Television Interview, Sky News First Edition

SUBJECTS: Capital Gains Tax; Housing; Defence spending; President Herzog visit

PETER STEFANOVIC, HOST: Joining us live now from Canberra is the Deputy Prime Minister, Richard Marles. Minister, good to see you this morning, thanks for your time. So, let’s start there today. A bit to talk about, but are you going to lower the capital gains tax discount?

RICHARD MARLES, DEPUTY PRIME MINISTER: Look, our housing policies are really clear. The tax arrangements around our housing policies are clear and they haven’t changed. And it’s as simple as that. And, you know, we’ve had the Finance Minister speaking on this yesterday. She made it completely clear. Our position is very clear that our housing policies haven’t changed.

STEFANOVIC: So, you’re ruling out now any changes to the capital gains tax discount?

MARLES: Our housing policies haven’t changed. We acknowledge that there are intergenerational issues in respect of housing.

STEFANOVIC: You say that now, but will they change come budget?

MARLES: Well, Pete, in explaining our position in relation to housing policy, we do accept that there are intergenerational challenges in relation to housing. But the way in which we are dealing with that is on the supply side, making sure that we are having more houses built around the country. Now, that’s been our strategy for a number of years. That continues to be the strategy. That’s what we took to the election. And so that’s how we are seeking to address issues in respect of housing. And the tax arrangements in relation to housing haven’t changed.

STEFANOVIC: Okay, so, I mean, capital gains tax can also apply to stocks. So it’s not just housing; it can apply to other things as well. Are you going to rule out any changes to the capital gains tax system?

MARLES: Look, I’ve made this position clear in answering your question, as have ministers throughout the week. Our position in relation to housing policy is clear, and we don’t have any intention to change the tax arrangements around housing.

STEFANOVIC: Intentions can change though, yes?

MARLES: Well, I mean, Pete, you’ve asked me the question and I’ve given you an answer. I mean, in seeking to address the issues in respect of housing and the intergenerational challenges there, what we are focusing on is the supply side, and that’s what we have been doing for a number of years.

STEFANOVIC: But even on the supply side — on housing — you’re just not building enough. You’re way behind your targets.

MARLES: Well, we’re doing much more in that respect than we ever saw from the Coalition in the nine years that they were in government. But in terms of the way in which you are asking these questions, that is our strategy and that is what we are pursuing through a number of policies. The Housing Affordability Fund, the Future Fund, is an example of that. We are seeking to have more houses built in this country, and that’s how we are dealing with this issue. And so when you are having a look at what the government is doing in relation to this issue, our strategy is clear and it’s not around changing the tax arrangements in respect of houses.

STEFANOVIC: Okay, but you can see that you’re behind schedule when it comes to building more homes?

MARLES: Well, we are building more homes in this country. It is a real focus of the government. We have a number of policies in place to do this, and I might say that we are doing this in the face of headwinds which have been put up by the opposition here. But we are having more houses built in this country, and much more than what we saw under the Coalition.

STEFANOVIC: Okay, so the Sydney Morning Herald, which is talking about this story about dropping the capital gains tax discount from 50 per cent to 33 per cent, also reports that this is going to coincide with tax cuts to allow young people to buy homes. Is that true? And if so, can you elaborate on that at least?

MARLES: Well, again, I think I’ve given you an answer in relation to these questions, and I’m not going to go further down this path. Our housing policies are clear, and the tax arrangements around them haven’t changed.

STEFANOVIC: Okay, let’s get to your house of defence now. Katy Gallagher — speaking of Katy Gallagher — she said yesterday that defence is one of the sources of budget pressures. If that’s the case, why persist with the $9 billion per ship Hunter frigate program?

MARLES: Well, the Hunters form a really important part of the future structure of our surface fleet. We did a significant surface fleet review through 2023, which we announced at the beginning of 2024, and the Hunter-class frigates are a critical part of that.

STEFANOVIC: Sure — they’re just expensive and very late.

MARLES: Well, we inherited a fair bit of that when we came to office, but it’s actually important that you see things through, and that’s what we’re doing in relation to that. We are seeking to manage both the cost of the program and the timing of the program. And since coming to government, we have brought both of those into check. But at the end of the day, you make a decision about whether or not this is an important capability for our future force and for our future surface fleet, and it most definitely is. This is going to be the most exquisite anti-submarine capability that will exist in terms of a frigate, and it is going to be an incredible addition to the Royal Australian Navy, and we are pursuing it.

STEFANOVIC: When I spoke to your colleague, the Treasurer Jim Chalmers, a couple of days ago, he did confirm that there will be budget restraint coming up. How much will that impact your Department of Defence?

MARLES: Well, I mean, there are two points in there. Firstly, we have managed the budget since we have come to government with prudency and with restraint. You’ve seen two surpluses under our government — something that was never achieved under the Coalition.

STEFANOVIC: You’ve not got much restraint, though. You’re almost at a trillion in debt.

MARLES: Well, you’ve seen two surpluses under a Labor government, which you did not see under the nine years of the Coalition. And if you look at spending under our government, spending has increased on average by about 1.7 per cent. Under the Coalition, it was increasing at 4.1 per cent. The fact of the matter is we achieved two surpluses, which, when we inherited the budget books, were intended to be deficits. In our third year, the deficit that ensued was much less than what was going to be put in place by the Liberals had they continued to govern. And even at the last election, the Liberals went to the election with bigger deficits than what we took to the last election. So managing the budget with prudency and restraint has actually been a feature of the way in which we have governed. In respect of Defence, there are very big challenges that we face in the world today, and I’ve spoken extensively about those. We have managed the budget in a way which has also seen record increases to our defence spending, and that’s been an important step. Getting that balance right has been part of the careful way in which we’ve managed the budget.

STEFANOVIC: Do you at least see that, across the board more broadly, your government is spending too much money?

MARLES: We have managed the budget with restraint.

STEFANOVIC: Is that a no, or a yes?

MARLES: Well, what it is is that we are paying down Liberal debt. I mean, that’s what we have done since we’ve come to government.

STEFANOVIC: That’s your debt.

MARLES: Well, Pete, you inherit a set of books when you get elected. What we inherited was a projected deficit over the first two years of our government, which we turned into significant surpluses for the first time, which did not occur during the nine years of the Liberal government. And in the third year, the deficit that ensued was less than what was predicted and planned for by the former Coalition government. So we stand by that record, and we are proud of the way in which we have managed the budget in terms of being prudent. You spend the budget on priorities. Defence is one of those priorities, but so too is cost-of-living relief, and we’ve been very focused on that from the moment we came to government.

STEFANOVIC: Richard, your colleague Ed Husic has expressed concern about the Israeli President arriving here on the weekend. Do you share his concerns?

MARLES: Well, the visit of President Herzog will be an important visit. He’s been invited by both the Prime Minister and the Governor-General, and he will be a welcomed and honoured guest in our country. It’s important in terms of the bilateral relationship between Australia and Israel, but it is particularly important in the wake of the Bondi massacre for Australia’s Jewish community. And I know that his presence here will be deeply meaningful for Jewish Australians. So this is a very significant visit, and President Herzog will be a welcome guest.

STEFANOVIC: So Ed Husic was talking about comments he thought were inflammatory in the past that were said and done by Isaac Herzog, which could inflame things here. Do you share those concerns about what the President has said in the past, and if these protests could get out of hand?

MARLES: Well, President Herzog visiting Australia will be an important visit — let’s be really clear about that. He has been invited by the Governor-General and the Prime Minister, and he will be a welcomed and honoured guest. It is in the context of the aftermath of the Bondi massacre, and as I said, what this will mean for Australia’s Jewish community is very significant. In terms of security, obviously we will be providing all the necessary security to President Herzog when he visits, as we would do for any visiting dignitary. And I’m very confident about the security arrangements that will be put in place.

STEFANOVIC: Okay, we’ll leave it there. Richard Marles, good to have you with us as always. Thank you so much.

ENDS