Bill Shorten and Christopher Pyne dissect the budget | 7.30

Now, this government's changes to negative gearing and capital gains tax might be new, but they are not new ideas.This was former Labor leader Bill Shorten 10 years ago.

We don't think that we can keep spending billions of dollars in taxpayer subsidies on negative gearing in the future.We also want to make sure that first homeowners are able to get into the market and be able to get their first home.I'm not a person who thinks the Australian dream is to negatively gear your seventh house.I'm a person who believes the Australian dream is for our kids to be able to buy their first house.

I'm very happy to say our political panel is back.Bill Shorten and Christopher Pyne, welcome back to both of you.Bill Shorten, obviously your first response is how much you've changed since then, but are you feeling vindicated today?Do you really think I've changed that much?

Oh, yes.My ties are better.I do think, though, one thing that hasn't changed is I thought my ideas were right then, and I think they're right now, and I think they've finally...The timing's now good.I love the idea that more Australians will be able to fulfil a dream of getting into their first home.And for that, I think that's great news.

Apart from the very obvious difference of this being done now by a government with all of the support that comes behind it, what has changed to potentially make this a winnable argument for the government?

Timing, timing is everything.And we've seen when I ran in 2019.probably half the electoral roll were born before 1965.Now that would be probably in the 30 % range.There's millions of extra people on the voters roll, younger people.The other thing which has changed is we've had 10 years of no change and housing prices have gone up.

40 % of people in Sydney rent, nearly 40 % of people in Melbourne rent.The housing prices in Brisbane and Perth are higher than Melbourne's.People Gen X and down are not even able to afford a house anymore.

smash the housing market.The Howard government was obviously fond of grey bribes.Is it just the demographics now that are in favour of this idea?

Well, I think the problem with this idea is that there's no evidence that the changes to negative gearing or capital gains tax will have any impact on houses at all, on house prices at all.In fact, the only way to actually reduce house prices is to increase supply, because economics hasn't changed since ancient times.It's a question of demand and supply.There's too much demand, there's not enough supply, and that's why prices are going up.There's no evidence that changes to negative gearing or capital gains tax are going to make the slightest difference to house prices or All that's happened here is that Labor's using the smokescreen of house prices to do something they've always wanted to do, which is soak the so -called rich.But they're actually soaking the great middle class and the aspirational voter who used to vote for John Howard and may well now think about voting Liberal again.

So those are things that your side of politics has been saying today, that this is abhorrent, it's pitting one generation against another.I think Tim Wilson says it's kneecapping a generation.Is this age warfare replacing class warfare?

Well I'm not sure if it's abhorrent etc.From an economic point of view, the question is, the central tenet of the budget is that apparently these changes will reduce house prices for young people.But the government is yet to create any narrative about how that actually works economically.

You had two goes at this narrative.

One thing which occurs to me listening to Chris is they really need you back.At least you can put the case for some degree of conviction.But the reality is that Chris is arguing for a system which has outlived its usefulness.Giving taxpayer subsidies from the nurses, the teachers, the hardworking people of Australia to people who have seven investment properties and helping them de -risk buy an eight for investment property, that is upward redistribution of taxes to people who don't need that support.What I'm interested in is how do we solve the housing problem?Yes, it's a supply challenge.

But what will happen is that when people go bidding on their next house, there might be one less bidder who's an investor who previously had taxpayer funded support to bid against to bid against your kids and the kids of everyone.

So Bill says apparently there's no one in your side of politics who can make the argument as cleanly as you can.So what are the lines?He's downing with faint praise.

The truth of course is it's the nurses, it's the teachers, it's the police men and women who are actually the people who are investing in second properties and third properties.So these tax changes, capital gains tax and negative gearing, are actually hurting aspiration and penalising the very people that Bill's talking about.And this is the first chance the Liberal Party's had in a long time to get off the canvas and get the debate back onto their ground, which is unemployment, inflation, interest rates, the economy, taxation, and let's hope they can grab that opportunity.

All right.All right.But let's move on.

We've had Christopher's system for 10 years and life hasn't got better.

Not because of these tax changes.Let's go to the other politics of this, because the other salient point here, of course, is the question around broken promises.Now, Historically in politics, in our lifetime, breaking promises has been a very dangerous thing to do with very heavy consequences.Let's have a look at Joe Hockey in the 2014 budget in his Budget Night interview.It's a budget with a new tax, with levies, with co -payments.Is it liberating for a politician to decide election promises don't matter?

Well, I don't accept that question.The biggest, most significant promise we made was to fix the budget.and strengthen the Australian economy.And we will.And this budget does that.

could get away with it because in the end you didn't.It cost the government an enormous amount of, you lost an enormous amount of paint over that narrative.

Sure.In the 2014 budget, the mistake that the government made at the time was not to own the broken promise and say that the circumstances with which we are dealing require us to change course.That was a terrible mistake because the Australian voter is obviously not stupid.They're full of common sense.And they looked at that and thought, but you have broken your promises.So pretending you haven't, it's going to make us really angry.

I think what the Albanese government has done by saying, yes, we have broken these promises.Well, not exactly a right, but they are at least owning to some extent that it's a broken promise.Now, it's clearly a broken promise, and pretending it isn't would be just political suicide.

Do you think this strategy is going to work for them, or have people's expectations around promises in politics fundamentally shifted?

Well, people call me stupid for outlining every possible policy we're going to do.That's not possible, Bill.No one would ever call you stupid.Well, I'm not saying I believed it.So we took all the policies to 2016 and 2019, and when you do that from opposition, I think that is difficult.We're not the government.

I think the government has owned the fact that it's a change of direction, and I think Chris is right.It doesn't matter who's in power.If you change your mind, you've got to be upfront about it, and you say the facts have changed, or you give your case why you've changed your mind, and just own it.People get that Facts change and people change and circumstances change all the time.

Now, we're meeting in the week of FARA, just briefly, because we've got to wrap up.Christopher Pyne, you said you had an unusual line for me on how the Liberals should be responding to FARA.

Well, I think FARA's very last season, actually.So I think we've all moved on...What day is it today?Last weekend.Last weekend.It's very last weekend.

Well, it was 196 hours, or...?I imagine it's an opportunity to draw the line under FARA and move on.Well, I simply think that the Coalition has to move on.focus at all on One Nation, let One Nation do whatever they're going to do.They cannot form a government at any point in the future because they don't try to appeal to the whole of the political spectrum.They've got a niche and it's working for them.

Our job in the Liberal Party is to appeal to the centre because that's where elections are won and Farah has taught us that.

I just, I think it's an extinction level event for the coalition.I think when 42 % of voters, with respect to your geometric shape measuring, that is not a niche.42 % is not a niche.

Well, it's a by -election.

Well, that's true, but 42%, 42 % is, what did the Libs get, 11?Like, I think - No, I think we got 12.All right, so it's - Bring it home, Bill Shorten.I think that the Liberal Party, I don't want to give advice to everyone, but I think moving back to the centre is smart.That's the space which Labor seeks to occupy and I think that's where most Australians are.I don't think we can afford to push to the extreme edges of the left or right.

Gentlemen, it's a great pleasure to have you back on the show.We look forward to having you on frequently in the months ahead.