David Hawker (Wannon, Liberal Party) Share this | Hansard source

In joining in this debate on the Tax Laws Amendment (2008 Measures No. 5) Bill 2008 I certainly concur with the comments of the previous speaker, my colleague the member for Menzies, who I think covered some of the main points. I would like to reiterate some of them. The important point about this legislation is that it comes from some work that was done by the previous government and in fact was flagged by an earlier speaker, the honourable member for Higgins, Mr Peter Costello. It certainly shows that the coalition were onto the issues but, as the member for Menzies pointed out, we believed that full consultation was very important in getting the legislation right. Of course, even on that point, there have been changes since the announcement that the current Treasurer made in the 2008 budget on the first schedule. So it has been shown that it is very important. The Senate Standing Committee on Economics has been looking at this legislation as well because it is clearly important that we do get this sort of legislation right.

I was listening to the comments of the member for Dawson in this debate and I must admit it did rather amaze me when he talked about some aspects of the legislation. Yes, he did start talking about the whole question of schedule 1 and what it would mean for people being able to manipulate their affairs relating to GST on property and in particular how one assesses the value added to real property after 1 July 2000 where there was a margin scheme involved. The legislation makes the point that it is important to make sure that people cannot manipulate their affairs to reduce their GST liability and, in particular, where there is a margin scheme that was previously acquired on a GST-free basis that the value added on the GST-free sale is included in calculating GST under the margin scheme. Of course, the legislation goes on further to ensure that this cannot be repeated so that, if a margin scheme were to be reinstated, this would not be a means of avoiding the GST on the sale. The legislation picks up on those very important points.

Getting back to the comments the member for Dawson made about the government introducing an extension of the first home buyers grant to those who buy new homes under construction or to be constructed, I would say that, when we talk about what is going to encourage people to buy homes, probably at one level if house prices themselves start to fall that would make them more attractive to buy. But the second point that one has to look at very closely is the whole question of confidence, and I think that is really quite worrying. I was looking at an article in today’s Australian entitled ‘Property price fall the worst in 25 years’. It talks about what has happened to property prices in Western Australia and in other capital cities and it says:

Real Estate Institute of Western Australia president Rob Druitt said the Perth market was moving into uncharted territory with a combination of falling house prices and dwindling sales.

The article went on to say:

While some correction had been expected, Mr Druitt said Perth had not experienced anything like the current downturn since 1982, when the median house price fell 10.5 per cent in a year.

When we listen to the member for Dawson talking about the impact of first home buyer incentives we then look at what has happened to residential auctions in the capital cities over the last 12 months. If you look at the clearance rates, which are a good indicator of what people are looking at when they want to buy a home, you see that in Sydney the clearance rate has dropped from over 60 per cent a year ago to 43½ per cent. In Melbourne it has gone from 76 per cent down to just over 44 per cent. In Adelaide it is even more dramatic. It has gone from 70.2 per cent down to 38.1 per cent. Then in Brisbane we see that the clearance rate has dropped from 52.8 per cent down to 25 per cent. It is very significant, but even more significant when you consider that the number of auctions in most of those places had increased in some cases by as much as double.

It was interesting to hear the government members’ approach to the whole question of what is happening in the economy. On the one hand, the member for Dawson was talking about being Father Christmas and about assistance to first home buyers and about assistance to pensioners for Christmas time, but then he went on to talk about how important it was to see interest rates falling, implying that this was another part of the current Labor government’s approach to managing the economy and making life better for everyone. He was talking about the role of a Labor government in claiming credit for this, the role of spending and the shrinking surplus. Remarkably, as so many old-timers have said to me over the years, ‘You can’t trust Labor with the money,’ and I think of the Labor budget surplus and how quickly it is shrinking. The government has not actually delivered a surplus yet, but I think someone is now running a book as to when the surplus will totally disappear. That comes back to what the old-timers said about not trusting Labor with the money.

When we look at the management of the economy—and this comes back to the point about confidence—we look at the whole question of the banking deposit scheme. In about a month we have seen the government change its position three times. At one stage it was critical of the opposition saying that deposit guarantees should be lifted. The government said the suggestion of $100,000 from the Leader of the Opposition was irresponsible. It then did a backflip and said, ‘No, we will do better than that; we are going to guarantee all banking deposits.’ It made a remarkable decision when clearly not even the Reserve Bank was directly consulted on that. I would have thought that was fairly important. Very quickly it was realised that this was having a massive distortion on the market, so we saw another position—again, within a couple of weeks—of its suddenly saying for any deposit over $1 million there would be a fee. The disruption that has meant—this comes back to the whole question of assisting people to buy homes—has been quite massive, because this is all about confidence and if you start to undermine confidence in the way you are managing the economy then home buyers will be even more hesitant.

We look at the impact of the management of this approach to supporting deposits in banks and we see that other institutions—and I can think of at least one in my area, a very reputable institution but one which operates outside the APRA approval and operates, I think, very responsibly—have been affected by the whole question of deposits drying up. Not surprisingly, good clients are very hesitant when there is no guarantee. This is a reflection of the way that the current government is not really too sure about what it is doing. I am reminded of a cartoon that was in the Herald Sun recently of a car going along stop, start, stop, start with the Prime Minister and the Treasurer in the car and the comment from the observer is, ‘Well, they’ve only got the L plates on so clearly they do have a bit of time to learn.’ The unfortunate thing about it, though, is that if that does happen—and a lot of people are going to get hurt—then the government will be held responsible. Make no bones about it: this is a very important part of the role of the opposition. That is why, when the Leader of the Opposition has been bringing to the attention of the government the importance of managing some of the challenges that we are facing in the current financial system, it should be done in a responsible and effective way. There is very real doubt that particularly the Treasurer is on top of his portfolio, and so when we look at what is in prospect I think we see that a lot of Australians are extremely concerned about the management of this government.

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