House debates

Wednesday, 24 February 2016

Matters of Public Importance

Turnbull Government

3:21 pm

Photo of Alex HawkeAlex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Hansard source

and the Leader of the Opposition's plan and the shadow Treasurer's plan to lower the property prices of existing housing throughout our country is somehow a positive plan for people. Just saying it is positive, I would say to the Deputy Leader of the Opposition, does not make it positive. In fact, if you have a plan to deliberately, by policy design, lower the price of everybody's house, their principal wealth creation asset—and we know that in Australia people rely on their housing as their principal vehicle for wealth creation—I do not call that a positive plan. I would say that the Australian people will not describe it as a positive plan when you have a deliberate policy intention to lower the price of everybody's property without any regard to the distortions that you are creating in the housing market.

That is why we see a Labor Party here in recent times who have come out saying: 'We want a gold star for going first. We have rushed something out in first draft form into the public domain, and we deserve a gold star.' I say that you do not deserve a gold star for leadership in going forward first if you have not planned or thought through the consequences of detailed and complex economic policy, like changes to the housing market and capital gains tax—two integral intersections of tax policy in Australia that affect the wealth creation of the entire middle and average class in Australia.

It might interest the Deputy Leader of the Opposition to know that there are as many people negatively geared in her electorate as there are in my electorate. We have very different electorates. Some people might say that the member's electorate is an inner-city type electorate and mine is an outer suburban electorate, but the reality is that I have the highest proportion of mortgages of any electorate in the country. So you would expect a higher level of negatively geared people. The reality for the Deputy Leader of the Opposition is that the same number of people are negatively geared in my electorate as in hers.

In fact, when we go to the statistics we find that there are 850,000 negatively geared tax filers in Australia, with a taxable income of under $80,000 per annum—that is their average taxable income. That is the macrostatistic that the Labor Party does not want anyone to focus on. It is also interesting to note, for the House's benefit, that of all the negatively geared taxpayers only two per cent claim net rental losses of over $50,000. Only two per cent claim losses from negatively geared properties of over $50,000. That is a very small percentage in anyone's language. So this equity argument that the Labor Party is running, that all the benefits go to the wealthy or to people who are investors, is not an accurate argument. It does not bear scrutiny. It does not stand up when you consider that offsetting your interest losses against your taxable income across all kinds of asset classes has been part of our tax code for 100 years.

Why is it part of our tax code? Why has it evolved in the Australian psyche? This is about the capacity of ordinary people to generate wealth and to get ahead. That is what this policy debate is about. Labor would have you believe that they have done something to wealthy people in this country, that they have somehow put a limit on very significant investors. This is what is very interesting about this debate. When you read their actual policy, what they are doing is shutting the door on everyone of average means in accessing this policy. Because when you take a third of the investment market out of existing realty and you force it into one narrow section of the property market—that is, new dwellings—you are creating a massive distortion. All of those cashed-up investors, those people that you say are on their seventh or eighth or 30th property and it is an outrage, will now be competing with your mum-and-dad investors in that same narrow band of property.

It was interesting that, in question time today, the member for Isaacs, when a serious lesson was being given by the Prime Minister on the simple laws of supply and demand in economics, said that the Prime Minister was making it up. Your deliberate policy design is to take one-third of the investors—in fact, the most significant third—out of the current property market and put them into new dwellings only. That would be a massive market distortion of deliberate policy design. So your average mum-and-dad investors will be up against seriously cashed-up investors who already have the means, the money and the property to do this.

Of course, what you are doing there in your policy design is shutting the door on ordinary mum-and-dad investors; shutting the door on your union mates who have taken this up in record numbers; shutting the door on your average person, while doing nothing to hinder wealth creation for wealthy people or to claw back any money for the budget. Your own figures show that over the forward estimates this is only worth $600 million. That is what your own figures show.

This incentive is designed to create property investment in a certain way in Australia and in particular investment classes. It is designed to encourage the ability of people to take risks, to invest and to deduct the losses against their own tax. When you change the settings by deliberate design, what you are doing is deliberately cutting off an avenue of wealth creation in this country. But you are cutting it off for the average income earner. You are cutting it off for the mum-and-dad investors. You are cutting it off for your nurses, teachers and emergency services workers—all of your people who are on modest incomes in this country and who use this as one of their principal vehicles of wealth creation.

So it is not surprising that the Deputy Leader of the Opposition did not speak about this issue today. It is not surprising that she says that her singular contribution to this policy debate is that it is positive—Labor has a positive plan. But actually, when you examine the detail of this policy proposal, this plan has a lot of holes in it. It is in first draft format. It has not been thought through. Its implications for the housing market have the potential to create such distortion and uncertainty in the property market that it will be, as the Prime Minister says, a very unsettling and disturbing environment in property prices in Australia today, which will, of course, come down in the existing market.

So the Labor Party came here today to lecture us on leadership when their period in office showed that they are just addicted to expenditure and to revenue and tax increases. The Deputy Leader of the Opposition pointed, of course, to their record on climate change—on the carbon tax—saying that we ran a scare campaign on the carbon tax. Well, there is nothing that is a scare campaign about the world's highest price on carbon. The Labor Party has never understood markets and they have never understood policy design. They proposed a carbon tax with a starting price of the world's highest price on carbon and they wonder why it failed! They wonder why it did not work. Then they lament that we ran a scare campaign pointing out to people that this was the world's highest price on carbon!

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