Chris Smith:
He’s a senior fellow and chief economist with the Institute of Public Affairs, columnist with the Australian Newspaper and former Washington correspondent for the Australian. Adam Creighton, good morning to you.
Adam Creighton:
Good morning, Chris.
Chris Smith:
Angus Taylor isn’t hiding his strategy. Well, he’s virtually doing a Hanson on Hanson, isn’t he?
Adam Creighton:
Yeah, look, I think that’s true and it’s pretty obvious why, because the One Nation Party in the polls at least is well ahead. And gosh, if we look at that Roy Morgan poll yesterday, there’d be a lot of very nervous libs. So I think, especially on immigration, that’s a big back flip for the coalition, which of course, while maybe not as bad as Labour in the last few years, has been a supporter of very high immigration for a long time. And now their policy is for a 40% reduction to below 200,000. That’s a big change for the coalition, and I think it’s one they have to push. Whether it’s enough remains to be seen. I think on the indexation of income tax scales, I think that’s a very good policy, and I think they deserve a lot of credit for that, something that should’ve been done a long time ago.
Chris Smith:
Yeah. That is real reform, Adam. That is real reform.
Adam Creighton:
Yes, it is. It is real reform. The only thing that worries me about that is it’d be legislated, and then at some point in 10 years when Labour comes back again or whatever, they just stop it. That’s my always concern with it because we don’t have a history of it in Australia, unfortunately, like in most countries, well, like in the UK or the US where they tend to index them automatically. But it would be a very good thing. It would be, in effect, a tax cut every year for everyone as the scales changed. And I think there would be very, very good policy.
It is, of course, as they say, “expensive,” but of course it’s the people’s money in the first place, so it’s not really expensive. So look, let’s hope … You know what I mean. I hope that they get some extra support in the polls for this. It’s a good policy and it should’ve been done many years ago.
Chris Smith:
What do you make of Bill Kelty’s idea to reform the tax system today? The Labour and union stalwart wants the top tax rate to be dropped down to 39%.
Adam Creighton:
Well, I think that’d be great if that happened. I mean, I think it’d be … And they’d say, Mr. Treasury doesn’t take into account the incentive effects of that. They don’t take into account that if you did that, people would work more, there would be less tax avoidance. It’d be a much more healthy, sensible economy, and –
Chris Smith:
The would strive to get to that top tax rate, wouldn’t they?
Adam Creighton:
Yeah, look, they should. I mean, I don’t know why it picks 39. I’d probably just pick 40 because I like round numbers, but 39 or 40 would be absolutely terrific. I mean, effectively now it’s 47 with the Medicare levy. That’s extremely high. And of course, as we’ve said many times, it cuts in at certainly low levels. I always tell my US friends and they’re always so shocked that our top rate of 47 cuts in at US$120,000s, which in the US you’d be barely paying 25% at that level, even if you live in California, which is a high tax state.
So it’s very high. And I think with these new CGT changes, you’d be crazy to start any sort of innovative business in Australia. You’d go to New Zealand or Singapore or the US or anywhere else. I think the CGT changes, they’re populous, but I think they’re not thought out very well, and I think they could have very bad unintended consequences.
Chris Smith:
Before we start talking about what you’ve written today in the Australian, I want to play you something from 7:30 last night on the ABC. This is Albo who I thought was so obstructive in the questions that he was delivered, and it just shows you that he is such a politician. He is the politician’s politician. Have a listen to this.
Sarah Ferguson:
You said on multiple occasions before the election that you would not touch negative gearing or capital gains. How would you describe those statements now?
Anthony Albanese:
Well, we’ve changed our position.
Sarah Ferguson:
No. How would you describe those statements now?
Anthony Albanese:
We’ve changed our position. They were statements that were made, and that’s why we’ve been upfront that we’ve changed our position. And we’ve changed our position because we couldn’t sit back and continue to watch young people being frozen out of the housing market. We couldn’t continue to see a situation increasingly develop where generations, this generation and future generations were locked out of the housing market because it wasn’t fair.
We couldn’t also sit back and continue to see that income from labour is treated so differently from income from assets. So for a long period of time, people have been talking about the need for tax reform. This is tax reform. It is also resilience. It is also a cost of living measures that we’re putting in place because every single dollar raised through tax changes is being given back in the form of tax cuts.
Sarah Ferguson:
Were those statements promises?
Anthony Albanese:
Well, they were statements and we have changed our position.
Sarah Ferguson:
Yes, but are you not able to say that they were election promises?
Anthony Albanese:
Well, we’ve changed our position, Sarah.
Sarah Ferguson:
You won’t say it?
Chris Smith:
Oh Adam. Oh, mate. And this is why we’re so cynical of politicians who don’t say a particular word because they’re afraid of the headline the next day. It’s out and out a broken promise and it falls in line-
Adam Creighton:
It certainly is.
Chris Smith:
It falls in line, Adam, with what we heard from Julia Gillard about a carbon tax. “We will not have a carbon tax under the government I lead.” Well, they’ve said the same about negative gearing and they’ve changed it a year later.
Adam Creighton:
Yeah. Look, I think they just should’ve said it was a, he should’ve said it was a broken promise. You get a bit more respect that way at least. They’re even lying about lying. I mean, you just say it’s a broken promise. I mean, I don’t like it when they change, when they do this, but all governments do it. I’m just thinking, didn’t Paul Keating have LA law tax cuts or something and it didn’t happen?
Chris Smith:
Yeah.
Adam Creighton:
And George Bush did the same thing in the US. I mean, governments do change their mind, but I just think they should be more open about it when they do rather than just try to avoid what the prime minister then was doing. It was just insulting people. It was a broken promise.
Chris Smith:
Let’s talk about what you’ve written today. The treasurer has made a very messy attempt to allegedly shift wealth from baby boomers to a younger cohort, and they’re supposed to be the beneficiaries. But as you write today, the reality is the government has actually abandoned young ambitious Australians. How?
Adam Creighton:
Yeah. Look, I mean, I think the narrative’s totally wrong here. They’re saying they’re helping the youth, but just as I point out in that column just on … well, firstly, there’s a lot of grandfathering. So people like you and I maybe who negatively gear, we’ll be able to still do that for the rest of our lives. And then all the pensioners are grandfathered on the existing CGT system, they don’t get hit with the 30% rate. That’s millions of people who don’t get the 30% rate. But I tell you, the ones that do get the 30% rate, minimum, is everyone else, young people whose marginal tax rates in many cases is lower than 30% at the moment. So if you’re earning 50 grand, 60 grand, 27 year old, doing a bit of trading on the side, your capital gains tax currently is about zero. Well, that goes to 30. So they’ve been really whacked. And of course they can never negatively gear property so they can’t do that.
And this idea … the bigger point of the column is this idea that house price is going to come down because of all this I think is completely mistaken. People focus too much on the rates for individual things and not the differences in tax rates between different asset classes. So what this has done is it’s made housing, owner-occupied housing even more of a tax shelter than it was before. So basically if you’re a wealthy person, you’re like, well, will I invest in an investment property or shares or will I renovate my house? You renovate the house because there’s zero tax on that, and now you’ve got 47% tax, potentially, on everything else for that person.
Chris Smith:
Including shares.
Adam Creighton:
So it’s crazy, I think. I mean, we already have a housing obsession in this country, but I think what’s going to happen is you’re going to get more capital, more money drawn back into refurbishing the family home, putting on another story, granny flats, bathrooms, whatever, because that’s the only thing that you don’t pay capital gains tax on. Everything else you pay much more now. So I think it’s a big-
Chris Smith:
And the problem with that is we don’t have the tradies to do the work, but that’s another problem.
Adam Creighton:
Yeah. Well, look, I think kind of amusingly, I said that the only progressive thing in the budget is there’ll be a huge boom for home renovation. And that’s going to mean more tradies get more money, and that’s fine with me. But everything else about the budget, I think is very regressive.
Chris Smith:
Yeah. Okay. The Beijing Summit between Trump and Xi looks more like a love in this thus far. But behind the scenes, we hear that Xi has been unequivocal about Taiwan. Could Trump, and I think I’ve asked this question of you before, could Trump allow China to take Taiwan?
Adam Creighton:
Oh, look, and I think I probably said yes, and I think that’s still my answer. And in fact, even more so now because the US is overextended. It’s fighting a war with Iran. It’s got a lot of its navy over there in the Middle East. It’s still heavily involved in Ukraine. Its budget position is dreadful. It’s got inflation. So I think relatively the US is weaker now than it was a few years ago.
I think they’d be worried that China will try to take it, but I don’t think they will. I think China’s extremely cautious. I mean, they haven’t fought a war themselves for about 70 years. I think that’s part of the reason why they’re so strong economically. They don’t get involved in the things overseas, whereas the US of course does and it’s very expensive. So look, I think this meeting showed a relatively stronger President Xi. Trump was very flattering and very nice. He’s a very valuable polite person, Trump. Xi is like the opposite. He says nothing. His facial expression never changes, and-
Chris Smith:
He’d be a good poker player.
Adam Creighton:
He was very firm on Taiwan because that’s what China’s obsessed with. And the question is, I don’t know, what do your listeners think? I mean, are the Americans going to lose tens of thousands of soldiers over a Chinese island? I don’t know. That’s a question for the Australian government too, which would be expected to help. I guess we helped in Vietnam and so forth, and we lost a lot of soldiers in that. But I hope China doesn’t do anything, but if they did, I would be very surprised if the US and Australia were willing to sacrifice tens of thousands of soldiers over it. But that’s just my view.
Chris Smith:
The answer still is yes. I agree with you. Great to have you on the programme, mate. Enjoy your weekend.
Adam Creighton:
Yes. Thanks, Chris. Great to be back.
Chris Smith:
Good on you. Adam Creighton, back from his sojourn to the United States of America.
This transcript with Adam Creighton talking on 2SM Mornings with Chris Smith from 15 May 2026 has been edited for clarity.
