House debates

Monday, 22 February 2016

Questions without Notice

Taxation

2:40 pm

Photo of Bill ShortenBill Shorten (Maribyrnong, Australian Labor Party, Leader of the Opposition) Share this | | Hansard source

My question is to the Prime Minister. Does the Prime Minister think it is fair that, under his government's policy, an investor buying their seventh home will receive more taxpayer subsidies from his government than a first home buyer?

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | | Hansard source

Mr Speaker, that is a question that should be savoured. It reveals how little the Labor Party understand about business and understand about the economy.

Ms Macklin interjecting

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

The member for Jagajaga is warned.

Photo of Malcolm TurnbullMalcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | | Hansard source

Every business, every investor, is entitled to deduct the interest expense of the borrowings they incur in order to buy an income-producing asset, and that is true whether it is a farm or a shop or shares in a public company or whether it, indeed, is rental property. So there is nothing remarkable, unusual or unorthodox about buying property and borrowing money to buy it and, if the interest loss is greater than the rent, being able to deduct that loss. If the taxpayer then sells the property at a gain, then he or she will obviously pay capital gains tax.

The honourable member says that this is a remarkable, unique tax concession. It is no different to the tax concession, if you like, that applies to every company, every farmer, every shopkeeper right across the board. It is absolutely basic income tax principles. The honourable member should understand that. The tax concession, which is substantial and which is absolutely hallowed and sacrosanct—and perhaps the Labor Party has that in its sights; we do not know, but it is sacrosanct on our side—is that the sale of a person's home is free of capital gains tax. So the big tax concession—and even the professor of economics would understand that—in the real estate sector is the fact that the sale of our homes, our residences, are capital gains tax free. So the question the honourable member asks reveals how little he understands about how business operates, and it underlines the risk that the Labor Party poses to the economy.

We will just move to a previous disaster of the Labor Party. Not so long ago they banned live exports to Indonesia. That interfered with eight per cent of the total cattle herd. It devastated cattle prices right across Australia. That is a fact. Now they tell us that, by pulling more than a third of the buyers out of the residential housing market, there will be no effect on prices. Labor cannot add up.

Mrs Griggs interjecting

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

The member for Solomon will cease interjecting.