HOST: Prime Minister, good morning and thank you so much for joining us.
PRIME MINISTER: Good morning. Great to be with you.
HOST: PM, the profile of our FiveAA audience, we've got a lot of older listeners, we've got a lot of middle-aged listeners, people in my age bracket who've got, you know, an investment property or maybe some shares set aside that they're hoping to set themselves up and more importantly their kids up for the future. We've had so much feedback in the last couple of hours and a lot of it goes to the key question of trust. A lot of our listeners are saying, based on the past reassurances you have given, how can we now believe anything that you say?
PRIME MINISTER: Well, importantly for people who have investments, as you've outlined, there's no changes to them. We've grandfathered any changes that are coming in. But importantly, as well, as you've said, quite right, I'm sure many people out there have got investments so they can pass something on to their kids. But what if you're a kid who doesn't have a parent who can do that? That's the point. We don't want for the future generation and the current generation of young people to be locked out of the market and for there to be the development in Australia of a two-tiered society, those that inherit wealth and those who are locked out of having the opportunity to have a roof over your head.
HOST: I get those arguments. But to just go back to the key point of credibility, I mean, you said things multiple times. I can remember you saying them on our show. There's so many quotes from you. How hard is it, for the 50th time, Jim Chalmers gave similar reassurances. You explicitly ruled these things out multiple times.
PRIME MINISTER: Well, we've changed our position. We're being upfront about that. We’ve changed our position on a few things in this Budget. We didn't go to the election saying we would halve the fuel excise, we've changed our position on that and we've put that in place. We've changed our position on this because we can't simply kick this can down the road. 75,000 additional young people will get access to home ownership. And importantly as well, we've changed our position in a way that doesn't disadvantage any decisions that people have made. If people have those investment properties in negative gearing, they'll continue to be able to receive those benefits for as long as they continue to hold those assets into the future. And importantly as well, we're not stopping negative gearing. What we're saying is that if you want to invest in property, good on you. If you invest though in a new property, a new build, such as the one that just advertised on your program, I've got to say, sounded like that, then you can benefit from negative gearing. You're helping yourself, just like people across the board have done to increase their wealth. But you're also helping the nation because you're boosting supply. And the key to housing is supply. We've thrown everything at it up to this point. We've got our Housing Australia Future Fund, we've got Build to Rent, we've got 5 per cent deposits, we've done all of these measures. But it simply wasn't proving to be enough because too many people felt, quite rightly, that they're locked out of the market.
HOST: But for these changes, by your own, everything you just outlined there, these are massive nation-altering changes. I mean, when you think back to the hue and cry from Labor when Howard exceeded his mandate with WorkChoices or when Joe Hockey brought down a Budget when Tony Abbott was PM and broke every undertaking Tony Abbott had given, you've just done the same thing, haven't you? You should have got a mandate for all of this.
PRIME MINISTER: No, John, Howard changed WorkChoices to go into an ideological position which would lead to cutting people's wages, cutting people's conditions. This is about lifting people up, this is about –
HOST: By dragging others down?
PRIME MINISTER: Well, no, well, that's not right. David, tell me who is impacted in that way by these changes?
HOST: People with investments.
PRIME MINISTER: No, they're not. Because they're not changed. Because they're grandfathered. Simple as that.
HOST: Well, yeah, negative gearing is grandfathered. But what happens if you're selling a property? What if you're selling a business?
PRIME MINISTER: Well, what do you mean if you're selling – businesses aren't negatively geared.
HOST: No, no, I'm talking about capital gains with that one. The effective capital gains tax rate has increased dramatically now.
PRIME MINISTER: No, capital gains is also, it's a 50 per cent discount if you like, automatic up to 1 July next year. There's no retrospectivity in any of this, that's the important thing going forward and what we're doing by making the change going back to –
HOST: Well, that's where that's not true. What about people have bought properties pre-1985, they'll start paying capital gains tax now. That's been exempt the whole time.
PRIME MINISTER: Well, if you're talking about people having investment properties since 1985, the idea that they would be negatively geared – that's a very big call. The truth is that negative gearing operates effectively on average about five years before it's either sold – a property sold –
HOST: I was talking about capital gains again, let's not confuse the two things. Again, let's drill down on this claim about intergenerational equity, because this is where I am most confused. Because the sum of the changes, according to your own Budget papers, to capital gains tax and negative gearing are these: house price increases will still outpace wages. Rents will go up. The young people listening now who have spared a few bucks to invest in shares or an ETF or something will now be taxed more. A young person who starts a business today as a result of the Budget last night will now be taxed more. How are these young people better off? How is their inequality being addressed?
PRIME MINISTER: Well, let's be very clear. Every single dollar of revenue, we are giving back through tax cuts. Every single dollar. There is no additional revenue to the Government that we are not giving back over the forward estimates through our Working Australians Tax Offset. Tax cuts come in on 1 July of this year, another one next year. Thousand-dollar automatic tax deduction and now the Working Australian Tax Offset. These are all aimed –
HOST: Nothing I said there is inaccurate. I just detailed a swathe of young people who are worse off as a result of the Budget.
PRIME MINISTER: Well, that's just not right. That's just not right. Young people will be better off as a result of the tax cuts. As a result as well, you would have – I would be amazed if you don't know young people who have told you stories about going to an auction and being outbid.
HOST: Your own papers say houses will go up by more than wages as a result of all this. How are they closer to getting a house today then?
PRIME MINISTER: Well, house prices have risen enormously over a period of time, and they will continue to rise. I'll tell you how it will help. As I said, you would know people who simply have been outbid because the person standing next to them at the auction is able to have an extraordinary advantage over them. Now, what we are doing is put in place a measure so that people can still negatively gear. But those investors, if they wish to negatively gear going forward, what they will do is be bidding on new builds rather than existing properties. That will change the balance which is there, which has distorted the market. And increasingly people are saying to us, as I'm sure they're saying to, not just young people themselves, but their parents and grandparents, people listening to your program will say, I'm worried about my kids and grandkids, whether they will ever be able to get into a home. And the dream of home ownership shouldn't be something that just my generation and your generation have. It should be something that is just part of the Australian way.
HOST: I would have appreciated this whole capital gains tax conversation if we were talking about it exclusively through the lens of trying to dissuade investors from parking their capital in property. We get that, that makes perfect sense. What was the thinking behind applying the capital gains tax increases across all asset classes? Because I'm thinking, what’s your pitch?
PRIME MINISTER: No, to be very clear, what we're doing is going back to – before 1985, there was no capital gains tax, there was no tax on capital. In 1999 –
HOST: Yeah. Inflation indexing. Yes.
PRIME MINISTER: John Howard chose to get rid of the inflation indexing, which means you get taxed on your real capital gain. That is a sensible thing that used to operate. John Howard changed that over a period of time. What that has done is distort where investment goes away from the productive side of the economy into housing.
HOST: Yes, but if you kept those, if you kept the Howard arrangements in place for other asset classes, it would have surely funnelled that investment into productive things like business, like the Australian stock market.
PRIME MINISTER: It will lead to a change towards productive investment because of the changes that we are making.
HOST: So, just what's the pitch to a young Australian today who has a billion-dollar idea for a business? Why aren't they moving to New Zealand or Singapore where there's a 0 per cent capital gains tax rate?
PRIME MINISTER: If you have a look at what we are doing across the board, whether it's a $20,000 instant asset write off for small business that we're making permanent, whether you look at the changes that we have for venture capital, which will encourage new businesses to thrive as well, there's a range of measures there aimed at supporting innovation, aimed at supporting Australian business across the board is what we have put in place. And we are a country that will continue to as well, through our Future Made in Australia plan, continue to back Australian business, back Australian innovation.
HOST: Prime Minister, what would you say to our older listeners who are really upset about the private health changes? They feel like they've done the right thing by taking out private health insurance. They were hoping that when they got to the age of 65 that the financial pressure on them would be lessened. And aside from addressing their sense of grievance, what impact is this going to have on public hospital system at a time when governments everywhere, especially here in SA, are trying to end the ramping crisis?
PRIME MINISTER: What we're doing is simply equalising the system so that there's not a two-tiered system in place. So, we're removing again – that was during the Howard era. That was changed. It was changed because you had a government that had revenues flowing in from the boom. But we're putting, importantly, every dollar of that back into aged care with the support that we have for building additional aged care residential homes, but also additional help at home as well. So, we very clearly are spending additional money on aged care and that is what we needed to pay for. We're doing that in a sensible way and the estimate is this will have a minimal impact on the number of people who take out private health insurance. But that is why we needed to do it, because we simply aren't building enough aged care residences at the moment and we need to ramp that up and the Government is addressing that. We had an aged care system we inherited that was in crisis. That was summarised by a Royal Commission interim report that was titled Neglect, and that was the case. We now have, 99 per cent of the time, there's a nurse back in nursing homes. We're increasing aged care, residential care, but also home care as well for older Australians.
HOST: And Prime Minister, just finally, on a much less contentious note. Indeed, hopefully something which I think, and we've done a fair bit of work on this, all Australians will really get behind. There was nothing specifically in the Budget last night about whether we'll be supporting a space mission. It may not be a Budget type issue anyway for now. But can I just ask you, is the Federal Government now inclined to support this push through the European Space Agency to get Katherine Bennell-Pegg into space? And do you think it should be a federal expense or rather approached as a fundraising piece across the nation?
PRIME MINISTER: Well, she's a great Australian and I think that all Australians are inspired by a great South Australian, indeed our Australian of the Year. And I think people will get behind it. I know there's some private philanthropy behind it as well. What we're doing as a government through our science minister, but also through Foreign Affairs, is having a word and more than a word – we are lobbying hard with the Europeans, which would be what it is a part of. And when Ursula von der Leyen was here, the head of the European Union, I certainly lobbied her hard to make sure that we can deliver a good outcome there. I want to see a positive outcome. But it's something as well that had a very large price tag attached to it, and in a difficult Budget it being solely Commonwealth-funded was something that would have presented a real challenge. But we're working on it with the Europeans as well.
HOST: Well, fingers crossed because I think it's one outlay you wouldn't get any flak over. And honestly, I think the private sector which stands to benefit from the spin-offs from it could actually chip in the same way. Prime Minister Anthony Albanese, thank you for joining us this morning.