: The Prime Minister, Anthony Albanese is here to talk to you this morning. PM, good morning.
ANTHONY ALBANESE, PRIME MINISTER: Good morning, Hamish. Good to be with you.
MACDONALD: At this point, I think everyone in the nation has heard your lines in response to the broken promise on negative gearing and CGT. Two words that clearly you and the Treasurer don't want to say. But are there other pre-election pledges that you might change your mind on?
PRIME MINISTER: Well, there's one that we have, another one is halving the fuel excise, which was an issue you might recall during the last campaign, Peter Dutton set himself up every day at petrol stations. That was something that we resisted. Circumstances changed, we changed our view, we halved the fuel excise.
MACDONALD: So, does that apply across the board to things you've said before the election? I suppose that's the question it raises for many people.
PRIME MINISTER: No, we certainly don't do these things lightly, but we're also not going to have a circumstance where we know that something simply isn't working increasingly, that if you continue to kick the can down the road, then the risk there is that younger generations simply get cut out of the Australian dream of owning your own home. And these changes are sensible. We worked through very clearly. For example, could we do it in a way in which we protected people who had made those decisions and those investments? We've done that by grandfathering the changes. Also -
MACDONALD: But PM just on that, can I ask you about it? Because Jeff's texted me right now saying, 'for the PM, I built a share portfolio for my retirement, assuming I'd get the CGT discount each time as I sold it down. I retired last year. Why isn't the CGT change grandfathered on that?' He says, 'it's an election promise broken, I'll change my vote'.
PRIME MINISTER: No, well, it comes in as well, what he will get, Jeff, I think you said Jeff is his name? Is that right?
MACDONALD: Yes.
PRIME MINISTER: Is that he gets a 50 per cent discount up till the 1st of July next year, and then he gets real discount, that is the gain, less inflation -
MACDONALD: I suppose his point is he's made his retirement plans based on those conditions, and you are acknowledging that people made those decisions by grandfathering it when it comes to property, but not with these other forms of investment.
PRIME MINISTER: Now, let's be clear that prior to 1999, this was the system that was in place. The Howard Government flogged off Telstra, right? They had, because they were flogging off public assets, they had a whole lot of money to throw at issues. And as a direct result of that, there's been a distortion in the investment market as well, in terms of productivity. And one of the things that we need to do is to reform the tax system so it treats more equally income earned from people working and income earned from assets. Now, that is the fair thing to do. The whole system has been skewed away from people who are working, and that's had consequences for younger generations in particular, going forward. There still will be, of course, a discount when it comes to capital gains, and there was no Capital Gains Tax before 1985. There'll still be a discount, but it's based upon real gain.
MACDONALD: Understood.
PRIME MINISTER: You're only paying tax on the benefit that you're receiving after inflation. That is, you are keeping the real value of the asset and you're only paying at the the rate on the actual gain.
MACDONALD: Yeah. Prime Minister, the decisions, though, are actually expected to push up rental prices here in Sydney. So, aren't you hurting the very people that you're saying this decision is designed to help in the immediate term?
PRIME MINISTER: No, we're not. This will -
MACDONALD: But you do acknowledge, though, that there is that forecast increase in rental prices?
PRIME MINISTER: It says a minimal, potentially a 2 per cent increase based upon the existing supply. But if you are increasing supply, which what we're doing is also making changes, so the people can still negatively gear property. They can go out and buy a new property, have negative gearing, choose either the indexation or choose a 50 per cent capital gains discount. The difference is when someone buys an existing property, they're building their own wealth -
MACDONALD: Understood.
PRIME MINISTER: Future income. But when people buy a new property as an investment, they're not only investing in their own future wealth, they're building the wealth of the nation because they're encouraging that boost in supply. And that is why it makes sense.
MACDONALD: But I need to keep coming back to this because as you say, it's a minimal increase, but it is an increase in the rental prices. Also, according to these forecasts, though, 35,000 fewer homes will be built over the next decade.
PRIME MINISTER: That's not right, Hamish, that's not right. There is one figure that's been plucked out. The Budget papers are very clear that the changes that we are making in this Budget, the changes that include the support for infrastructure which builds into supply, will result in an increase -
MACDONALD: Yes, but there is a lag, isn't there? Because those new homes are delivered later. So, we end up with a sort of disfiguration of this. And at the same time, you're increasing migration, almost a million people over the next four years.
PRIME MINISTER: We're not increasing migration.
MACDONALD: Well, you are. It's going up. It's not going down -
PRIME MINISTER: It is going down, Hamish. It's going down from 295,000, to next year, 245,000. And the year after, 225,000. And we have a range of measures in place to make sure that that will occur.
MACDONALD: The net forecast overseas migration for this year is 305,000. But the out years over the next four years are higher than what was previously forecast, aren't they?
PRIME MINISTER: No, as I just gave you the figures, they're 295,000 -
MACDONALD: Yes, we heard that.
PRIME MINISTER: Then going down to 245,000 then going down to 225,000.
MACDONALD: But those numbers are higher than what had previously been forecast, aren't they?
PRIME MINISTER: This year's figures are higher than the forecast because more people, not because more migrants are coming, because more people have stayed in Australia.
MACDONALD: But almost a million more people over the next four years. Where will they live?
PRIME MINISTER: Well, that's not right, Hamish. You don't get a million people. We have a migration figure that's remaining constant that we're talking about, of 185,000. What the net overseas migration figure takes into account, for example, is tourists coming here, is Australians coming home, is those issues. What the NOM is, the NOM represents the number of people who are here across the range of issues.
MACDONALD: But as you, I mean, you've just listed those numbers each year for the next few years, the forecast net overseas migration, and that does total nearly a million people. And according to the figures, that would require at least 22,000 new homes to be built, whilst at the same time, I know it's a single figure within the Budget, 35,000 fewer homes would be built over the next 10 years.
PRIME MINISTER: That's not right. But that's not right. The Budget papers did not say, Hamish, with respect, that there'll be 35,000 fewer homes built over the next decade. That's just nonsense. The truth is that we're investing in a range of supply. We're building new public housing through our Housing Australia Future Fund. We're encouraging private rentals through to be built through our Build to Rent scheme. We are encouraging as well, with our $2 billion plan on top of the existing infrastructure, support for those smaller, support for, the extra bit of -
MACDONALD: So, are you saying then to listeners this morning, PM, that whatever the numbers end up being, there will be enough homes, there will be enough infrastructure here in Sydney to accommodate what the intake is?
PRIME MINISTER: Yes, I'm saying that we are throwing absolutely everything at supply. And one of the reasons why the negative gearing changes are aimed at still having it, but new supply rather than old homes does two things. One, it encourages new supply to be built because people will invest, they'll go out there and they'll support essentially new developments, new units being built, because that is where they can get a tax incentive there, as opposed to turning up this Saturday and competing with first home buyers, who I'm sure you can get, I'm sure you have had listeners on your program who have rung up, because certainly in my local community as well as right around Sydney, the stories of young people, as well as their parents and grandparents, telling us about it, about their people going along, they're first home buyers trying to buy a home that they can live in, to have a roof over their head that's secure for their life - and they're outbid by an investor who's backed by government concessions effectively through the system. Now we're redressing that through these changes in the Budget in a way that boosts supply at the same time as making the system fairer.
MACDONALD: It is a quarter to nine on 702 Mornings. The Prime Minister is here talking you through the Budget. It's not just about whether there are enough homes for people that arrive here in Australia. It is also about infrastructure and the way our communities function. The New South Wales Government is pretty unhappy with this Budget. On the GST carve up, the State Government gets 82 cents back for every dollar collected, compared to $1.07 in Victoria. The State Government also says New South Wales is home to 31 per cent of the country's population, but only getting 17 per cent of infrastructure funding. This is what the New South Wales Treasurer, Daniel Mookhey had to say to Tom Oriti on Drive yesterday.
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MACDONALD: What is the answer to that, PM? Why does Victoria get such a sweet deal compared with us?
PRIME MINISTER: They don't get a sweet deal. And it's interesting that Daniel Mookhey's chosen Victoria rather than Queensland, which actually has a higher per capita rate. That's up to him to explain why he has gone down that road.
MACDONALD: But why? Why? To take that example, why would you invest in their suburban light rail, which has got lots of issues around it, when we need more Metro and Western Sydney, for example, you know, fastest growing part of the Australian economy.
PRIME MINISTER: And we're investing and driving change through the Metro that will go to the airport. And we have funding in the Budget, our funding not matched by New South Wales, for support for the extension of that rail line that we want to see extended to Macarthur. And we have a massive build, a massive build, totally funded by the Commonwealth, of the biggest piece of infrastructure that is being built anywhere in Australia at the moment, which is Western Sydney Airport, which will open later this year, just as the Moorebank Intermodal was totally funded by New South Wales, just as the High Speed Rail project between Newcastle and Sydney. There's no State money in that at this point in time for the planning work and all of the early consideration, the business case, all that work that's being conducted as well, is being done in New South Wales. And we'll continue to work with New South Wales, we're funding through the $25 billion, the largest single new money in this Budget is our Health and Hospitals Agreement. New South Wales is the biggest winner of that. And in areas like Rouse Hill Hospital, we're funding the maternity wing, totally a State Government responsibility, we are funding that maternity wing as we are funding other health issues with an upgrade in Fairfield Hospital, a State Hospital run by the State Government. So, New South Wales is getting to a range of other infrastructure projects as well as being the beneficiary of our additional funding into public schools that began this year, as well as Free TAFE, as well as more Urgent Care Clinics than any state in the country that we have funded to make permanent all the way through.
MACDONALD
