NSW Premier Gladys Berejiklian NSW Gladys Berejiklian talks about the housing affordability package they’ve launched, giving first home buyers a leg up, and doubling the stamp duty for foreign investors
Introduction – NSW Housing Affordability Package
Ross Greenwood: I think that is really quite fascinating. Anyway, tell you what, somebody else who might be quite interested in that, is the New South Wales Premier Gladys Berejiklian, who is also the former treasurer of New South Wales. She’d be interested in the cashless economy and the black economy. Good evening to you, Premier. How are you?
Interview – Premier Gladys Berejiklian
Gladys Berejiklian: Well, thanks Ross. How are you?
Ross Greenwood: Good. Good to have you on the program. Always great to have a chat. What about the cashless society? It’s a good way to crack down on the black economy, you’d imagine.
Gladys Berejiklian: Absolutely. It’s just the convenience factor, isn’t it? Most of us want to have an easier way of paying our bills and getting around our business, no doubt about it.
Ross Greenwood: On a daily basis, how much cash does the Premier of New South Wales carry around in her purse or her pocket?
Gladys Berejiklian: Do you know what? I really shouldn’t reveal that, but I still do rely on cash. If I’m buying my coffee or whatever else, I do take out the dollars rather than the card, I have to say. Obviously, for larger purchases, I take out the debit card. Note that I take out the debit card and not the credit card.
Ross Greenwood: That’s it. I do like that. I do like a premier and a treasurer who’s got a debit card and not a credit card.
Gladys Berejiklian: Correct. [crosstalk]
Ross Greenwood: I want to get to an issue today. We’ve done a bit of comparison on the various states as well. We’re broadcasting right around Australia, just to try and give some sense of what it is. New South Wales now abolishing stamp duty for first home buyers and also existing and new homes. That’s the big key here: doing this for existing homes as well as brand new homes, which is the difference with some other states, up to $60,000 and those stamp duty discounts will disappear beyond $800,000.
Just explain to me why you felt, as the premier of New South Wales, that this was an important thing to do? Were you not concerned this would only add to the price of houses; that property developers would push up the prices rather than being a genuine saving for those first home buyers?
Gladys Berejiklian: Absolutely. There was a concern and that’s why we sought the advice of Glenn Stevens, as you know, former governor of the Reserve Bank. I’ve always been someone that’s been very conservative when it comes to approaching demand-side solutions. State governments continue to focus on supply as the biggest enabler of downward pressure on prices. I don’t want to take away, Ross, from the fact that supply is still the best strategy to reduce prices; more stock means downward pressure on prices.
But there’s no doubt that in recent years, in particular, wages have not grown anywhere near the increases in property values. Compared to my generation, we had to put up with double digit interest rates, 17 or 18%, but we certainly didn’t need to take as long to save for a deposit. I can see now that if I really want to give first time aspiring homeowners a chance, we need to actually support them in saving up for those deposits or in terms of getting the foot in the door.
Ross Greenwood: Just explain a difference here because you’ve abolished stamp duty for those first home buyers on the existing and new homes up to $650,000. Now, in Victoria, from July 1, first home buyers who purchase a home in a regional area of Victoria will get $20,000 for new homes valued up to $750,000, that’s doubled. In Queensland, first home owners grant will revert back to $15,000 for the purchase of a new or a construction of a property. In Canberra, there’s a grant of $7,000 to help fund the purchase of a new or substantially renovated home; properties of $750,000 or less is eligible. In WA, the first home buyers grant of $10,000 is available if you are buying or building a new home.
Can you explain to me why it was that New South Wales did not have a first home buyers grant as other states did, that you felt it was better to do it through stamp duty concessions?
Gladys Berejiklian: We did have first home owner grants on new homes. We did have those $10,000 grants in place. We did have those incentives on new homes. We certainly didn’t have them for existing homes. But the measure for us, what if a hard working person reasonably wants to get into the housing market? What options do they have? The median unit price in Greater Sydney is $700,000 so half the units on the market are below 700 and about half are above 700. We thought if we kick in total stamp duty exemption at 650, but then discounts up to 800, that is a very fair and reasonable prospect for people getting into the market for the first time.
The other thing we’ve done, Ross, is reduce the unfair advantage investors has. In New South Wales, if you’re an investor it might have been your sixth or seventh property, you were still getting a new homeowners grant if you bought off the plan. We’ve actually taken those grants away from investors. Not only are we giving first home owners a bit of a boost, but we’re also making a level playing field for them when they’re going to buy off the plan or when they compete against investors. It’s on both sides of the equation that we’re really trying to support them.
Interviewer: One of the problems of the east coast of Australia, in particular, Melbourne and Sydney, it’s not quite the same situation in Brisbane, perhaps Canberra to a certain extent, is a lack of housing. Big population growth, ongoing population growth, a lack of building over a very long period of time, you want to give more incentive for more building to occur. As it’s been put out there by the Urban Development Institute, that effectively what’s happening here is if you suddenly start to clamp down on foreign buyers coming in, which is what you’re doing by raising the foreign investor surcharge from 4 to 8% on stamp duty and also from .75% to 2% on land tax, isn’t there a potential that foreign buyers will not find it as attractive to come to New South Wales and build? And therefore you won’t get the building that you want and that could squeeze prices up into the future as well.
Gladys Berejiklian: Well, Ross, it’s pretty much an inelastic market, as you know. The research and evidence we have is the foreign investment surcharge in New South Wales is really turned into a revenue raising exercise as opposed to a house affordability measure. What we mean by is we believe that by increasing the foreign investor surcharge, it doesn’t necessarily disincentivize them, it just means they’re contributing more to the consolidated revenue here in New South Wales.
We are convinced, based on the fact we introduced this investor surcharge for the first time 12 months ago, we haven’t seen a decline in any event of the proportion of foreign investors in the market, but what we feel this will do is certainly increase the revenue.
Sydney is comparable, still a bit less than other cities like Hong Kong and Singapore who have huge revenue at 15% on foreign investors. What we’re doing is comparable to other cities in the region, and certainly in London it is at around 12 to 15% as well. Certainly, our rates are comparable to those around the world. I’m not convinced it will deter foreign investors. All it means is they’ll contribute to a larger extent.
Ross Greenwood: It’s going to be interesting because also Victoria has a very similar scheme as well. The problem, the perception at least anyway is that foreign investors coming in were crowding out many of the first home buyers. Do you believe that this package makes it easier for a person living in Sydney to buy a first home?
Gladys Berejiklian: I absolutely do, and if I didn’t, we wouldn’t have put it together. We’ve spent a good part of my premiership putting it together. We’ve sought the advice of experts. We’ve consulted widely. As I said, previously I had resisted introducing any demand-side measures for fear of unintended consequences. The other interesting thing with Sydney is different to Brisbane and Melbourne, in particular, is the units we’re building aren’t just in the CBD of the city where it tends to be more expensive. If you look at the South West, the North West, the greater West, we actually have a lot of diverse housing over a larger geographic spread, unlike Brisbane and Melbourne who mainly are building their units in the CBD.
We feel not only will that assist in affordability on supply-side initiative, but obviously also is choice. Not only are we building those units in those other regions, but we’re also providing the vital transport links. We’ll be spending an extra an $73 billion in the next four years on infrastructure, building new rail lines, building new motorways and also the social infrastructure: schools and hospitals. You can’t expect new communities to grow or existing communities to grow if you don’t support that through the infrastructure spend. That’s why for us our package is holistic, and it certainly does give a big boost for people trying to get into the market [crosstalk]-
Ross Greenwood: One last thing I can leave you with Premier before I let you go, are you going to build a train line between the city and the new Badgerys Creek Airport?
Gladys Berejiklian: We’ve committed to doing whatever we need to do to expedite that airport. We’ve already started investing literally in billions of dollars worth of road infrastructure in the precinct. If you go out to that precinct, you’ll see all the new roads we’re building. Clearly, we’ve already also started preserving the rail corridor as to where we think the alignment [crosstalk]-
Ross Greenwood: In other words, you’re not taking it completely off the table. You’re saying there is a prospect that there could be a new rail link to the Badgerys Creek Airport?
Gladys Berejiklian: Yes. I’m not going to take it off the table by any stretch, but I’m also someone that needs to make sure we build infrastructure at the right time and where it’s needed most. We need to make sure we plan things when we need them and that we put our resources where they’re needed the most. Certainly, we’ve already started the work on preserving the rail corridor. We’ve started planning. Clearly, we’ll work with the federal government on those issues.
Ross Greenwood: Always great to have the Premier of New South Wales on the program, Gladys Berejiklian. You’re good with your time, and we appreciate it tonight on the program.
Gladys Berejiklian: Thanks, Ross. All the best. See you soon.