JOHN ALEXANDER OAM MP, MEMBER FOR BENNELONG:

Welcome Prime Minister to Bennelong. Just shortly I’d like to say with the Prime Minister securing gas and with the Snowy Hydro 2.0 in place you’re now the most powerful and reliable Prime Minister we’ve ever had and with these tax cuts the most generous, welcome to Bennelong. 

7,000 businesses, more than 7000 businesses are going to benefit from the tax cuts, thank you very much. 

PRIME MINISTER:

Thank you and right across Australia more than half of all Australian workers are employed by businesses from the very smallest up to businesses with turnovers up to $50 million are going to benefit from these tax cuts. 

We have now delivered all of the tax cuts that we promised to deliver in this term of Parliament and that’s been achieved and it will benefit businesses large and medium, large and small. It will benefit this business because the owner will have more money to invest, he has more money to invest, his business will grow and he will have more employees.  This is an engine of growth. 

We have to recognise that if we want to remain a prosperous, high wage, generous, social welfare safety net, first world economy we’ve got to be competitive. That’s absolutely critical. And it’s a very competitive world out there and right around the world countries are reducing their company tax rates. 

We were just discussing a moment ago in Britain it’s down to 20 per cent, heading to 17 per cent. President Trump is talking about a 15 per cent tax rate. All of the countries in our region have got much lower rates so we have to be competitive.

Our ten-year Enterprise Tax Plan is going to make Australian businesses like this and hundreds of thousands of others competitive, enabling them to invest and to grow. That is the key.

Company tax is a tax on workers’ wages. That’s a fact. The higher company tax is, the fewer workers will be employed and the lower their wages will be. So this is a recipe for growth. It’s a stimulus for growth. As are all of our policies.

And this is the big difference between our Government, our Government’s national economic plan and Labor.

Labor does not have one policy they can point to which will stimulate employment or investment. Not one. They don’t even claim to have one so their recipe is no, which is short for nothing. They have nothing to offer in terms of ensuring Australians have strong businesses, strong investment and strong growth.

Before we go to questions, I want to say something about the ice seizure today that’s been announced today.

Ice is a scourge which destroys families, it destroys communities, and we are committed to tackling this scourge at every level.

This is the second big drug bust in just a few weeks. Nearly a tonne of ice has been seized, around $900 million worth of ice. This would have destroyed, gone to destroy, thousands and thousands of Australians’ lives.

I want to thank the Australian Federal Police and the Victoria Police, yet again working with all of our security agencies, in achieving this enormous drug bust.

But of course we’re also dealing with the consequences of ice addiction. We have over $300 million invested in our ice action plan, which is working at the grass roots, at community levels around Australia ensuring that people who are suffering from ice dependency are able to get the help and the support they need to recover.

But, again, this drug is a scourge and we will be relentless and ruthless in finding the people that seek to bring this poison into our country and hitting them with the full force of the law.

JOURNALIST:

Prime Minister, given that the Reserve Bank Governor has now added his weight to calls to reform negative gearing, do you concede that not doing anything to reform negative gearing is just protecting the rich at the expense of future generations?

PRIME MINSTER:

Well, I’ve read what the Reserve Bank Governor said last night and he made the point – and he made the point four times – that the real problem we have with housing affordability, and that’s particularly in this city, is supply, lack of supply that for too long supply of new dwellings have been constrained so demand had overtaken supply and you’ve got as a consequence a big increase in prices.

And he actually made the point that making changes at the prudential level, as the regulators have done, so limiting the amount of interest-only loans or indeed changing tax arrangements, can have an impact but they are a minor part of the solution.

The Reserve Bank Governor’s speech has been much commented on, but based on the comments I’ve read, has not been read itself.

The speech needs to be read and he makes the point that we all do, that this is essentially one where we need to get more supply, more development, more dwellings being built so that supply meets demand.

JOURNALIST:

He says that tax arrangements have contributed to high property prices as well. And we’ve got APRA, which is reducing the level of interest-only loans [inaudible] 30 per cent. Should there be movement on both those fronts? Fewer interest only loans and also tax changes?

PRIME MINISTER:

Well APRA, we welcome the decision APRA has made, yes, certainly. That’s their job. They’re the prudential regulator and they’ve recognised the risk associated with too many interest only loans being made, particularly in the circumstances the Governor talked about and they’ve taken action, we welcome that.

JOURNALIST:

Prime Minister, your colleague John Alexander –

PRIME MINISTER:

Yes – my dear friend.

JOURNALIST:

Has obviously called for a debate on negative gearing, will you turn to him and say that’s not going to happen?

PRIME MINISTER:

Well, there is a debate on all of these issues and John has made a very constructive and informed contribution to it but in terms of the housing affordability issue – and I say it’s especially severe in Sydney, it is a big issue in Melbourne, lesser extent in Brisbane and some other parts of Australia prices are going south. And, again Governor Lowe made this point yesterday that we don’t have a national housing market, there are a big difference between the different cities, so let’s just focus on Sydney if I may for a moment. The key here has been for a long time, demand has exceeded supply and so what we are seeking to do with our cities plans, our City Deals that we’re entering into with state and local governments which, as you know, we have a big one here in Sydney, the Western Sydney City deal, our focus is on working with state governments and local governments to ensure there is greater supply of housing. 

We’ll have more to say on all of this in the Budget and I don’t want to pre-empt that.

But please do not be under any misapprehension. The key to dealing with the housing affordability issue is building more houses or building more dwellings.

And I checked the Reserve Bank Governor’s speech on the way here and he made that point not once, not twice, not three times but four times. So it is a very clear point to remember. We need more dwellings.

JOURNALIST:

John Alexander, do you agree John Alexander that just by more supply will solve the problem or do we also need to look at tax reform?

JOHN ALEXANDER MP:

I think when you consider what the regulators are doing that’s a, we are working with the regulators.  In this very region we have an incredible program of building. You see the cranes in the skies building more supply and if, as I have listened to both Wayne Byers and the Governor. They are very much taking appropriate action that works perfectly with what we’re doing.

JOURNALIST:

It’s not working, house prices are going up.

PRIME MINISTER:

Can I just make this point – John and I both recognise that this is a multifaceted issue, you know there are demand side issues, there are issues about regulation, there’s the prudential issues such as APRA has taken a stand on recently to restrict the number of percentage of interest only loans but the fundamental point is that we have not been building enough dwellings and that is the, that’s the key and that point has been made by the Reserve Bank again and again for as long as I’ve been interested in this issue which is getting on for well over 15 years, since I first started writing about it and researching it. It is a supply side issue overwhelmingly. All of the other factors are irrelevant. But at the end of the day if you’ve got a growing population, as you do in Sydney, and growing demand for housing and if you are not building enough dwellings to keep up with that demand then prices will go up.

JOURNALIST:

Bur Prime Minister, Mr Alexander has previously flagged maybe letting people access their superannuation.  Do you think that’s something Australians should be able to do to get into the housing market?

PRIME MINISTER:

Again, John makes a very valuable and original contribution to this and so many other issues including fast rail, John and I have a lot of, we both have –

JOHN ALEXANDER MP:

Which is essentially about supply.

PRIME MINISTER:

Yeah exactly, that’s exactly right.  I mean we both have an understanding of big interest in all of these urban issues. 

Now of course the Budget is in May, it’s about a month away and I’m not going to fuel Budget speculation, I think there will be more than enough as it is without that. But all of these issues boil down to making sure that there is more housing. One of things John is passionate about and I am too, is about mass transit and rail. And what does that do? Well distance is measured in minutes not kilometres.  If you can get more people, bring more people closer together with good transport infrastructure and that’s what we’re seeking to do with all of our massive $50 billion investment in infrastructure, road and rail – if you’re able to do that then you increase the supply of housing.  So it is a complex issue. 

The Labor Party is very prone to say there’s one silver bullet or one lever you can pull that is going to make the difference.  It’s not.  Fundamentally, the mistake that has been made is that the consent authorities, essentially state and local governments, have not allowed enough supply to meet the demand and that has been particularly the problem here in Sydney where you’ve had strong population growth and again, I’m literally paraphrasing what the Reserve Bank Governor said yesterday, so I apologise to him for that but it’s pretty clear that’s what we need to do more of and that’s what we’re committed to. 

That’s why we’re working in a manner unprecedented for federal governments, working in a collaborative way with state and local governments in our City Deals to ensure that everything we’re doing, every investment we make, every piece of infrastructure we’re involved in is adding to that amenity, adding to housing supply, enabling the Australians, new home owners, you know empty nesters that are selling and want to buy something else, right across the spectrum, everybody has the ability to afford a home.

JOURNALIST:

Mr Alexander – you’ve spoken about your daughter who was unable to afford a house because she was outbid by an investor. Are you comfortable with her depleting her super to buy a home?

JOHN ALEXANDER MP:

My partner’s daughter?

JOURNALIST:

Your partner’s daughter.

JOHN ALEXANDER MP:

It must be put in the context of a whole raft of policies. If you’re going to do something to empower the home buyer, you’ve got to somehow calm the market. It appears that there is evidence that both APRA and the Reserve Bank is concerned with calming the market, that it has been a volatile market driven by investors empowered by lower interest rates that move them from being negative gearers to being neutral, positive gearers. And that there has been a problem that has driven this latest wave of the price rises. We’ve had very high price rises, 74 per cent in the last three years. So if you are going to look at giving first home buyers a bonus, that will only create more heat. It has to be offset with something else. So they’re the discussions that we’ve been having for a long time. The great man will tell you on Budget night what the next step is and I am looking forward to seeing that Budget.

JOURNALIST:

Is it simply politics though? Is negative gearing simply too political these days? Is that why you won’t touch the issue?

PRIME MINISTER:

Again you come back to negative gearing. The vast majority of people who offset a net rental loss against their personal income are Australians on middle incomes who are teachers, policeman, business people. It is very much a, it is an investment that is overwhelmingly dominated by middle Australia. So let’s just be very clear about that.

But, I get back to the fundamental point that the, and again it is the point that the Reserve Bank Governor made, as I said, four times – at least four times, it may have been more, I counted four – in his speech yesterday, you need to build more dwellings.

Now the state government is committed to this, Gladys Berejiklian’s Government is very aware of this.

There is a long period of complacency under the Carr and Labor-Labor Governments. You remember when Bob Carr said: ‘Sydney is full’. Now, if you have a deficit in supply of housing year after year after year, you can’t fix it in one year. Okay? So this is a process that needs to develop it but basically you need more supply of housing.

And there are other issues, many other issues associated with it, but I just want to emphasise it’s that supply side factor which is the biggest one.

There are markets in the world, London is a good example where the negative gearing arrangements we have in Australia are not available – haven’t been available for a long time. Their housing prices are even less affordable than ours. Why is that? Because supply has not met demand.

You see parts of the United States where housing is much more affordable than others. Why is that? Because supply has been able to meet demand.

So it is very much, it is a problem that you face when zoning, and regulation and red tape, you don’t let the construction of more dwellings to occur.

I’m sorry to repeat myself but it is, it is a very important point. And that is why our working together with the state and local governments is so critically important to ensure that supply is available.

JOURNALIST:

Are you concerned the gross national debt is growing so quickly? And what are you doing about it?

PRIME MINISTER:

In terms of the Federal Government’s debt, obviously we are in accordance with our budget projections, confirmed in MYEFO, seeking to bring our deficit down, bringing the Budget back into balance by 2021. And then once you do that, of course then you start repaying debt and the economy will grow without adding to debt and debt will become a smaller percentage of GDP.

But all of the warnings that the Reserve Bank Governor and that APRA have made about the rising levels of debt, particularly associated with housing are well made. That is their job. They are doing their job. The system is working and they’re making changes. They’re making adjustments to the prudential rules so that it will take, as John was saying, take some of the heat out of the market just at the right time.

JOURNALIST:

Prime Minister, can I just ask you about Bob Day?

PRIME MINISTER:

Okay.

JOURNALIST:

Will your ministers provide a full explanation as to how the Government entered into a lease arrangement which obviously led to his invalid –

PRIME MINISTER:

Well, firstly let me say the circumstances surrounding Mr Day’s lease were brought to the attention of the Senate by the Government. That is the first thing. And the orders made by the High Court were the orders sought by the Government, by the Commonwealth.

In terms of the timeline, all of that was set out exhaustively by the Special Minister of State, Senator Ryan when he spoke about it in the Senate some time ago. All of the facts are out there. But the bottom line is when the circumstances surrounding Mr Day came to the attention of the Special Minister of State, they were properly investigated and then the matter was brought to the attention of the President of the Senate who referred it to the High Court, and the High Court has made the orders that the Commonwealth sought, so there would be a recount of the Senate vote in South Australia.

Thank you very much.

[ends]