out there. I'm giving you an opportunity to rule out specifically changes to negative gearing and the capital gains tax discount ahead of the next election.

JANE HUME: Michael, we have no policy to change capital gains. We have no policy to change negative gearing. But what we're hearing is that the Government does and it's been working on this for some time and then lying to you, lying to your colleagues about that. Now, that's a disgrace, because we know that this Government has a tendency to lie. It said that there were going to be no changes to stage three tax cuts before it was elected. Then it got into government and changed it. It said there were going to be no changes to superannuation tax before it came to government and the moment they got in, they changed that too. So why should we believe anything that the Prime Minister has to say on negative gearing? Why should we believe anything he has to say on capital gains tax if he is so comfortable lying to the Australian people?

MICHAEL ROWLAND: You mentioned stage three tax cuts. The Coalition has indicated it will consider going back to Scott Morrison's initial broader stage three tax cuts that the Government changed. Will that be a government Coalition policy?

JANE HUME: What we said is we'll go to the election with a lower, simpler and fairer tax package that is in keeping with the principles of stage three.

MICHAEL ROWLAND: Does that include going back to the initial package?

JANE HUME: Well, the initial package is gone. That's gone. Because the Government has trashed that.

MICHAEL ROWLAND: Okay. So that's off the books because the Coalition was not ruling that out for a period. So that that's now off the books.

JANE HUME: Well I think we actually said from the very beginning that once it was gone, it was gone because the government had trashed it. But we do agree still, that bracket creep is an insidious feature of our tax system, which eats away at people's aspiration, their ability to take on additional hours, take on that promotion, get a new job that pays them higher wages because with the increased tax brackets that just gets eaten away. Bracket creep is one of the only things that has delivered this government a surplus. That and commodity prices. It hasn't been the hard work of Jim Chalmers. It's been the hard work of ordinary Australians.

MICHAEL ROWLAND: Okay, very big week for economics. We had the RBA board deciding to again keep interest rates on hold yesterday, pointing to persistently high underlying inflation. Today, Jane Hume as you know, will get the monthly inflation figures, a bit more volatile, as you also know, but will show potentially annual inflation falling to 2.7% or so. That's well within the 2 to 3% target range. That would be at least a welcome move.

JANE HUME: Well, the RBA themselves have said that is inadequate because it is only a manipulated headline figure. It's been manipulated by government subsidies. That's not what the RBA looks at.

MICHAEL ROWLAND (INTERRUPTS): Subsidies that the Coalition supported.

JANE HUME: They look through that, they look through that and they look at core inflation and core inflation still remains far too high. In fact, they've said that they can't see that core inflation coming down back into band until 2026. That's around 15 months from now. It's about a year longer than Labor originally forecast and they've also said that inflation in Australia is two things. It's homegrown, which means you can't blame anyone else for it and it's sticky, which means it's been harder and harder to get down. Labor have failed in the challenge to get inflation down. That's because they've relied on the RBA to do all of the heavy lifting using the one tool they have, which is interest rates. If the government were serious about getting inflation down, they'd use their fiscal policy to do the same.

MICHAEL ROWLAND: And so how would things change under a Coalition Government, if the Coalition was elected in March, April, May next year? Inflation is still sticky. How would a Coalition Government bring inflation down?

JANE HUME: Well, the RBA have said that persistent public sector spending growth is one of the things that's keeping inflation higher.

MICHAEL ROWLAND: What would you cut?

JANE HUME: Well there's a lot of undisciplined and unnecessary spending. There is no doubt about that. The government has spent an additional $315 billion. In there are things like $13.7 billion in production tax credits for miners to do what they were already doing. There was $1 billion for Solar Sunshot, you know, solar panels in an industry that even the productivity commissioner says it's unlikely we'd ever be competitive in. There was half a billion dollars for PsiQuantum. That's an American company. So for a Future Made in Australia policy, it's really more like a future made by Americans. So there are plenty of things that we have said that we wouldn't do that will bring down that public sector expenditure.

MICHAEL ROWLAND: Okay, Jane Hume appreciate your time this morning as always. Thank you.

JANE HUME: Great to be with you, Michael.