Monday, 29 February 2016
Questions without Notice
My question is to the Prime Minister. Labor has ruled out retrospective changes to negative gearing. But on Thursday in question time the Prime Minister twice refused to rule out retrospective changes to negative gearing. Investors want to know what is on his radar, so I ask again: will the Prime Minister now rule out retrospective changes to negative gearing?
I thank the honourable member for asking me about negative gearing. The Labor Party's policy on negative gearing and its proposal to increase capital gains tax by 50 per cent is an ill-considered, reckless effort to undermine Australia's transition to the new economy. At a time when we need investment, surely all honourable members believe that Australia needs more investment. Surely we all believe that we want Australians to take risks, to invest, to have a go, to start new businesses. Surely we want young people to be able to borrow some money, realise their dream, start a business and do so, naturally, in the hope of gain. We would all hope that that is what they would do, and yet the Labor Party is saying that if they get into government they will increase the tax on any gain that young person makes by 50 per cent.
If you increase the tax on something, you discourage it. If you increase the tax on investment, you discourage people making those investments. What Labor is proposing is absolutely calculated to undermine our transition to the new economy. We have had a massive mining construction boom. China grew. China had a massive stimulus. Demand for iron ore and coal soared upwards, and we responded. Tens of billions of dollars were invested here, and we benefited from that. But that investment has been made. We are now in the production phase. Prices have come down. How do we maintain our prosperity? We do so through innovation, open markets and investing in infrastructure, and, above all, we need Australians to back their passions and dreams and to invest. And right at that point, while the government is encouraging investment and incentivising investment, what the Labor Party is doing is increasing the tax on investment by 50 per cent. Labor is whacking up higher taxes to discourage the very thing Australia needs more of to be successful.
There is a way to the future opportunities that we deserve in this, the most exciting times in human history. Labor is standing in the way, imposing taxes which will discourage the investment, entrepreneurship, technology and innovation that Australians need to succeed in these times.
My question is to the Deputy Prime Minister and Minister for Agriculture and Resources. Will the Deputy Prime Minister advise the House of the importance of steady economic policies to business confidence in rural and regional Australia. Why is a consistent approach to tax policy critical to the investment decisions that business and individuals make in our economy?
I thank the honourable member for her question. Obviously I am very aware of the effects of tax policy, having made my way in life as an accountant. I think one of the clear things to see in any tax policy is a comparative analysis of what happens if there is an alternative policy that an alternative government may have. I am very aware of the industries in the areas of the member for Capricornia and the member for Flynn and what is important to them. In the past that we have seen policies brought forward such as the resource super profits tax, which was designed by, it is imagined, Labor and the Greens and the Independents together. It came up with a 40 per cent tax on super profits. That meant that, on top of the 40 per cent tax on super profits, there was a corporate tax on what was left over, which meant that their effective tax rate went to around about 57 per cent. This was devastating on the future potential of places such as Moranbah, Dysart, Emerald and Clermont because, quite obviously, it showed an excessive tax rate. It was disastrous. It was so disastrous that, in the end, they changed their own ill thought out tax plan, because they knew that it was just not a flyer.
You could excuse them for having one bad idea, but they had a number of them. The carbon tax was yet another one of their crazy ideas. For those who worked at the QAL refinery at Gladstone and Rio's refinery at Yarwun or for the Boyne smelter, this was a massive hike on the price of electricity—and, as we know, aluminium is predominantly bauxite and needs a lot of electricity. What this did was put great uncertainties into the city of Gladstone and into Central Queensland, because it showed that, at that point of time, the Labor, Green and Independent government had no real understanding about the economics, the consequences of their economics. You might just think it stopped there, but of course it did not. They also had the overnight cessation of the live cattle trade, and of course with that we saw an effect on the price of cattle, one of the biggest industries in Central Queensland.
These were all the random policy objectives and the random policy approach of the government at the time, the Labor, Green and Independent government that did not know what it was doing. And now they are back at it again. Now we see their entree into negative gearing. Might I just remind people, especially in Queensland—the member for Dawson will be interested in this—that Mackay has the most negatively geared homes in the area. There are 5,755 people negatively gearing homes. Labor's most recent tax foray is devastating to them, to the 4,000 in Cairns and the 4,000 in Gladstone. It will affect them. You really do have to have a government that has got its head screwed on, and that is why the Australian people will stick with the one they have got.