Speaking at a doorstop interview in Canberra, Treasurer Scott Morrison has said the decision to contradict advice from his own department was due to his time as an economist and that his decision was, as he was quoted saying: “based on my own experience and understanding of these issues”.
Previously, public comments from the Turnbull government described Labor’s policy as a sledgehammer to the economy back in 2016, while the advice from Treasury was only made public in January this year after a Freedom of Information request by the ABC.
When asked why he was contradicting the Treasury, Mr Morrison stated outright that he did not agree with the advice.
"I didn’t agree with them. That’s why,” Mr Morrison said.
“My first job was as a research economist in the property sector. At the time that advice was provided, house price growth was running at around 13 per cent in Sydney.
“Today, it’s growing at just over 1 per cent. So, there’s a big difference between then and now.”
Mr Morrison said that house price growth has slowed from 17 per cent to over 1 per cent over nine months, which he claims is due to APRA limiting interest-only loans and investor credit growth
“We did that because we knew we had to deal with the investor heat that was in particular markets, which was a result of a fact that there was undersupply in those markets,” he explained.
“So, the reason prices were going up was because of undersupply and then we saw that the growth in credit for investors – in particular, interest-only loans – exacerbating that problem so we took a very careful, calibrated policy response.”
He continued, stating that the point of Labor’s negative gearing policy was not for housing affordability “unless they actually want to cause a housing price crash”.
“Treasury’s advice is their advice, but it wasn’t based on any economic modelling or anything of that – there’s been no economic modelling on Labor’s policy,” Mr Morrison said.
“Only the BIS report has done that which Labor don’t accept but that says rents will go up and prices will fall.
“So, if Labor wants to take away the asset values of Australian mums and dads, well, they need to explain why to the Australian people. I’m not going to do that for them.”
Despite contradicting the Treasury’s advice, Mr Morrison said he still respects their advice.
“I take advice from my officials, but I’ll make my own decisions and based on my experience and based on consulting widely, I think that’s what people would expect of ministers, so I absolutely respect the Treasury and I think John Fraser’s done an outstanding job as secretary,” Mr Morrison said.
“They’re a fantastic organisation, I love working with them but from time to time, the Treasurer is going to have his view and I’ll have my reasons for that which are based on my own experience and understanding of these issues.”