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First Home Owners Scheme, NAB Survey, Tax Cuts, Wentworth Pre-selection – Doorstop Interview, Parliament House



Senate Alcove Courtyard

Parliament House

Tuesday, 14 October 2003
12 noon

SUBJECTS: First Home Owners Scheme, NAB Survey, Tax Cuts, Wentworth Pre-selection


Well, according to Melbourne newspapers today, the Victorian Government has

been paying first home owners grants to toddlers, and seeking reimbursement

from the Commonwealth under the Commonwealth First Home Owners Scheme. The Commonwealth

was alerted to this by the press today. The Victorian Government has never alerted

the Commonwealth to this, it has never disclosed that it has been doing this,

and it was never authorised to do this.

Under the First Home Owners Scheme, to qualify for a Commonwealth grant, you

have to be buying or building your own home; it has to be your principal place

of residence. Now, I don’t believe that two-year-olds can buy homes. And

I do not believe that two-year-olds move into homes as their principal place

of residence. I think the likelihood is, that this is a second home or a third

home for the parents, which has been put in the toddler’s name. So, the

Victorian Government has been administering this scheme in breach of the principles

and has been claiming reimbursement from the Commonwealth.

The first thing we intend to do, is to seek reimbursement from the Victorian

Government for those grants that they have claimed from the Commonwealth, and

we will also be writing to other States seeking assurances from them that other

States have not been following this practice. Now, the Victorian Treasurer has

apparently announced this morning, that he is going to amend his legislation

to stop this from occurring. That legislation, if it has allowed this, was always

flawed and defective from the start. And again that is in breach of another

agreement which the States have with the Commonwealth, is that there would be

provisions in this legislation, State legislation, to prevent abuse. So, the

Commonwealth is not going to reimburse any State that pays First Home Grants

to toddlers and it will be seeking recovery of those monies that have already

been paid.


How much money do you think has been paid?


Well, according to the newspaper, and I am just going off the newspaper, there

at 38 grants, so it would be 38 grants of $7,000. Now, that is if the newspaper

story is accurate. Can I make this point. The Commonwealth was never given a

list as to who actually receives one of these grants. The States take the applications,

the States pay them out, and after they pay them out, claim reimbursement from

the Commonwealth. So, the Commonwealth doesn’t know who has been paid,

who has been paid in the past, and we just find it unbelievable that these States

Governments, or I should say, this State Government, this Victorian State Government,

has apparently paid grants to toddlers. Now, I ask you this: How does a toddler

sign a contract to buy a house?


Isn’t that an indictment though, of how the scheme is set up?


Absolutely. Under State legislation this should never have been allowed, and

it is an absolute indictment of the legislation that allowed it.


(inaudible) time to check whether other States are doing this?


No, I will be writing to all of the States today, to alert them to what the

Victorian Government has done, and to ask them for assurances that they haven’t

allowed the same thing to occur.


Mr Costello, you claim all the credit for the good things about the First Home

Owners Grant, but the bad things, the millionaires who are getting it, now the

toddlers, that is all the States’ fault.


Let’s leave aside millionaires and let’s come to toddlers…




…I will come to that in a moment, because if you’d have read the

Herald Sun today…


I did Mr Costello.


…you would have seen the Victorian Government was somehow attempting

to imply that the Commonwealth had approved of money going to toddlers. The

Commonwealth never knew that money went to toddlers. The Victorian Government

has refused to give the Commonwealth a list of who actually gets the grant.

Now, we have an agreement with the States as follows, and this is the agreement

we have with the States Principle D1 (iii): Eligible applicants must be natural

persons who are buying or building their first home in Australia. I don’t

think toddlers would come within that clause. ‘An eligible home must be

intended to be a principal place of residence and occupied within a reasonable

period.’ I don’t think toddler would come within that clause. ‘The

relevant State legislation will contain adequate administrative review and appeal

mechanisms along with provision to prevent abuse for the First Home Owners Scheme.’

So, what we have said is, we will fund a scheme, fund a scheme to be set up

with State legislation preventing abuse. And today we find out that one State’s

legislation has apparently allowed this. Now, I welcome that fact that the Victorian

Treasurer has announced he is going to close the loophole today, I only wish

that he had closed it on 1 July 2000.


Wouldn’t it have been easy enough to write a clause into that agreement

saying that an eligible applicant must be aged over 18?


Well, can I say to you, it would never have occurred to me that a toddler

would be occupying a house.


It must have occurred to you that people are trying to (inaudible) loophole.


Well, toddlers occupy houses all the time.


Do they? Do they?


Of course they do, in family situations.


No, no, I am sorry…


But it is the definition of…


…no, no, I am sorry. Toddlers occupy their parents’ houses. Toddlers

do not buy houses and do not move into them. And that is why I say to you, that

is why I say to you, in reality, I believe that this must have been parents

buying houses, second houses, in toddlers’ names, and that is why you

have anti-abuse clauses.


But other people have been abusing this system as well Mr Costello. Millionaires,

multi-millionaires from overseas have been abusing this.


No, that is not true, because to be eligible you have to be an Australian

citizen or a permanent resident. That is not true. Now, let me come to the question,

here it is here, it is all in the agreement: eligible applicants must be natural

persons who are Australian citizens, or permanent resident. You have to be an

Australian citizen or a permanent resident. It is not true to say that non-Australian

citizens are buying houses.


Treasurer, toddlers can make an income under trust laws, but surely when you

are drafting this, it might not have been prudent to prevent people from using

those kind of loopholes to get the grant?


Well, that is why we had a clause that there would be anti-avoidance provisions.

Now, seriously it never occurred to me until this morning that toddlers were

signing contracts for land. I don’t believe they can do it. I mean, aside

from the fact that toddlers mostly can’t sign their names – aside from

that fact – you know, maybe they are putting an X on, maybe they are doing a

finger painting on the contract, you know. What are we going around to kindergartens

saying, dip your finger in the paint and sign this contract for law. As far

as I know, I might be wrong about this, but as far as I know, under 18-year-olds

are not bound by contracts. They don’t have capacity to sign contracts.

It would never have occurred to me that anyone would try and do it. How does

a toddler sign a contract?


Do you believe this is a one off?


You know, let’s put this all into perspective. I know some of you like

writing colour pieces, but you know, the thought that you know, toddlers were

signing a contact and then calling the removalists around to clean out their

playrooms, and put them into their principal places of residence. It would just

never occur to me…


Treasurer, does the Commonwealth have any legal recourse, and if so, will

the Commonwealth be using it?


Yes, we will be seeking the money back.


What happens if Victoria refuses to pay back the money.


Well, we, I am going to ask the Victorian Government to re-pay the money,

and if the, and I would expect them to re-pay it, and if they don’t, well

I will face that problem when it arises.


The latest NAB survey shows a slight fall in business conditions, what does

this signal about the Australian economy and are you concerned at all?


Well, I think business conditions fell slightly, and confidence rose by a

larger amount. So I think what it shows, is, that conditions are still strong

and confidence is still strong. And I think that as we come out of drought,

as agricultural production picks up, as the world economy strengthens, I think

they will be positives for the Australian economy.


Mr Costello have you have had words with John Anderson following his remarks

on the weekend that future surplus proceeds, that a greater priority should

be placed in spending in the bush rather than offering tax cuts?


Well, I am not sure that you are correctly representing Mr Anderson. But let

me tell you what the position of the Government is. I think the position of

the Government is this: if we can meet our proper expenditures in health, in

welfare, if we can meet the cost of maintaining our troops in the field, if

we can meet the cost of increased security and we can balance our budget, with

a low debt position, we can now afford to return to taxpayers. But, there’s

about five conditions, and you know as I have been at pains to point out, I

make this point – this is a serious economic point – you had an outcome for

30 June 2003 -that is the year that has past – we have cut taxes in this

year, we have already returned $2 billion in the current year, and then you

are asking me what we might do in the next year, which is the…


No, I am asking you to respond to Mr Anderson.


Well, no, you are asking me, you know, what the Government might do in relation

to spending and taxing in next year’s budget, and I am not speculating

on that except to tell you what the Government’s position is. The Government’s

position is this: we meet all of our just expenditures, we meet defence, we

meet security, we try and balance our Budget, and if there is room to return

to the taxpayers, then we do that too.


Do you think Malcolm Turnbull is going to win pre-selection for Wentworth?


I can’t even engage in the Wentworth pre-selection. I mean it is, I

follow it like everybody with enormous interest. Thank you very much.