TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with Jon Faine

ABC, 774

Wednesday, 30 July 2003

8.50am

SUBJECTS: Charities, Housing Affordability

FAINE:

Peter Costello good morning.

TREASURER:

Good morning Jon.

FAINE:

Thank you for joining us. In the papers on the weekend I saw there was an ad

from the Taxation Department saying that they were looking for community input

on the definition of a charity, Laura Tingle in the Fin Review today says that

you are trying to gag charities. We briefly heard from you on AM, if you want

to broaden the definition of charity, why would you start introducing political

tests into the definition?

TREASURER:

Well we wouldn’t, and we haven’t.

FAINE:

At the moment it is suggested in a draft discussion paper that we have looked

at on the website, that a disqualifing purpose of a charity would be attempting

to lobby governments for law reform for instance, or to change government policy.

TREASURER:

But Jon, lobby groups at the moment don’t get gift-deductible status.

They are not tax deductible at the moment.

FAINE:

Not if that is their sole purpose, no.

TREASURER:

Exactly.

FAINE:

But if it is one of their purposes?

TREASURER:

No, they wouldn’t. To be a charity at the moment, unless you get a specific

law listing you, you would have to engage in relief of the poor, help for the

sick, a religious purpose, or education.

FAINE:

You have to relieve suffering and distress and poverty in the community…

TREASURER:

That’s right.

FAINE:

…you would literally have to hand out soup.

TREASURER:

Well, to be a charity, as you say, you have to be in relief of the poor, help

for the sick, education or a religious purpose.

FAINE:

Don’t you think it should be modernised that definition?

TREASURER:

Well that’s what this is a proposal to do, is we were asked to put the

legislation, the definition in legislation, and that is what we are proposing,

and to most nearly replicate the current definition, So…

FAINE:

I know that you don’t like personalising it, but if people want…

TREASURER:

No, no…

FAINE:

…to donate money to your brother for instance for the charitable work

he does, which is advocacy, should that be tax deductible?

TREASURER:

Well it is.

FAINE:

Should it continue to be tax deductible?

TREASURER:

Well it will be.

FAINE:

And so the…

TREASURER:

I can’t understand what this is all about. You see, what the proposal

was, was that take the current definition and put it into legislation and replicate

it, and that is what we are trying to do.

FAINE:

Why not even broaden it further?

TREASURER:

Well we have broadened it in some areas, but you see, I heard some comment

saying, oh they are restricting it.

FAINE:

Yep.

TREASURER:

That is not the case, Jon.

FAINE:

No I didn’t think it was when I read it either…

TREASURER:

Yeah I know…

FAINE:

…I just wanted to clarify it.

TREASURER:

…and you see this is one of the problems you are up against here. You

know, somebody goes out and says, “Oh, they are trying to narrow it,”

and then they go to the charities, “Did you know that they are trying

to narrow it,” and the charity says, “That’s terrible.”

I just want to assure all of those charities, that is not the case, that is

why we put out the definition as you’ve rightly done, you look it up on

the website, you know that it replicates the current situation and I just hope

that the furphy that some sections of the media were trying to run can, well

I hope that people won’t be taken in by it and I will just look at it,

and that is why we are consulting on the issue.

FAINE:

Would you like to see groups that engage principally in for instance, lobbying

government to improve to the lot of the poor, that they should be able to get

tax deductible status?

TREASURER:

No I don’t think so Jon, I will tell you why. I think when people give

money to a charity, they expect it to actually help those on the ground. We

went through this Red Cross thing, a lot of people gave money to the Red Cross,

didn’t they, thinking they were helping the Bali victims. But when it

turned out afterwards that people wanted to know whether the money had actually

got through, and I think that if you gave charitable status to lobby groups,

people would say, you know, well where did the money actually get through to.

I think they want to be sure that it gets through to the needy and they can

be sure that something that gets tax deductible status at the moment is required

to give it to the needy. If you say we will give you tax deductible status but

you never need to give it to the needy, you can engage in lobbying, or email,

or advertising campains, I think the status of a charity would lose a bit actually.

FAINE:

So you would be able to engage in lobbying, but not as your principal purpose…

TREASURER:

If you want to be a charity you have got to have a principal charity of actually

helping people in need. If in the course of that you want to engage in lobbying,

you can continue to do it as you currently do.

FAINE:

Alright, can I ask you about housing affordability. Yesterday you took a swipe

at the states on housing afffordability and said that they could make homes

more affordable by reducing stamp duty, that was something they could do to

help. You could wind back negative gearing, that would be a huge thing to make

homes more affordable for first home buyers. That is something you could do.

TREASURER:

I am not sure that it would actually Jon. If you abolished negative gearing

you would put up the rent.

FAINE:

You don’t have to abolish it, you can wind it back.

TREASURER:

Well even if you wind it back, you would put up the rent for the people who

can’t afford a home and have to rent one. We know that, that is precisely

what happened the last time it was tried. Now…

FAINE:

But it is the negative gearing boom that is driving up the prices isn’t

it?

TREASURER:

…no, when people negatively gear they put a tenant in don’t they?

And what it is actually doing is making a lot of housing available for tenants.

Now if you stop that, there will be less tenanted properties around and rents

will go up.

FAINE:

The Reserve Bank says it’s negative gearing and investment that is driving

up prices.

TREASURER:

Well look I know from experience that if you restrict or abolish negative gearing

you will push rents up. I think that has the capacity to actually hurt poorer

people more than help them. I don’t see how pushing up the price of rent

for people who can’t afford to buy a home is going to help them.

FAINE:

Alright, but dropping off another $1000 from stamp duty from the states, that

is not going to make much difference either?

TREASURER:

Well why only $1000?

FAINE:

I think we both know they are not going to make more of a change. Peter Costello

we are out of time because of the news, but it would be good to catch up for

a longer talk about social engagement and your political persona when you have

got some time.

TREASURER:

That would be great. Thanks very much.