JOHN ALEXANDER MP:
Good morning, and welcome to Bennelong. It’s my pleasure to welcome our Prime Minister and Treasurer to Bennelong and this beautiful development at Putney Hill by Frasers. Some 800 residences being built here and I think it is a great example of the vibrancy of the economy. These homes are being sold off the plan, all bar two of stage one have already been sold and it’s designed for downsizing which is probably appealing to me, actually. So, welcome to you.
PRIME MINISTER:
John, look it is good to be here and it is good to be here in this marvellous new development, which is a sign of Australia being open for business under this Government. But before I talk about today's announcement, I do want to note that there have been very severe storms in south east Queensland. There has been loss of life. First of all, obviously our thoughts and our prayers are with the families of those who have suffered and the Federal Government stands ready to assist the Queensland government under the standard natural disaster arrangements.
I think it's important just to note that while it's good to be here in beautiful Sydney in this new development, there are people in our country right now who are afflicted and we should be thinking of them, as well as doing what we are doing now.
But, yes, this is a splendid new development. It is a sign of a country which is open for business under a Coalition Government, which is pro-business and pro-investment. I really want to stress that this is a Government which is pro-business and pro-investment, and we are certainly pro-foreign investment, but it does have to be the right foreign investment in the right things and we do need to have a foreign investment review system which encourages public confidence that the foreign investment we need really is in Australia's national interest.
And the problem under the former government was that the rules about foreign investment were simply not enforced. Under the former government, the rules against foreign investment in existing residential land, existing residential properties, just weren't enforced. There was not a single prosecution, there was not a single divestment order in the whole six years of the former government.
This Government takes the rules seriously. We believe they are good rules and that they are rules which will be enforced. So, the Treasurer and I are here today to announce that from the end of this year, there will be tougher penalties for illegal foreign investment in existing residential properties. There will be tougher penalties, there will be tougher enforcement, there will be broader enforcement of the rules. Because it is really important – really important – that Australians understand that the foreign investment we need is in our national interest and that means having a good system of rules and ensuring that the rules are enforced.
I want to say thank you to the Treasurer for the work that he's done here. Joe Hockey and I made an announcement a couple of months ago when we released a consultation paper on this subject. We have had extensive consultation. I can say that I think there is broad community support for the announcement that we are confirming today, based on the consultation paper that we put out a couple of months ago.
Again, I want to thank the Treasurer for his outstanding work in this area.
TREASURER:
Thank you, Prime Minister and thank you John for hosting us in your electorate. I join with the Prime Minister in making this announcement. Australia is open for business and when the Prime Minister announced on election night that Australia is open for business, he has delivered because last year there was a 23 per cent increase in the level of foreign investment in Australia.
Now, in the main, overwhelmingly that foreign investment creates new jobs for Australians, it helps to build prosperity for Australians and the outcomes have been significant, you can see them all around us. But we want to make sure that the foreign investment regime is robust and that it is enforced. Now, as a result of the very good work of Kelly O'Dwyer in the House of Representatives, we have responded with a plan that ensures there are proper application fees for foreign investors who wish to invest in Australia, particularly in relation to real estate. But most importantly, as the Prime Minister said, we are going to have a proper enforcement regime that includes penalties as severe as claiming the capital gains made by the unlawful purchase of a property.
We've already issued one divestment order. That property is now in the process of being resold to an Australian after it was unlawfully purchased by a foreign investor. We are investigating a further 100 cases at the moment. A number of people are now coming forward who have participated in unlawful acquisitions. For example, one case in Western Australia involving a property of around $800,000, the foreign investor has come forward, self-identified and now that we are having those people come forward, I am pleased to announce that we are going to have a moratorium so that any unlawful foreign investment in Australian real estate, those foreign investors have until 30 November to come forward and self-identify. They will be forced to sell their properties, but they will not be subject to criminal prosecution by the Commonwealth Government – but they will need to sell their properties.
So, I say to foreign investors: you have until the end of the year to declare yourselves. If you do not come to us, we will come to you because eventually we will find those people that have engaged in unlawful acquisition of Australian real estate and we will prosecute you and we will be very hard about it.
So, these are the things that help to build confidence in the foreign investment regime. They ensure that the laws that are in place are properly enforced and importantly, they give Australian investors and Australian homeowners confidence that they are competing on a fair and level playing field.
PRIME MINISTER:
OK, do we have any questions?
QUESTION:
Is the rate of foreign investment making it harder for Australians to crack into the market?
PRIME MINISTER:
There is no doubt that if we have foreigners illegally coming into the existing residential property market, that is driving up prices. If we keep them out, if all foreigners are doing is adding to the housing stock, that tends to reduce prices, but once foreigners come into existing housing stock that tends to increase prices. So, what we want to do is ensure that illegal foreign investment is not unnecessarily driving up prices.
QUESTION:
In this property here, it's a new property so it's open slather, they could purchase it, but they’d have to pay $5,000?
PRIME MINISTER:
But they have to go through an appropriate regime under the Foreign Investment Review Board. But, yes, certainly this property would be available to a foreign investor because this is a new property. But what we want to do is to maximise the opportunities for Australians to buy a home at the best possible price.
QUESTION:
So, it's not really going to make much difference for people here – Australians – wanting to buy this sort of property because the foreigners will still be competing against them?
PRIME MINISTER:
Except there will be an application fee regime, there will be an application fee regime, and while it will be relatively modest by international standards, nevertheless it is something that is new and it will ensure that we have a strong and robust system with the mechanism for policing.
QUESTION:
How can you say to us we are still open for business if every couple of weeks we have another crackdown on foreign investment?
PRIME MINISTER:
Because as the Treasurer has just said, the Foreign Investment Review Board report which has just been released shows that we have had a 20 per cent-plus increase in foreign investment over the last year. Because foreign investors know that if you play by the rules, and by international standards our rules are pretty open and pretty welcoming, if you play by the rules, there is no more welcoming place than Australia. What we're saying today is that if you don't play by the rules, there will be a tough penalty regime in place and those penalties will be enforced.
QUESTION:
What about real estate agents – are they vulnerable too if they don't report?
PRIME MINISTER:
Well, that’s interesting that you should ask that question, because under these new rules, under this new regime, if you are a third party who aids and abets an illegal foreign purchase of existing residential property, yes, you too will be subject to penalties.
QUESTION:
So, what do the real estate agents have to do going forward?
PRIME MINISTER:
They have to know what the rules are and they have to ensure that as far as is humanly possible, they comply with the rules and they try to ensure that their clients comply with the rules.
QUESTION:
The Victorian government has just announced its own set of regulations. Will this work in tandem with them and anything to say on them?
PRIME MINISTER:
Well, that's a very different issue. That's a very different issue. That's quite a heavy tax change. What we are proposing is a $5,000 application fee for properties under $1 million in value. What the Victorian government is proposing is a 3 per cent tax. This is an application fee regime. It's, if you like, a species of fee for service. What the Victorian government is proposing is a tax pure and simple, so on an $800,000 property, that will be a $24,000 additional tax for a foreign purchaser on top of stamp duty and all the other taxes that state governments levy.
QUESTION:
Why is it so important to move all of this to the Australian Tax Office as opposed to the Foreign Investment Review Board?
TREASURER:
I can answer that. The Foreign Investment Review Board has had very limited resources, in fact they’ve been run down by previous governments. The Australian Taxation Office has very significant compliance resources so they are able to data match, particularly with immigration information. But also importantly data match with state taxation offices to get the best information in the most reliable fashion. So, this is purely about simplicity and ensuring there is not a massive red tape burden associated with the new regime.
QUESTION:
At the end of the day what difference is this really going to make to sort of red hot property markets in Sydney or Melbourne? Interest rates are already low and possibly getting lower.
PRIME MINISTER:
Well, we don't want depress property markets. We want people to be absolutely confident that the rules are being enforced and we want people to be absolutely confident that locals are getting a fair go. So, I'm all in favour of a buoyant property market. But we want to ensure that locals are getting a fair go, that the playing field is at least level and, if possible, slightly tilted towards the locals and that's what we are going to achieve with today's announcement.
QUESTION:
Just on another matter, has the Government dropped its plan to reduce the rate of indexation for the aged pension and instead focussed on targeting wealthier retirees?
PRIME MINISTER:
Well, I'm pleased that you have asked me what is in effect a Budget question, because I want to assure people – I want to assure you – that this is a Budget that will be measured, responsible and fair. It's a Budget that will be good for jobs, growth and opportunity. It will be a Budget which is good for confidence because in the end, everyone should be confident in this country. Yes, we have our problems but by international standards, we are a blessed land and Australians can be confident that this will be a Budget for jobs, growth and opportunity. As for particular Budget items, obviously we've got the Budget itself coming up in ten days and people will have to wait until the Budget itself for those sorts of specific details.
QUESTION:
Laurie Oakes says that you are considering a snap election after the Budget. What is your response to that?
PRIME MINISTER:
I am considering nothing but the Budget and how we can ensure that it is as effective as it possibly can be in delivering jobs, growth and opportunity – that's what I'm considering right now – delivering the best possible Budget so that Australians can be confident that their future is in good hands; Australians can be even more confident about the future post-Budget than they are pre-Budget.
I should say it is my firm intention to deliver on the mandate that the public gave us and when the public elected us, they expected us to govern for three years and that is absolutely what we intend to do.
QUESTION:
Would dropping the index on the aged pension, will that shore up the leadership given it’s very popular amongst the backbenchers?
PRIME MINISTER:
Well, I'm just not going to engage in pre-Budget speculation. What I am going to assure you is that this will be a Budget which is measured, responsible and fair. You would expect a Budget which is responsible, because everything this Government has done since the election has been about building a stronger Australia for the long-term. This is a Government which was prepared to take difficult decisions, very difficult decisions, in last year's Budget but because we were prepared to take difficult but necessary decisions in last year's Budget, the debt and deficit disaster that we inherited from the Labor Party has been more than halved already. If you look at the Intergenerational Report and everyone should be familiar with the Intergenerational Report, everyone who is interested in the fiscal future, the long-term economic future of our country, you will see that Labor was taking us to a southern European level of debt and deficit. Deficits in the order of 12 per cent of GDP; debt in the order of 120 per cent of GDP and Labor's debt and deficit going forward has been halved as a result of last year's Budget and we will continue to build on that strength, that success in this year's Budget.
QUESTION:
Julie Bishop says Australia should move on from the executions – what’s your response to that?
PRIME MINISTER:
Well, look, I very much understand – I very much understand – people's continuing dismay at what happened this week. It really was terrible that these cruel and unnecessary executions went ahead. That said, we do have to respect Indonesia's sovereignty. Their system is different from ours but it is their system and they have a right to their system and our anger and our grief, sadly, is not going to bring those two young men back. The important thing now is not to do anything that would make a difficult situation worse and, yes, in the weeks and months ahead, we will need to restore our relationship with Indonesia because it is a relationship that's very important to our future. It is a country with which we have got good and strong relations. Yes, they have been through a very trying and stressful time over the last few days but I am confident that we will be able to rebuild the relationship. It's important to Australia, it's important to Indonesia and it's important to the wider world that Australia and Indonesian friendship is strong and growing in the months and years ahead.
[ends]