Michael Sukkar MP

Interview with Raf Epstein – Mornings on ABC Radio Melbourne

THE HON MICHAEL SUKKAR MP – SHADOW MINISTER FOR SOCIAL SERVICES, NDIS, HOUSING AND HOMELESSNESS

TRANSCRIPT

INTERVIEW WITH RAF EPSTEIN – MORNINGS ON ABC RADIO MELBOURNE

Thursday 26 September, 2024

TOPICS: Inflation, Housing, Negative Gearing, Lebanon

E&OE

Raf Epstein: We are joined to talk about both inflation and potential changes around housing. With Michael Sukkar, he is the Shadow Housing Minister. He is also the Liberal MP for the eastern suburbs seat of Deakin. Good morning.

Michael Sukkar: Morning, Raf.

Raf Epstein: Inflation has more than halved since the Coalition were in government. Are you jealous?

Michael Sukkar: Well, I think Australians are jealous, Raf, because we’ve been in a per capita recession now for 18 months and typically when the economy tanks as badly as ours has, it wouldn’t be surprising to see inflation drop. The problem here is that under underlying inflation is still outside the band, still much higher, and underlying inflation in the end will be the thing that dictates whether…

Raf Epstein: So, no credit at all? For halving inflation, no credit to the government at all?

Michael Sukkar: Well, no, because what we’ve seen is household income, disposable income drop by nearly 10 per cent. We’ve been in a per capita recession for 18 months. And typically if an economy is effectively in recession, inflation drops in free fall because ultimately, if you’ve got constrained growth, or here, negative per capita growth. So that means each of us on an individual level are going backwards. Clearly, people have less money to spend in the economy and that should drop inflation much more quickly. We’ve got quite sticky inflation by global standards and that’s why interest rates haven’t dropped. If I said to you 10 or 15 or 20 years ago that the Australian economy was in a per capita recession for as long as we have, you would think that inflation would drop much more quickly and that ultimately interest rates would drop as well. So, I don’t think there’s too many families out there in Australia that are doing cartwheels at the economic management of this government.

Raf Epstein: Treasury is now looking at some potential changes to negative gearing and maybe the capital gains on real estate as well. Treasury’s doing some modeling. If I can just play you, the PM’s been asked about that this morning. He has no plans for any changes. Let’s just have a listen.

QUOTE GRAB:
Are you considering taking negative gearing reform to the next election?
No, we’re not.
Is it changing?
We have no plans. Well, we have no plans to change negative gearing.
And what if you had no choice?
I’m not interested in that.

Raf Epstein: Doesn’t it sound like he’s going to do anything? Do you agree?

Michael Sukkar: Well, I think we’ve seen these slippery sort of statements from the from the Prime Minister before. I mean, I don’t think most Australians believe much of what the Prime Minister says anymore. And when he makes these vehement denials because he’s done it before and he’s broken a litany of promises.

Raf Epstein: No plans, not interested?

Michael Sukkar: Well, the other thing that’s curious here is that the argument that Treasury of its own volition has just gone off and decided to do this work. I can tell you, as a former assistant treasurer, the idea that your department just goes off and does work without being instructed by their ministers would be a highly…

Raf Epstein: Can I interrupt Michael Sukkar? Scott Morrison said exactly that when he was Treasurer and he spoke about the excesses in negative gearing. He said at the time Treasury regularly conducts analysis on many policy issues, which is their job. It’s no different to your government, is it?

Michael Sukkar: Well no, I think I think they’ve conceded that it’s been costed and looked at. Now that’s much different, but I’m just talking about my experience as a former assistant treasurer. The idea that your department is off doing this work with you, knowing nothing about it is quite remarkable. And yesterday the Prime Minister wouldn’t even confirm whether the Treasurer knew. And so it was a situation where the Prime Minister and the Treasurer are not talking about these sorts of issues…

Raf Epstein: Michael Sukkar?

Michael Sukkar: I mean, you can choose to believe him…

Raf Epstein: … and people can make up their mind. 774, Michael Sukkar, the Shadow Housing Minister, just in the time we’ve got left, perhaps just the sort of the actual merits of whether or not it’s worth changing. Scott Morrison did say in 2016 there were excesses in negative gearing. Was he wrong?

Michael Sukkar: Well, no. See you’ve got to have a corporate memory here. So in 2016, what we did was we did make some changes around negative gearing. What we did was, we reduced the deductions you could claim for interstate travel to inspect…

Raf Epstein: Very minor.

Michael Sukkar: That’s what. Correct. Very minor. But that’s what he was speaking about at the time. So when you pluck those quotes out of context, not that, to be frank, Raf, we’re going to be held by something that was said by a former treasurer eight years ago.

Raf Epstein: He’s the former Prime Minister, but anyway.

Michael Sukkar: No, Raf, but that’s the context in which you’ve plucked that quote. So you’ve not given the context – we did make that change. But the point here is but the point here is this, Raf, and I’ve tried to I’ve tried to make this point in multiple ways over the last few months. A third of Australians rent, and I don’t think you, or I, or your listeners are going to think that that’s going to drastically change. So, if a third of Australians are renting, someone’s got to own that housing stock. In fact, millions of those homes need to be owned by somebody. What this government is really seeking to do is to replace the mum and dad investors who own those millions of rental properties in this country with large foreign corporate entities, because right now they’ve got a bill in the parliament to reduce taxes for foreign corporates to hold Australian rental stock.

Raf Epstein: Do you want Australians to be scared of foreigners?

Michael Sukkar: I don’t want Blackstone and Vanguard – large US corporate funds to own tens of thousands of Australian homes.

Raf Epstein: They’re not talking about getting rid of it. Isn’t there a dark undertone to saying foreign, foreign, foreign?

Michael Sukkar: Well, not if you’re giving them the most advantageous tax arrangements possible. So the bill, the build to rent bill that they have in front of the Parliament would provide the best, the most advantageous tax arrangements to foreign corporate funds to own investment properties in this country. The headline tax rate is the most advantageous at 15 per cent, they want to tax Australian mum and dad investors at a higher rate. So the only consequence…

Raf Epstein: We don’t know that they want to tax mum and dad – at the moment they’ve got no plan. Well can I try and get back to the substance of the policy?

Michael Sukkar: No, Raf, this is the substance. If you accept that someone has to own the homes that our renters will live in, they can either be mum and dad investors or they can be large corporate entities who own – like in the US – many funds in the US own tens of thousands of homes…

Raf Epstein: OK, Michael Sukkar – I think we’ve made the point about the government’s place. I just want to get to the merits of the policy. Quite a few economists, people like Saul Eslake, Angela Jackson, former head of the Reserve Bank, Philip Lowe. Negative gearing is an incentive for investors. It adds to demand. So it means that when you go to an auction, there’s an investor there as well as an owner occupier. Would you agree that negative gearing adds to demand? It means there’s less homes for people to buy, to live in themselves?

Michael Sukkar: No, I don’t accept that. And there’s – for every economist that that claims what you’ve suggested, there are other economists who would vehemently denied it.

Raf Epstein: Self-Evidently true, isn’t it? If you have fewer investors, there’s more for the the owner occupier?

Michael Sukkar: No, because what ends up happening is, and even I think the Prime Minister’s accepted this, you end up with fewer supply of homes. If you want less of something, you tax it more. If you want people to smoke less, you tax tobacco more. If you want less investment in housing, if you want less houses built, you tax it more. And we’ve just got to look at the tax arrangements on housing in this country at the moment for new apartment in Sydney, nearly 50 per cent of the cost of that apartment is taxes and regulatory charges. That gets borne by the end purchaser. It’s not the developer that wears that cost. It’s the end purchaser that pays those accumulation of hundreds of thousands of dollars of taxes. Now, if you tax property owners more, there’s only one group who will end up paying more – it will be the renters, or the people who are seeking to buy a home because there’ll be less homes built. That is absolutely, unequivocally correct. And the idea that we don’t tax housing enough in this country is crazy. Housing in this country is taxed far too highly, and so any proposal to tax it more, in the end, will just hit renters, will just hit first time buyers and make it even harder to own a property in this country and get ahead and would be a real handbrake on aspiration.

Raf Epstein: Just before I let you go, I’m pretty sure your family background is Lebanese. I just wonder, like, how are you feeling about what’s going on there?

Michael Sukkar: Well, it’s it’s heartbreaking because, you know, Lebanon is a wonderful country that has been used by many of the powers in the region as a proxy for their own battles. And sadly, Hezbollah, a terrorist organisation, is there doing the bidding of Iran from Lebanese soil. And they have been attacking Israel. And Israel is very rightly seeking to stop those attacks. And in doing so, Hezbollah has embedded themselves on Lebanese soil. And for your listeners who don’t follow Middle Eastern politics closely, Raf, I’d say Hezbollah is not there doing the bidding of the Lebanese people, they’re doing the bidding of the mullahs in Tehran, and it’s the innocent Lebanese who are suffering the consequences. So, I think many Lebanese are really hoping that the Israelis can deal with this terrorists organisation, Hezbollah, and hope that out of all the tragedy of this situation, that on the other side, Hezbollah is a lot weaker and hopefully destroyed altogether because it has absolutely destroyed Lebanon and the Israelis have every right to defend themselves, given that Hezbollah’s been bombing them, and civilian populations across the border.

Raf Epstein: Michael Sukkar, I need to leave it there. Thank you for your time.

Michael Sukkar: Good on you, Raf.

Raf Epstein: Shadow Housing Minister. He is the Liberal MP in the seat of Deakin. What do you think? Give me a call. What do you make of what he had to say?

ENDS