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The Govt's Investor Taxes Will Make the Housing Crisis Worse | Senator Andrew Bragg Warns · The Follio Property Podcast

• 0:00
  The Shadow Housing and Homelessness Minister Andrew Bragg has had $10 billion to build 17 houses in Canberra, so they're making the housing problem worse.
• 0:07
  This has been one of the greatest failures in public policy.
• 0:10
  Nearly $2 trillion of real estate almost wiped off, right?
• 0:13
  So they've created so much uncertainty.
• 0:14
  The government was going to propose almost $80 billion in new taxes on everything to solve a housing crisis problem.
• 0:21
  You've had 1.5 million people come into the country over the last four years, and you've only built half a million houses.
• 0:26
  First home buyers applications are down 20, 30%.
• 0:28
  I mean, in Sydney, you could be looking at up to 200 bucks a week.
• 0:32
  Insolvencies, the builders are leading the insolvencies in Australia, so the fundamentals of the system are bad.
• 0:37
  Pushing our most vulnerable into negative gearing.
• 0:39
  On every metric, it's been a disaster, and Labor has proven that they hate investors more than they want to fix the housing crisis.
• 0:47
  What is the solution?
• 0:48
  Because there's no confidence in the Liberal Party.
• 0:49
  not under Labor, but under us, they've got at least a chance.
• 0:55
  You're listening to the Folio Property Podcast.
• 0:58
  I'm Rhys Bettle and I'm here each week with my co-host, Lachlan De La Hunty.
• 1:02
  Welcome big guests today.
• 1:04
  We've got Senator Andrew Bragg.
• 1:05
  I want to get into the budget first of all, touching on housing, supply, affordability, and productivity.
• 1:14
  He said off air coming in here, there's no questions that can't be asked.
• 1:18
  He will answer honestly and tackle the big, hard-hitting questions.
• 1:21
  So I'm looking forward to this chat.
• 1:22
  Welcome.
• 1:23
  Thanks, guys.
• 1:24
  Let's get into it.
• 1:24
  I mean, there's a range of topics we want to get through with you today, just someone with your caliber and having the ear on the ground as well.
• 1:30
  But let's talk the budget, I guess, or the current landscape.
• 1:35
  We are a property podcast, so we're naturally going to look into a lot of property topics here.
• 1:38
  But what was your opinion on the budget in May and the aftermath, I guess, of what's happened with the property market?
• 1:45
  Well, I think most people found it very confusing that the government was going to propose almost $80 billion in new taxes on everything to solve a housing crisis problem.
• 1:56
  And what we've seen since the budget is the tax on everything is damaging investment, but the taxes on housing are also damaging housing and property.
• 2:04
  So you're saying...
• 2:05
  fewer home loans to unoccupiers, you're seeing higher rents, and you're seeing fewer houses being built.
• 2:12
  So those are the facts.
• 2:15
  And so, so far, you have to say it's been a massive failure.
• 2:18
  I mean, we've looked at some of the data.
• 2:20
  The interesting one there is the budget did seem, well, the agenda that was being pushed was to help younger Australians give them a go, but the data we're tracking from banks, lenders, mortgage aggregators, first-time buyers applications are down 20%, 30%, depending on where they are.
• 2:36
  So you're not seeing that immediate impact and then would love to get your opinion on the first-time buyer scheme that was released back in October.
• 2:44
  A lot of these first-time buyers now have a negative equity too.
• 2:48
  Well, I mean, you're not going to get more houses by increasing taxes on them.
• 2:53
  I think that's always been the economic orthodoxy.
• 2:55
  I guess the question is, why did the government think it could do this?
• 2:59
  I imagine they thought that it would help them politically to look like they're trying to rebalance the system.
• 3:05
  But ultimately, now we've had four months since the budget, you can see that the numbers are in.
• 3:10
  On every metric, it's been a disaster.
• 3:12
  And a house in Australia is already very heavily taxed.
• 3:16
  So the government really, I think, have embarrassed themselves again here.
• 3:22
  And this is one of the reasons why we've pledged to wind back the taxes if we win government, because negative gearing, CGT changes, they've been...
• 3:33
  And ultimately, I think Labor has proven that they hate investors more than they want to fix the housing crisis, because not only have they introduced the new taxes on capital gains, but also...
• 3:49
  the banning of negative gearing for certain properties.
• 3:52
  But they've also, of course, banned SMSFs from borrowing to invest in a property.
• 3:56
  So they really, really, really hate individual investors.
• 4:00
  And when you destroy sentiment like the budget did, it impacts everyone.
• 4:06
  So now everyone's, the people they were trying to apparently assist in the first-time buyer market,
• 4:11
  Well, they're dictated by sentiment, right?
• 4:13
  They're not going to go and try to catch a falling knife and buy in a market where prices are coming off nearly $2 trillion of real estate almost wiped off, right?
• 4:22
  So they've created so much uncertainty.
• 4:23
  The question I have for you, the knowledge or I guess the information we were given around the changes to negative gearing…
• 4:31
  and capital gains, particularly negative gearing, that was brought up maybe four weeks before budget.
• 4:37
  They kept it behind closed doors and obviously didn't speak to people in the industry.
• 4:42
  When would they have had knowledge about these significant changes?
• 4:45
  Because it's sort of setting up the question.
• 4:47
  In October, they brought about the 5% deposit game, which they're going to hand out.
• 4:52
  Essentially 95% loans, that's what it is.
• 4:55
  Let's go out to our most vulnerable who haven't proven that they can save a dollar and haven't proven that they can pay back debt.
• 5:00
  Let's give them 95% of debt and there's been about 300,000 of those loans and then let's shock the market six months later to 10%, 15%, 20% falls, pushing our most vulnerable into negative gearing.
• 5:15
  If that's the case, did they know about these changes that they were going to embark on in May and then set up the first-time buyers' plan
• 5:22
  Like they have?
• 5:23
  I think you're giving them too much credit for being strategic.
• 5:26
  I think that effectively they are very incompetent.
• 5:29
  It's a bit like for your older listeners, they might remember the show called Fawlty Towers where people run around like idiots basically running in a very bad hotel and,
• 5:40
  So they've had three policies in housing.
• 5:42
  They've had a housing future fund, which has been a disaster.
• 5:45
  They've had the 5% deposits, which they removed all the means testing on and the place caps.
• 5:51
  And then they had the taxes.
• 5:52
  Now, the taxes and the 5% deposit scheme, of course, work against one another.
• 5:59
  But, look, at the end of the day, this might not be all that politically sexy, but we are in a housing supply crisis.
• 6:06
  So you need to be building about a quarter of a million houses in Australia each year.
• 6:11
  This year we'll be lucky to get $170,000.
• 6:13
  We used to get $200,000.
• 6:15
  So the taxes alone were going to suppress supply by $35,000.
• 6:20
  And that was in their documentation.
• 6:23
  That's in the budgets, right?
• 6:24
  So you've got to think to yourself, why would I want to reduce housing
• 6:28
  the housing supply by one house, let alone 35,000 houses.
• 6:32
  Like it just seems to be an insane thing to do.
• 6:34
  And as I say, you've got to ask yourself why, because they have all these people working for them in the treasury.
• 6:39
  They've got their own political spinners and stuff.
• 6:41
  I believe the reason they did it was because they thought it was going to be popular with young people.
• 6:45
  But ultimately what's happened is the orthodoxy of economics has shone through that if you increase taxes on something, you get less of it.
• 6:57
  And less houses or fewer houses, I should say, means higher rents, less affordability, blah, blah, blah.
• 7:04
  Yeah, and so those that they're trying to protect, which are those younger demographics, instead of paying an extra $2 a week, they're paying closer to $30 a week increase in rents.
• 7:13
  If they're lucky.
• 7:13
  Yeah.
• 7:14
  I mean, in Sydney, you could be looking at up to $200 a week as projected by the NAB.
• 7:19
  It's insane.
• 7:20
  Being a shadow housing minister, you've had your ear to the ground long before the carnage of the last 12 months in terms of what's some of the manoeuvres that the government has pulled over the last 12 months.
• 7:34
  Where did you see the property market?
• 7:36
  Was there a correction that needed to be had, but the levers that have been pulled have been incorrect?
• 7:40
  Or from your standpoint, business as usual, from an investment standpoint?
• 7:45
  Look, I've talked about this idea of an ambition for housing to be cheaper in Australia, which has been controversial.
• 7:54
  But what I meant by that is you build out more housing, you have more supply, and prices moderate.
• 8:01
  You get more affordability.
• 8:04
  You don't do it by smashing the market with more taxes, which might result in you having lower prices, but you have all the other bad things that come with that.
• 8:11
  High rents, fewer home loans, fewer houses overall.
• 8:15
  So there are different ways you can achieve price reduction.
• 8:20
  There's a sensible and sustainable way, and there's a crazy kind of socialist way of doing that.
• 8:27
  And so...
• 8:28
  My projection would have been that you could have price moderation and affordability increasing if you build out the homes.
• 8:36
  Now, as I say, we used to get 200,000 houses a year.
• 8:41
  Now we're only going to get 170,000 houses this year if we're lucky, and we need a quarter of a million.
• 8:48
  Now, meanwhile, on the demand side, you've had 1.5 million people coming to the country over the last four years and you've only built half a million houses.
• 8:57
  So that's been pretty ugly.
• 9:01
  You don't have to be an economist to work out the imbalance between supply and demand.
• 9:04
  But they are the two.
• 9:06
  If you look at a property market, what drives property?
• 9:08
  It's supply versus demand.
• 9:10
  So by increasing supply, you're right, you would create a more affordable market.
• 9:13
  But on the demand side, that's the other factor.
• 9:16
  What's ironic is that if you go back over the last 20 years, in a Labor government environment, we see significant house price inflation because they're so pro-migration.
• 9:26
  Which tells you that in the medium term, I imagine the prices will continue to grow in the medium term because the fundamentals are so bad in the housing system.
• 9:35
  So it's expensive to build a house, way too expensive.
• 9:38
  All the houses are gold-plated, all the new ones.
• 9:42
  you've got the CFMEU and all the corruption issues, you've got the new taxes.
• 9:46
  It's extremely expensive.
• 9:48
  Insolvencies, the builders are leading the insolvencies in Australia.
• 9:51
  So the fundamentals of the system are bad, okay?
• 9:55
  And migration is still running pretty strongly.
• 9:58
  So I'm not a house price forecaster, but my sense would be that we're looking at price pressures returning over the medium term.
• 10:06
  But just to go back to the point you made before about
• 10:09
  the budget, yes, it was a secret.
• 10:13
  And budgets are always a secret.
• 10:15
  That's not unusual.
• 10:16
  But because they didn't consult with the industry, they buggered up the tax definition.
• 10:21
  So the Treasurer would say, well, we've given tax concessions to new builds.
• 10:26
  But the new build concession is only of limited value because you want to sell that house eventually.
• 10:33
  And so they destroy the secondary market.
• 10:35
  So if they'd consulted with the property sector, they would have known that information because they didn't consult, they didn't know the information, or maybe they're too stupid to have factored that in or too incompetent.
• 10:50
  Yeah, and that's reality.
• 10:51
  All these investors now that they're trying to push won't have a secondary market because they don't get any of the tax benefits that the so-called investor gets today.
• 11:00
  But I'm sure Rhys will lead into it.
• 11:01
  But what is the solution?
• 11:02
  Because there's an argument that suggests that Liberal, you guys have had arguably the best opportunity to take market share away from an incompetent government but haven't been able to do so because there's no confidence in the Liberal Party.
• 11:14
  Yeah, so we've had a pretty rough period.
• 11:17
  There's no doubt about that.
• 11:18
  I think we had a disappointing period in government which concluded in 2022.
• 11:24
  And I think over the last four years, we've been engaged in a lot of internal discussion.
• 11:31
  And now it's very important that we're able to present a coherent way to cutting the cost of housing, to improving affordability, getting supply moving,
• 11:45
  The other parties, the small parties, the independents, they've got no real prospect of ever fixing these things.
• 11:51
  So I feel a great sense of responsibility, which is why we've already developed a few policies like cutting back the construction code, aligning houses.
• 12:00
  That's a 2,000-page document that probably can produce the same outcome in 30, 40 pages, right?
• 12:06
  That's right.
• 12:07
  The aligning housing to migration.
• 12:10
  We're looking, hopefully, to cut some more taxes in this area, rolling back Labor's taxes.
• 12:15
  So effectively, what it comes down to is we believe that the cost of building is too high.
• 12:21
  There are too many taxes.
• 12:22
  It's too complicated.
• 12:23
  It's too hard.
• 12:25
  We need to see a supply-side revolution to fix the nation's housing crisis.
• 12:30
  That's what we've got to make sure that we can explain carefully over the next 18 months so that we can win back the confidence of the Australian people because people are relying on us to be better than we have been in the past.
• 12:41
  I feel that.
• 12:41
  I get that.
• 12:42
  And we're working very hard.
• 12:44
  18 months, that's a long time in politics, I'm sure.
• 12:48
  So a lot can go right, a lot can go wrong.
• 12:50
  My concern is the Labor government, come the next budget, are going to have a lot of forecast earnings from all these taxes and then they're probably going to give it away like they do to the voters.
• 13:00
  Is that sort of the gut feel of how this all plays out and probably why they delivered what they delivered this year in budget night, not next year?
• 13:08
  I think they're going to try and bribe the electorate for sure, but we're not going to be going along with the bribes because we know that people can now see through them.
• 13:16
  They can see them for what they are.
• 13:19
  And I think we need to credit the Australian people with having a decent understanding of where this country is going and that we have to be responsible and so that the days of
• 13:33
  giving away money, are over.
• 13:35
  Like, there's so much waste in the budget.
• 13:37
  People know that there's waste and corruption.
• 13:40
  And I'd say one of the things that really upsets the Australian public is all these patronising, ridiculous videos that the Prime Minister does when he talks on social media about complicated things and he imagines that everyone's an idiot.
• 13:53
  I mean, people are quite intelligent.
• 13:54
  People have been able to get access to more information than at any time in our past through...
• 14:02
  AI through accessing podcasts like this, I think people are well informed and they know that the government's got its backside out of its pants when it comes to its budget.
• 14:10
  It needs to rein in the expenditure.
• 14:13
  And so we'll be playing our part as responsible people and we'll be arguing to cut taxes, but also to cut spending.
• 14:20
  My concern, and I'll be interested to hear your thoughts on this, is obviously there's been a surge or there's been more activity from One Nation, which is creating lots of conversations from the outset and could be very wrong in this, but it feels like Liberal and One Nation –
• 14:38
  essentially going for a similar voter and it's my concern is they're going to become in competition and and you know it sort of leaves labor uh i guess a run to the finish line what's your thoughts around that it's it's it seems there's some similarity in policy that liberal and one nation are more aligned in comparison to labor and there could be a divergence because of that
• 14:58
  Well, I mean, we're not aligned with One Nation in any way.
• 15:02
  I mean, I accept the argument that they make some comments that may be similar to us on the economy.
• 15:10
  but I think that's pretty much where it ends.
• 15:13
  We need to do our own ambitious body of work to win back the support of the Australian people.
• 15:18
  We're not seeking to be a coalition with other parties.
• 15:21
  We're seeking to be a majority government on the idea that we will cut taxes, cut regulation, cut spending.
• 15:28
  Migration.
• 15:30
  Of course, that's part of our agenda as well, but to a responsible level because, as you know, as a West Australian, we need a lot of people to be working
• 15:39
  ag in mining, seasonal work.
• 15:42
  So this is a very carefully calibrated body of work that needs to be undertaken here.
• 15:49
  But ultimately, we want to win the election on the basis of our economic credentials, that we can fix the budget, fix the economy.
• 15:57
  We're not seeking to work with anyone else.
• 15:59
  We think that we can do that.
• 16:00
  We've got the runs on the board in the past, and we can do it again in the future.
• 16:05
  I want to just go back to the supply because it feels like – I was chatting to Lachlan before we caught up today and I said I feel like the values are very similar with us in terms of it's not a demand – as much of a demand issue.
• 16:18
  It's more of a supply issue.
• 16:20
  And you've come out and said like the only way to get out of this housing crisis is to build our way out.
• 16:25
  Now, you did – both of you guys just referenced about this building code with 2,000 pages there.
• 16:31
  I'm sure a lot of our listeners have no idea about this or even understand what goes within that remit.
• 16:37
  But what are some key things out of that code or that book that you think would be easy to remove and A, make building – I guess building a house cheaper and quicker as well?
• 16:48
  So if you want to build a house on the outskirts of Melbourne, Sydney or Perth, you have to build the house as if you are disabled and as if you want a seven-star building.
• 16:59
  Now, for a lot of people who want to buy a home and land package and build a house, it's their first house, like they haven't got a lot of packed cash and they want to just build a reasonable house that's safe and secure and warm but doesn't have to be a super-duper house.
• 17:14
  It's their first house.
• 17:16
  So...
• 17:17
  We want to pare it back so you've still got to have insulation, you've still got to have windows and doors, but you don't have to have disability ramps, you don't have to have solar panels or whatever else.
• 17:30
  We want to have it as a standard house that's reasonable and good and safe and secure but it's not the Taj Mahal.
• 17:37
  And in your modelling, what differential does that look in terms of a build time or even a cost perspective?
• 17:44
  Well, we think we'll knock about 70 grand off the cost of a new house.
• 17:48
  It's significant.
• 17:49
  It's substantial.
• 17:50
  It's substantial.
• 17:50
  So the builders just want to build good houses.
• 17:55
  They don't want to build the Taj Mahal every time they have to build a new house.
• 18:01
  It's also the safety requirements.
• 18:03
  Has this been considered?
• 18:04
  A good example is requiring scaffolding on a single level dwelling has been introduced on the basis of this code, which for most builders, you speak to them on the ground.
• 18:14
  It doesn't create any additional safety benefits, but the cost of that scaffolding might be $12,000, $15,000.
• 18:21
  It adds a cost straight to the consumer, but obviously safety is priority number one and
• 18:28
  No one ever wants to see anyone get hurt in the workplace.
• 18:30
  But have you looked at that as well in terms of pulling back some of the red tape in terms of what's deemed compliant versus, okay, let's leave it to the people that specialize this to make their own sites and responsibility safe?
• 18:44
  Yeah, so the point of this is going to a principles-based approach so that the builder can, as long as they work in concert with the code, they can achieve the outcome as they see fit.
• 18:56
  It's not going to be prescriptive as it is today.
• 19:00
  So this has been a huge failure of public policy because all these vested interests have been able to go into a room and effectively make this complicated and convoluted and expensive.
• 19:09
  And I just think it's fundamentally illiberal and I want people to have choice.
• 19:15
  If you want the Taj Mahal, you can have it.
• 19:17
  And if you want a good, safe, secure house, you can have that as well.
• 19:20
  So it's giving people more options, more choice.
• 19:23
  We also, of course, have to get rid of the CFMEU off building sites.
• 19:26
  It took me through that because it's talking about the corruption, the billions of dollars that that creates –
• 19:31
  So firstly, explain what the issue is for those, particularly some Western Australians.
• 19:36
  The unions aren't as present over on the west as they are on the east and how do you fix it?
• 19:40
  So if you were in Melbourne, you would find that a worker on a housing site could get three times the amount of money they get on the big build.
• 19:49
  So the big build is all the big Victorian, and it's been proven to be a corrupt program.
• 19:54
  CFMU run it.
• 19:55
  They run the work sites.
• 19:57
  They steal the money.
• 19:58
  They add a huge amount of money for people
• 20:01
  No reason.
• 20:01
  But how does that happen?
• 20:02
  Just to play out?
• 20:03
  Well, because Victoria has become like a failed state, which is why they need a change of government down there.
• 20:07
  Yeah.
• 20:07
  And the problem with the federal government is they're looking more and more like the Victorian state government.
• 20:11
  So we need to save Victoria, we need to save Australia from this corrupt model.
• 20:17
  How does it play out?
• 20:18
  Let's just, for an average part, how could our government get this so wrong?
• 20:23
  How does the corruption actually take place with the union?
• 20:24
  So what they do is they say, we're going to have all these new roads and railway projects,
• 20:29
  And then they let the CFMEU go onto the sites and then they control the sites.
• 20:33
  And then they do enterprise agreements with the CFMEU.
• 20:37
  And in those enterprise agreements, they include provisions where, you know, a lollipop person will get paid 300 grand a year, right?
• 20:46
  And there'll be 17 RDOs a week or whatever.
• 20:50
  Like all these ridiculous things that in the real world –
• 20:53
  people wouldn't be able to afford to proceed.
• 20:55
  Now, they get away with it because it's public money.
• 20:58
  And so public money, frankly, isn't treated as well as it should be.
• 21:02
  If it was your own money, you just wouldn't build.
• 21:04
  So one of the things that you would know about the property sector is it's becoming uneconomic to build, which is why builders don't build houses.
• 21:11
  They do other things with their money.
• 21:14
  But the state is captured by this scheme, which is why we've been calling for a royal commission into this completely discredited program, where federal and Victorian taxpayer money has been stolen by the CFMEU.
• 21:26
  So my point is that they inflate the cost of construction because the builders then have to match the costs of the labour on the big build sites in Victoria.
• 21:37
  So that's big.
• 21:38
  And then your private guys go, well, I'm trying to get a chippy out here to fix a roof.
• 21:42
  And well, we're on the big bill.
• 21:44
  We're getting paid 300 grand a year to hold a side where you can come in, you're going to have to work hard and you're going to have to work 10 hours a day and we can only pay 110.
• 21:51
  So you're losing good quality labor because of the corrupt spending that's happening in the bigger projects.
• 21:57
  So if you go back and you look at all the Productivity Commission reports, they would say to you in detail that construction productivity is in the toilet.
• 22:04
  I mean, productivity in Australia is anemic or going backwards, but it's really down in building and construction.
• 22:10
  And the CFMEU is one big factor.
• 22:12
  The regulatory burden is another big factor.
• 22:14
  We talked about that with the code.
• 22:17
  And so you can't ignore or paper over the productivity issue.
• 22:21
  I understand that people don't want to discuss productivity because it might not be all that exciting.
• 22:26
  But, like, if you're building fewer houses for the same money you were providing 10 years ago, then that's also part of the problem.
• 22:34
  So you've got to have a complete approach to this.
• 22:37
  You look at the tax.
• 22:38
  the regulation, the labour force, so you've got to bring in more foreign tradies.
• 22:43
  Like it's not just one thing you've got to do to fix housing.
• 22:46
  There is no civil bullet.
• 22:47
  There's a number of things that needed to be done.
• 22:49
  First time I've actually heard that, and thank you, because it is.
• 22:52
  It's a multi-tiered problem.
• 22:55
  Just to go back to your point before, though, are we going to see a Royal Commission into this issue, this fraud that you're talking about?
• 23:02
  Well, look, I mean- It needs to happen, clearly.
• 23:04
  We've got a Victorian government on its knees that hopefully could be a change of an election very soon.
• 23:08
  Well, look, the Victorian Labor government, which is on its knees and about to have an election, they've announced their own Royal Commission into their own government.
• 23:16
  I mean, that's like, you know, that's like Dracula running the blood bank and then saying, I want to have an inquiry into the blood bank.
• 23:22
  I mean, no one takes that seriously.
• 23:25
  If the Liberals win in Victoria, they'll have a Royal Commission.
• 23:28
  We may have one federally as well.
• 23:30
  We have to discuss that further.
• 23:32
  But I think if you want to get the CFMEU out of the building and housing system,
• 23:39
  work, then you're going to have 30% cost reduction according to the master builders.
• 23:45
  So what they're saying is- It's massive.
• 23:47
  That's significant.
• 23:48
  So wherever they're on building sites, it's a 30% premium.
• 23:52
  So I've met with builders in Newcastle here in New South Wales, which is in my electorate, where they verified that 30%-
• 23:59
  additional costs from the CFMEU.
• 24:02
  In Queensland, where they've been active, they're trying to chase them out.
• 24:05
  They're having a Royal Commission in Queensland into this as well.
• 24:08
  So it's a big issue because it's pushing out the prices of housing at the time where we're trying to reduce the cost so we can have more houses.
• 24:16
  It almost feels like New York in the 80s when they were trying to get rid of the mafia.
• 24:21
  It's like a mafia.
• 24:22
  100%.
• 24:22
  Yeah, yeah.
• 24:23
  And so they have hugely deep links into the Labor Party, into the Labor governments, and then they back it all up with the CBUS Superfund being their fund.
• 24:33
  I mean that's obviously a fund which is owned by the CFMEU.
• 24:39
  and others.
• 24:41
  And so it's all part of a virtuous circle between Labor, the unions and the big super funds, which I just think needs to be crushed with a serious Royal Commission.
• 24:52
  See, because what you just said then, and I think our listeners will want to understand more, you hear a little bit that, you know, the government's now taking control of our super and, you know,
• 25:02
  you've taken it out of the hands of mum and dads to look after their money and can probably do a better job themselves through investing in a self-managed super fund.
• 25:10
  Why does our government currently want these bigger super funds to control their money?
• 25:14
  Because you just said it right then.
• 25:16
  Who's behind it?
• 25:17
  Well, I mean, every year the super funds transfer $40 million off to the unions and the Labor Party.
• 25:23
  I mean, these are huge.
• 25:24
  The super funds have become the underwriters of the Labor Party movement because as union memberships have dropped off,
• 25:32
  There is a lower amount of financial transaction that happens between the unions and the Labor Party itself.
• 25:38
  And so their big cash cow has become the super funds.
• 25:42
  Well, the super funds hand over the money.
• 25:44
  To the unions and then the unions give it to the Labor Party.
• 25:46
  And then if you go through and you find –
• 25:48
  Go look at all the boards and the super funds.
• 25:50
  I mean, a lot of them are retirement homes for Labor Party politicians.
• 25:54
  So there's so many of them.
• 25:55
  I mean, Wayne Swan's been on CBUS for years.
• 25:57
  There are heaps of them actually.
• 25:59
  So that's why they're naturally incentivised because obviously we saw the rise of self-managed super funds increase in the last two years and obviously people are taking, you know,
• 26:08
  money out of the big super funds and saying, look, I want to go and buy an investment property.
• 26:11
  I want to control it.
• 26:11
  I think I can outperform the market.
• 26:13
  And now the Labor government are going, well, hang on.
• 26:15
  This is what's feeding the retirees of the Labor government or the unions.
• 26:21
  And so they want to control that money.
• 26:23
  They want to control that super.
• 26:24
  So we can't take it out ourselves, essentially.
• 26:27
  They love this model because it suits them financially and it also is a very paternalistic approach.
• 26:32
  Now, the self-money super funds, which give people choice to do whatever they want, is obviously a threat to that.
• 26:39
  And so you've started to see massive outflows in terms of the big accounts moving out of this industry of funds into the SMSFs.
• 26:48
  Now, they've tried to hobble that by banning the borrowing to buy laws, which allowed the SMSFs to borrow to purchase property.
• 26:59
  So that wasn't a decision that was grounded in any evidence.
• 27:04
  It wasn't anything they consulted on.
• 27:07
  It was purely designed to help their friends keep market share.
• 27:12
  So they wanted to help, in other words,
• 27:15
  Labor wanted to help Australian Super, CBARTS, HESTA, keep their members in their fund.
• 27:20
  And so, as I say, Labor hate investors more than they want to help the housing crisis because Jim Chalmers, the Treasurer, said it would affect about 4,000 houses a year.
• 27:33
  So 4,000 fewer houses, but the industry data shows it's more like 16,000 transactions a year in SMSFs.
• 27:40
  So as I say, why would you want to have one less house?
• 27:43
  Why would you want to have 35,000 fewer houses?
• 27:46
  Why would you want to have 16,000 fewer houses in a housing crisis?
• 27:50
  This just seems like one big Ponzi scheme where the money flow is essentially going up the chain through to the super funds, which then goes to the unions and so on.
• 28:00
  And they're creating more debt and it sounds like filling their pockets at the same time.
• 28:04
  I mean, I just think it's not the way to go.
• 28:05
  I mean, I'd give people more choice, more agency.
• 28:08
  As I say, I don't think people are stupid and, you know, super isn't the only way to save either.
• 28:14
  I mean, people are smart and canny but the government have gone out of their way to destroy other alternatives for
• 28:21
  Rent investing is now not a strategy for many young Australians because you don't get the negative gearing benefit and that's sort of how I got on the property ladder, how you got on the property ladder, how many of Australians have taken that away.
• 28:31
  But how can the Liberal government change what is – it's a downward spiral.
• 28:36
  We're going into times that the futures never look so bleak and we're on the verge of a rate rise, cost of living's never been worse.
• 28:47
  Australians are really feeling the pitch and my fear is it's going to get worse before it gets better.
• 28:51
  What are you going to propose?
• 28:52
  I think it's going to get worse before it gets better.
• 28:53
  I agree with that.
• 28:54
  And I think the next election, which is in 18 months, that's a big opportunity for us to right the ship.
• 29:01
  And that's why we're very focused on trying to develop all those policies now so that people can see them.
• 29:06
  So there'll be more policy announced up front rather than left to the last minute and people will be able to see, well, the Liberals have got a plan to fix housing, to fix the economy, to fix small business.
• 29:19
  and I'm hoping that we can win the support of people.
• 29:21
  And can you give us any sort of, I guess, a snapshot of what some of those policies may look like?
• 29:27
  Well, the direction of travel is fewer taxes, less complexity.
• 29:30
  So I'm whining some of that negative gearing.
• 29:32
  I'm whining that capital gains.
• 29:33
  So negative gearing changes will go into the bin.
• 29:37
  So revert back to where we were pre-May.
• 29:39
  Capital gains tax changes go.
• 29:41
  So back to the old model?
• 29:43
  No more minimum 30%.
• 29:44
  That's all gone.
• 29:46
  Good.
• 29:46
  So the trust stuff.
• 29:47
  Then we want to go further, but that's still under...
• 29:51
  discussion.
• 29:53
  Then we cut back some regulation.
• 29:54
  A building code.
• 29:56
  Yeah, and then try and look to do some other stuff for small business because we think that small business is the engine room of the economy.
• 30:02
  The government hate that, of course, but we think there's more we can do for them.
• 30:04
  So we're consulting at the moment on a small business act, which would be like one definition in law of small business just to make it easier because we take the view that it's not fair for small business people to work all day in the shop and,
• 30:15
  And then at night time, do government compliance.
• 30:17
  So we want to try and make their lives easier because, frankly, anyone who works in small business just feels like the government just kicks them in the ass all the time.
• 30:24
  Tax them, compliance, tax compliance.
• 30:26
  Just surrenders, right?
• 30:26
  And you're like, well, what's the point?
• 30:28
  I mean, I talk to – there are so many different forms of small business, as you know, and everyone I talk to is just despondent.
• 30:35
  They just feel like they work their asses off and they get nothing.
• 30:40
  That's true.
• 30:41
  We're a small business race and without a doubt, it's just you're fighting an uphill battle every day, every week, every month.
• 30:47
  Yeah.
• 30:47
  So, like, I guess, look, our message is, you know, we love small business.
• 30:51
  We want people to have a go.
• 30:52
  We don't want people working for the government or big companies.
• 30:55
  We want to have a dynamic economy.
• 30:56
  And you think about...
• 30:58
  the opportunity for Australia from AI.
• 30:59
  I mean, we're not going to be in the arms race with China and the United States on who's going to be the next open AI or deep seek, but the opportunity for Australia is going to be developing applications that can be used by people and used by companies like Afterpay or Canva.
• 31:16
  And unless we have a competitive economy that's got competitive tax settings, competitive business settings.
• 31:23
  Incentives.
• 31:24
  Right?
• 31:24
  We're stuffed.
• 31:25
  Right?
• 31:25
  We're going to become a backwater.
• 31:26
  Right?
• 31:27
  So this is so important that we don't lose this opportunity because the world is about to go faster than it's ever gone before.
• 31:33
  Yeah, and all the smart minds of Australia are exiting in droves, right?
• 31:37
  You know, the amount of conversations I have now with, you know, other entrepreneurs that say we're trying to find ways to get out of Australia.
• 31:42
  Well, that's not what we want.
• 31:43
  We want to keep the smart minds and we want to keep those –
• 31:48
  wealth books in the country, right?
• 31:50
  Yeah.
• 31:50
  Because they employ a lot of people.
• 31:51
  The risk is that the best Australian ideas will be commercialised in Tel Aviv, Singapore or Silicon Valley, and they won't be in Melbourne or Sydney.
• 32:01
  That's the risk we're sitting on right now.
• 32:02
  That's a sad thought.
• 32:02
  With this crazy tax and regulatory system we've got.
• 32:05
  It's a quagmire.
• 32:06
  What about, you know, you've spoken a lot there on productivity and supply, which we're very passionate about as a business and also as a community from our podcast perspective.
• 32:17
  But we've got to talk about demand as well.
• 32:19
  So what I'd love to get your opinion on is, you know, migration, where we currently sit.
• 32:25
  I know you're pretty pro-curbing some of that migration.
• 32:29
  What's your opinion on how far we've come now and where would you like to see migration levels at?
• 32:36
  Well, if you want to align housing and migration, then you need to have a range of about 170,000 to 180,000 people coming in the country a year.
• 32:45
  That's where you need to be.
• 32:46
  For today's building rate?
• 32:48
  Yeah.
• 32:49
  If you want to close the migration housing gap, then you can do it over four or five years.
• 32:55
  That's where you need to be.
• 32:56
  So-
• 32:56
  We averaged 175,000 under us, under the coalition when we were in government.
• 33:02
  Under Labor, it's averaged 400,000 people coming in the country, so more than double.
• 33:07
  So we need to halve it, halve and a bit less where Labor has been.
• 33:12
  Because people could feel it in the infrastructure, the services, the housing.
• 33:15
  Put pressure on everything.
• 33:17
  Yeah.
• 33:17
  So we've got to fix that.
• 33:18
  I think in terms of demand side measures, like our housing measures, I think we've got to be very careful.
• 33:23
  Like the 5% deposits, I think they need to be
• 33:25
  means tested and need to be targeted for lower income earners only.
• 33:29
  Like the idea we're going to give them to these people who are earning more than 600K is just insane and just wasteful use of taxpayer funds.
• 33:37
  I think, look, there is a case for looking at how a super can help people get into a house.
• 33:42
  Like, you know, if you think about the psychology of, you know, Maslow's hierarchy where you've sort of got to cover the base.
• 33:49
  I mean, the most important thing for people who are retired is to have a house.
• 33:54
  So if you are a retired renter, you're going to have a very tough retirement.
• 33:58
  And the biggest macro trend that I'm seeing now over the next 20 years is the influx or the growth of retired renters.
• 34:07
  Like we're going to become a nation of a lot of retired renters, close to a million.
• 34:13
  retired renters over the next decade.
• 34:16
  So we've got to arrest that decline.
• 34:18
  I don't want to see a situation where we've got people who are renting in retirement, but they've got a lot of super.
• 34:24
  That's not right.
• 34:25
  It needs to be...
• 34:28
  So you're talking about using super as a potential deposit for people to get into the market, right?
• 34:32
  Something that we're working through.
• 34:33
  I think it's a really important debate to have.
• 34:35
  I mean, of course, every time we talk about this, the vested interest coming out of the woodwork because the super ecosystem pays so many people, right?
• 34:44
  There's so many people hanging off it.
• 34:45
  You've got the asset consultants, the fund managers, the accountants, every spiv in town, right?
• 34:52
  Loves it.
• 34:52
  And so trying to argue for a more reasonable approach.
• 34:57
  is challenging.
• 34:58
  But if you look at other countries like Canada, Singapore, New Zealand, I think we'd all agree they're kind of culturally similar.
• 35:05
  They have superannuation schemes which allow for a house to be part of that.
• 35:09
  So I think it's a reasonable debate for us to have.
• 35:13
  When I flagged this at the National Press Club, Jim Chalmers tried to raise money for the Labor Party on the back of this.
• 35:19
  He sent out a text message saying,
• 35:21
  I wanted to destroy the superannuation system.
• 35:24
  In fact, he said that me and Pauline Hanson are trying to destroy super and so everyone should give him $41 at the Labor Party.
• 35:31
  I mean, what a joke.
• 35:31
  I mean, this guy is the treasurer.
• 35:33
  No wonder the quality of the debate in this country has become like Guatemala.
• 35:38
  I mean, it's a bloody disgrace.
• 35:39
  Childish.
• 35:40
  It's childish.
• 35:41
  So I think when you peel it all back,
• 35:46
  We don't want to be a country where people are renting in retirement, unless that's their choice.
• 35:52
  So aligning the super and the housing policy in some way, I think, is a very important debate.
• 36:00
  What about first-time buyers there?
• 36:01
  You made a comment regarding the limit or the salary bracket for that first-time buyer.
• 36:06
  Had $600,000 been ridiculous coming to a 5% scheme.
• 36:10
  From your perspective, how can we help first-time buyers get into the market, whether that's with a scheme or some of these other levers that you can build?
• 36:17
  By building.
• 36:19
  Like building the supply, like that's the key.
• 36:21
  Everything else is Mickey Mouse.
• 36:23
  I mean, and for a government to go around and peddle 95% loans to everyone, I just think it's reckless.
• 36:29
  It's irresponsible.
• 36:30
  So we won't be doing that.
• 36:32
  Why don't we just do some quick fire stuff actually?
• 36:33
  Okay, cool.
• 36:34
  Just give me quick hands.
• 36:34
  Four minutes quick fire.
• 36:35
  Quick fire, okay.
• 36:37
  Senator Bragg.
• 36:38
  Yes.
• 36:39
  What three things would you change to improve housing, productivity and living standards?
• 36:43
  Okay.
• 36:44
  I would build more houses, I would cut the costs, and I would bring in more foreign tradies.
• 36:50
  Negative gearing, keep or scrap?
• 36:51
  Keep.
• 36:52
  Will the average 25-year-old today own a home by 35, yes or no?
• 36:57
  Not under Labor, but under us, they've got at least a chance.
• 37:01
  Super for housing, sell it in one line.
• 37:04
  The best form of retirement is a house.
• 37:06
  Rates or supply, what matters more for affordability?
• 37:09
  I'm going to go with supply because it's the one thing we can influence, whereas the rates we can't really influence that much.
• 37:14
  What's the most overrated housing supply idea right now?
• 37:17
  That new taxes will make more houses.
• 37:19
  I mean, sounds like la-la land.
• 37:22
  All right, and to close off the podcast today, thanks very much for coming on, Senator Bragg.
• 37:27
  End this sentence.
• 37:28
  The housing crisis ends when?
• 37:31
  Jim Chalmers and Albo get put into the gulag.
• 37:37
  you'd be listening to the following political gulag political gulag