Former Liberal Treasurer Joe Hockey has backed the Albanese Government’s decision to scrap negative gearing for existing properties but described the changes to capital gains tax as “a mistake.”
Speaking at the National Press Club, he backed the changes to reduce tax concessions for property investors and said it was “tough” if his political colleagues in the Liberal Party didn’t agree with his controversial call.
“I am consistent, and if you don’t like it, tough,’’ Mr Hockey said.
“I think negative gearing on existing property is the right policy, and I stick by what I said in my valedictory speech.
“I think the CGT initiative is a mistake.”
Mr Hockey famously called for the Liberal Party to reform negative gearing when he quit politics suggesting it was unfinished business for Scott Morrison.
While Mr Morrison flirted with the idea of negative gearing changes, it never made it into legislation.
“We must increase and over time broaden the GST, we must lower all income tax,” Mr Hockey said in his valedictory speech.
“We should be wiser and more consistent on tax concessions to help pay for that, in particular tax concessions on superannuation should be carefully pared back.
“In that framework, negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property.”
Death tax warning
But Mr Hockey also sounded the alarm that Western democracies were “sleepwalking” towards a future economic crisis around unemployment with the rise of AI.
“My expectation is by 2031, within five years, we could be facing 15 per cent unemployment in Australia and in Western world, and that’s assuming similar participation rates.
“I mean, driverless cars are writ large, coming fast in the US, and AI technology and robotics are replacing people, and it’s going to be on a mass scale.
“And the biggest losers will be young people.
“I looked at the numbers the other day. In fact, it’s big story in Britain: personal income tax collections are now exceeded by welfare payments in the UK, massively.
“Personal income tax collections in France are exceeded by welfare. The same in Italy, in Germany, in Japan.
“Here in Australia, we are nearly at the point where our welfare payments are less than our total personal income tax collection.
“Now you look at the budget, and you say, “Hang on, what happens if we’ve got 15 per cent unemployment?
“Where’s the money going to come from to fund existence or our existing program, let alone the new stuff, let alone the new stuff that’s coming?”
Mr Hockey said the rise of artificial intelligence was set to trigger big changes.
“And that’s why Elon Musk and others are running around saying we’ve got to have a universal wage, and why?”, he said.
“Because they can see what’s coming with this mass unemployment, and particularly young people.
“So you’re going to see the tax system move from income into capital, and they’re going to start talking about death taxes and taxes on the family home, like they have everywhere else.
“But the problem is expenditure, and you know the difference between the Chalmers budget and Hockey’s budget is was reducing expenditure, not increasing taxes.
“I had to do it temporarily, but you can’t keep increasing taxes because at the end of the day you are crushing innovation.
“You’ve got to give people hope, and you can’t give them hope if you’re taking away more from what they achieve.”
