Tuesday, 23 February 2016
Questions without Notice
The honourable member has asked this question at least three times now, but he gives me the opportunity to talk further about capital gains tax and what the Labor Party is proposing. Under Paul Keating's policy—
capital gains tax was indexed for inflation. As I said earlier, that had the consequence that the after-inflation gain was taxed at your marginal rate. So, if you are on the 49 per cent rate for the purpose of that year, your tax on the real gain would be 49 per cent. Consider that you have owned an asset for 10 years and it has grown at seven per cent—every year for 10 years. That is a phenomenal return. There are not many investments that have done that. That is more or less what we have seen in residential real estate over the last decade. Under Labor's plan—Labor circa 2016—the tax on the real gain would be 52 per cent. It would be higher than Keating's—
Mr Watts interjecting—
So they are putting the tax on real gains up, well above the top marginal rate. They are penalising investment.
The Labor Party would say: 'It doesn't matter as long as it is real estate, because our aim is to reduce the value of residential property'. If that is their goal, then I must say that the policies they have propounded will absolutely have that result. If they win office and implement those policies, they will not be disappointed; house prices will come down.
This is an already vulnerable market. In some cities it is estimated to decline anyway. In other cities—like my own of Sydney—it is estimated to rise at less than the rate of inflation. That is an anaemic level of growth. They are going to throw into that a massive shock which can have one and only one consequence. Every single homeowner in every single electorate represented in this House will be poorer if the Labor Party is elected to government.
Then what about every other form of investment? What about somebody who invests in a company, a mining company perhaps, or a technology company? What about somebody who invests in a cafe or a shop? You will be taxed at the highest capital gains tax rate in any comparable country. That is the Labor Party's plan. This can have only one consequence: lower house values; a poorer Australia; less confidence; fewer investors; driving the economy south; driving the economy down. That is the inevitable consequence. (Time expired)