JON FAINE: Lindsay Tanner is the Acting Treasurer and Federal Finance Minister. Yesterday we heard from a lot of people about the impact of the first home buyers grant on the property market. Lindsay Tanner this morning on AM has confirmed that there are to be moves afoot in the Federal Budget about the first home buyers grant. Lindsay Tanner, good morning.
LINDSAY TANNER: Good morning, Jon. I haven't quite confirmed that, but anyway.
JON FAINE: Yeah, well, you all but confirm. Well, what are you saying about the future of the first home buyers grant in the Budget?
LINDSAY TANNER: That that issue, along with a number of others, is something that we're still actively considering, because as things stand at the moment it is due to complete at June thirtieth. And that's the additional money. Keep in mind there's an ongoing grant, of course. But we extended that for a period of time; that's due to finish on June 30. And because the economy has deteriorated even further over the past few months as a result of the global recession, then clearly there's a lot of issues that we have to give some further examination to. That's just one of them.
JON FAINE: It distorts the real estate market, the first home buyers grant. Do you acknowledge that?
LINDSAY TANNER: Yes, it does. And in normal circumstances you wouldn't do something of this kind. I made that clear at the time. In fact, I'm on the record a couple of years ago criticising this kind of thing, but that's in normal circumstances. In the situation that we faced late last year, we were looking at a dramatic collapse in activity in the construction sector and, of course, the threat of significant falls in house prices in many parts of Australia that really would have an enormous negative impact on the economy. So, it was a suitable initiative for its time, but it's not the kind of thing you would do in normal circumstances.
JON FAINE: Negative gearing also has an impact on the housing market. Are you going to change the rules on that?
LINDSAY TANNER: Look, I think although that issue has been one of the issues under consideration in Ken Henry's view of the tax system, there's one point about that that makes any change very difficult, and that is that any exit from negative gearing, of course, would have an immediate and very significant impact on the property market. In the current circumstances, of course, you can imagine the kind of effects that that might have. So, it's certainly one element of a complete review of the entire - entire tax system that's occurring under…
JON FAINE: [Interrupts] But negative gearing, in fact, costs - negative gearing costs revenue more than the first home buyers grant, negative gearing has a more distorting effect on the property market than the first home buyers grant, yet you're looking as if you're winding one up and not touching the other.
LINDSAY TANNER: Well, there's a lot of debate about the impact of negative gearing, but I think the key question that is unavoidable, Jon, is that were you to remove it the immediate impact on [indistinct] behaviour would lead to a crash property prices in much of the Australian economy. And in the current circumstances, of course, that would be disastrous.
JON FAINE: You don't want that. But you could taper it or you could foreshadow that you're going to slowly wind it out, or phase it out.
LINDSAY TANNER: Look, there's all kinds of hypotheticals that we can play around with here, Jon, but the true picture is that along with virtually everything else in our tax system, that's under a formal review with the Secretary of the Treasury, Ken Henry, heading the review. That process is due to complete by the end of the year. And that'll - yeah.
JON FAINE: Can I ask you about morality? Would you accept money from a fundraiser conducted by Mick Gatto?
LINDSAY TANNER: Well, Jon, I was working last night and, in fact, I don't think I even got an invitation. So, I'm clearly not on the A-list, which is very distressing.
JON FAINE: And it's your birthday. Happy birthday.
LINDSAY TANNER: [Laughing] Thank you very much. Mick Gatto clearly doesn't know it was my birthday about to happen. Look, I have troubles with it, I'd have to say. It's really not my place to go around casting judgement on what money should go to bushfire victims and what's inappropriate, but I'd be raising a big question mark over it. And there are some real challenges for the people in the State Government administering these things, cause they get offers of donations from all kinds of different places and all kinds of different things, some of which, inevitably, will be a bit inappropriate. So, I'd certainly have a big question mark over that.
JON FAINE: Would you take a donation from James Hardie Industries?
LINDSAY TANNER: No.
JON FAINE: And yet they're a legitimate, publicly listed company, although with some adverse findings against their directors, and yet they're a legal business. Mick Gatto operates in the sort of shady shadows.
LINDSAY TANNER: Well, sorry, when you say would I take a donation, I thought you meant a political donation for my campaign. From - for the bushfire victims, look, it's not my place to make that call. That's probably a different matter. But, Jon, I sat down with James Hardie, I think, in 2001 with the then Shadow Treasurer, I was Shadow Finance Minister, Simon Crean, and they explained to us why they were moving their corporate headquarters to the Netherlands. And it was all about company tax structures and double taxation and so on. And, in truth, it was about avoiding these asbestos liabilities. So, I'm not a fan of James Hardie. I think the way they've behaved in the last decade or so has been absolutely extraordinary.
JON FAINE: Tainted money is tainted money; dirty money is dirty money. James Hardie's money now looks as if it's basically not enough for the people who need it. They promised a fully funded compo scheme and now they're saying, first of all, it wasn't fully funded; secondly, we've lost money on the sub-prime. And is the taxpayer, Lindsay Tanner, going to have to pick up the bill?
LINDSAY TANNER: Look, I don't know, Jon, I think it's too early to cast assessments on these things. And one of the things we have to be conscious of, of course, is that a James Hardie that's gone broke is in nobody's interests because clearly the primary objective here is ensuring that those liabilities are covered. I don't know a great deal about the detail of their circumstances. I've read the media reports that indicate that there is the threat of a shortfall after, I think, 2013. Clearly, the onus has got to be put on James Hardie to tackle that problem, but I can't give you a detailed assessment of where things sit. But, that's got to be the number priority.
JON FAINE: Are the penalties adequate for directors who lie?
LINDSAY TANNER: Look, I think so. I think that there's a reasonable set of penalties in the corporations' law for misbehaviour. There are…
JON FAINE: They're going to be fined and banned from being directors, perhaps. Gee whizz, wow, so what.
LINDSAY TANNER: Look, I think that matters. And there are other laws, of course, governing fraud and various forms of criminal behaviour that also can come into play in certain circumstances where company directors do the wrong thing. I'm not asserting that that's necessarily the case with James Hardie directors, but the laws governing the behaviour of company directors are not the only laws that are relevant to them if they do the wrong thing. So, I think the existing laws are probably pretty reasonable on that narrow point. And there is a fine balance to be made here, because we want to make sure that we don't discourage people from being company directors. And there's been a lively debate about that for some years and there's a lot of regulatory reform trying to improve that area so that we don't - we don't kill the goose that lays the golden egg, so to speak.
JON FAINE: All right. Thank you, Lindsay. Lindsay Tanner, who is the Acting Treasurer and Federal Finance Minister.
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