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Transcript of press conference: Sydney: 3 March 2017: OECD signals macroeconomic risks flowing Australian housing market; Federal Government has received warnings for years from regulators; international economic agencies and reviews; Labor's plan for housing affordability; National Accounts; Centrelink robo-debt fiasco; and privacy debacle



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CHRIS BOWEN MP SHADOW TREASURER MEMBER FOR MCMAHON

E&OE TRANSCRIPT PRESS CONFERENCE SYDNEY FRIDAY, 3 MARCH 2017

SUBJECT/S: OECD signals macroeconomic risks flowing Australian housing market, Federal Government has received warnings for years from regulators, international economic agencies and reviews, Labor’s plan for housing affordability, National Accounts, Centrelink robo-debt fiasco, and privacy debacle.

CHRIS BOWEN, SHADOW TREASURER: Well thanks for coming everybody.

Warnings overnight from the OECD will come as no surprise to the Federal Government. It should come as no surprise because the Government has been warned before.

Consistently, Labor has been saying that reform to the tax treatment of housing in Australia is necessary for housing affordability, for Budget repair, and because of systemic risk. And Labor has not been the only party or commentator saying this.

The Government was warned by its own Financial Systems Inquiry, chaired by David Murray.

Two years ago, David Murray in the Financial Systems Inquiry told the Government this "The tax treatment of investor housing in particular tends to encourage leveraged and speculative investment and housing is a potential source of systemic risk for the financial system and the economy".

That was the government's own review. The Murray inquiry has been sitting on the shelf and collecting dust. As the Government flip from thought bubble to thought bubble and refuse to act on capital gains tax and negative gearing reform.

Last year the IMF said "The tax system provides households with incentives for leveraged real estate investment that likely amplifies housing cycles".

As the OECD has said overnight "Macro financial indicators underline the threat for the housing market".

The Labor Party is always very measured, balanced and careful in our public comments about the economy. The OECD report stands for itself. But I stress again, the arguments for reform of Australia's negative gearing, the most generous tax concessions for property investment in the world, are overwhelmingly strong.

Right across the country, young people are wondering how they will ever afford to get into the housing market. Commentators, experts, have pointed out that the budget is in need of repair and negative gearing reform helps repair the budget. These continual advices and reports to the Government that the system is made more risky because of the generous tax conceptions for property investment is clear and consistent.

And the Government refuses to act. Scott Morrison refuses to listen. Malcolm Turnbull is incapable of action. The Government is frozen on this issue. Partly because of their own internal division and dysfunction.

Well, the Labor Party, just as we went to the last election promising negative gearing and capital gains tax reform, will go to the next election, if the Government refuses to act in the meantime. But the Australian people shouldn't have to wait that long.

Young people shouldn't have to wait that long. The system shouldn't continue with the inherit risk that it currently does for that long. But the Labor Party will continue to prosecute the case and will implement those reforms in government.

Happy to take questions.

JOURNALIST: Do you buy the argument that changing anything to do with negative gearing may have unintended consequences?

BOWEN: No. Labor's carefully designed policy grandfathers all existing investments. I think that would be a legitimate concern if there was to be a shock to the system, if people who had made investments in good faith just had the rules changed. That would be a legitimate concern, we have avoided that.

We spent a lot of time carefully designing our reforms, grandfathering all existing investments, allowing negative gearing on current property to continue to apply which is an important part of the design. You make these changes carefully and you make them designed for a long time. Negative gearing won't be reformed very often. It was last reformed in the 1980s. The next lot of reforms would be in place for a long time. They have to be ready for any range of market circumstances: boom markets, not boom

markets. Right across the decades. And that’s what the system put in place by Labor achieves.

JOURNALIST: Mr Bowen, I’m just wondering, you are criticising the OECD report. Earlier this week figures came out revealing Australia's economy has grown by 1.1%. Does Labor not recognise or welcome this?

BOWEN: I didn't criticise the report. I pointed to the consistency between the OECD and other commentators. Of course we welcome growth figures. I said after the last negative quarter last year, we expected a bounce-back. You have a bad quarter, you expect the next quarter to be strong. That's as it played out. That's welcome.

Scott Morrison was quick to sheet blame to everybody else for the negative quarter and claim credit for the positive quarter for himself. If avoiding a technical recession in more benign international economic circumstances was the big claim to fame, good on him. We welcome and provided comments welcoming good figures.

JOURNALIST: What about state levers like stamp duty? Do you have an opinion on the Berejiklian Government, obviously the boom is based in Sydney, and the Berejiklian Government’s move on stamp duty?

BOWEN: What I do have an opinion on is that housing affordability is best tackled by governments working together: federal, state and local. Every State Government will have their own approach. Indeed the ACT Labor Government has engaged in reform there. State Governments can consider their own reforms, that’s a matter for both the State Liberal Government and the State Labor Opposition.

I would point out that Rob Stokes, when he was Planning Minister, his contribution was to call for negative gearing reform and he was then lauded by his Premier as being the best Planning Minister in New South Wales history. He knew that this was a most important lever. So desperate it appears, to avoid conflict with the Federal Liberal Government, that the new Premier moved him out of that portfolio.

JOURNALIST: It’s a pretty dire prediction from the OECD, in your very own electorates, what concerns are Mum’s and Dad’s facing?

BOWEN: Well again, I’m very careful about public commentary which is alarmist. I try not to be alarmist about these things, but just call it like it is. Now the OECD has made comments themselves, which stand for themselves. I think the concern among the community is rightly, how will young people be able to afford to buy into the market and how sustainable is this system of continual, massive price rises in Sydney, but not limited to Sydney. How sustainable is this? How will it end?

What the OECD and others have in effect said is that it’s best to reform now, to make those important changes now and before it’s too late. To get a more stable system. That is what David Murray, commissioned by Joe Hockey, advised this Government to do

two years ago, and they have singularly ignored that advice. Just as they ignored the IMF last year and I expect they ignore the OECD today.

JOURNALIST: What reason?

BOWEN: Well, we know that Scott Morrison wanted to reform negative gearing but he got rolled in the Cabinet, he said there were “excesses”. I mean this is a Treasurer who has shrunk in the job and is singularly incapable of achieving anything. Now he can explain why he won’t act when he said publicly that there were excesses in the system. Clearly the Liberal Party is very divided on this. Malcolm Turnbull chose a scare campaign, he thought his ticket to victory last election was a scare campaign against our reforms, well he failed. He failed at that scare campaign. He should accept that the reality and accept that the time has well and truly passed for reforms to Australia’s negative gearing system which is the most generous tax concession for property investment in the world.

JOURNALIST: Minister, Labor yesterday voted for amendments that allow for the release of private information of veterans. Do you still support that?

BOWEN: Obviously we are most concerned at the egregious behaviour of Minister Tudge. Linda Burney has prosecuted this case with competence and professionalism and Linda has made clear Alan Tudge’s lack of both of those attributes. As she has said, this is reckless at best and illegal at worst. Now of course we always try to be constructive with the Government and provide support where we can, but where we see a Minister acting like Alan Tudge, releasing personal information, which is one of the great trusts placed in the Minister. As a Minister you are entrusted with the personal information of many people. So we have great concerns about that flavours our approach, to the Government’s approach to handling private information. In relation to particular information, I will leave it to the relevant shadow ministers for them to comment on that, but of course, we do have concerns about how this Government treats personal information.

JOURNALIST: There’s a suggestion the party didn’t do its due diligence?

BOWEN: No, we work with the Government when we can, but when new issues come to light, we bear those in mind.

Any other issues? All good? Thanks very much.

ENDS

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