Topics: Negative gearing, deficit levy, 2016 Budget.
E&OE…
KIERAN GILBERT
With me now the Minister for Vocational Education and Skills Scott Ryan; what is your response to this because clearly in dollar terms as Grattan Institute and Chris Bowen argue, the wealthy are getting the bigger share of the negative gearing pie, whereas as the Treasurer says, two-thirds of those involved are on incomes below $80,000. So two-thirds of those participating, but in dollar terms the wealthy get the bigger benefit.
MINISTER RYAN
And that is over 800,000 people in Australia. And more than half of the people accessing negative gearing are actually earning in the middle two tax brackets i.e. earning between $18,000 and $80,000. Labor’s plan is an assault on house prices for those in the housing market now, and it also prevents future generations of Australians saving for their own independence and their own retirement using this long-standing tax principle. Which as my colleagues have pointed out, isn’t just about property, it actually applies to investment right across a range of investment tools. And if you’re wealthy enough to have investment income you can still negatively gear that, so to speak, but you can’t offset investment losses against your wage and salary income. And so Labor is not only assaulting house prices now, but also assaulting and preventing future generations of Australians using this to build their own wealth.
GILBERT
But if you have got all of that large number of lower to middle income earners, as you and the Treasurer have argued this morning, engaging in negative gearing – but in dollar terms the wealthy are getting the bigger benefit, why not rein in the “excesses” at the top end as the Treasurer had flagged previously that he would?
RYAN
We have to look at the impact at this right across the spectrum. And the truth is there is an issue around complexity. We do not need to make our tax system any more complex, I think everyone would agree with that. There is always the aspect that those with more money to invest will be able to access investment allowances more than those with less, but you don’t want to actually shut off the pathway to saving and investment for hundreds and thousands of Australians and future generations of Australians. Because remember, Labor’s policy is: if you have got it you can keep it, but future police officers, future nurses, future people trying to invest for their own independence will not get the opportunity.
GILBERT
Now, in terms of this other angle of the Budget that we are talking about today, tax relief for higher income earners. The Financial Review suggesting, and Labor picking up on that, that those on upwards of $180,000 a year would be possible in it for two pieces of tax relief here by the removal of the deficit levy – although the Shadow Treasurer, Chris Bowen, urging caution on that, that the Labor Party has not decided to keep the deficit levy in place for those earning upwards of $180,000 a year.
RYAN
There seems to be a real division between the Shadow Treasurer and the Leader of the Opposition here. They seem to be using some very different language. And they should come clean. Without commenting or knowing the details of the Budget, this was a temporary levy introduced that the Labor Party voted not only for its imposition but also for it to be temporary. So, if Labor wants to vote for a tax increase on a substantial number of Australians they should come clean about it.
GILBERT
If you did keep it in place, if Labor did keep it, are you worried about the competiveness of the tax rates? Is that your issue with that? Because it was the Government who put it in place in the first place.
RYAN
And it wasn’t a measure I was particularly happy with, and it wasn’t a measure that a lot of Liberals were happy with. I didn’t come into politics to increase taxes. I didn’t come into politics to increase the tax burden on Australians who are working hard and having a bit of success. And in fact so many of the other problems we have in our tax and welfare system are because of very high tax rates at that end and so we don’t want to make it any worse.
GILBERT
Thanks for your time, Minister for Vocational Education and Skills – we will talk to you over the next week – Scott Ryan.
(ENDS)