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

My question is to the Prime Minister. Last year the Prime Minister said:

Bracket creep is seeing Australians on average earnings move into the second-highest tax bracket. That is not right. … Isn't that a problem that we should address? … Well, of course, it is.

Prime Minister, isn't breaking your word on tax cuts just more proof that every idea this Prime Minister has ends up going right down the drain?

Mr Mitchell interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for McEwen will cease interjecting.

Mr Pyne interjecting—

The Leader of the House will cease interjecting.

Mr Joyce interjecting—

The Deputy Prime Minister—

Mr Pyne interjecting—

The Leader of the House and the Deputy Prime Minister will cease interjecting.

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I thank the Leader of the Opposition for his question about tax, because it does give me an opportunity to talk about the dangerous tax changes that are being proposed by the Labor Party.

Mr Sukkar interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for Deakin!

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I do not think the significance of the changes that Labor is proposing to the tax system is generally understood. They represent, for example, that negative gearing represents some kind of special concession. So-called negative gearing is no more than income tax 101. It enables a taxpayer to deduct the interest cost of borrowings incurred for the purpose of acquiring an income-producing asset. They bring the income to account and they also bring the cost of the borrowings to account. If that results in a loss, then that can be called negative gearing. This is an absolutely standard business practice engaged in by millions of businesses and well over 1.4 million Australians in respect to residential property alone. The Labor Party claims that they are concerned about housing affordability.

Ms Macklin interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for Jagajaga has been warned!

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

Everybody knows that the challenge for housing affordability—

Mr Pyne interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The Leader of the House will cease interjecting.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

Mr Speaker, on a point of order: the question was specifically about bracket creep. The Prime Minister is refusing to deal with anything about his own policy. He is being completely irrelevant to the question.

Government members interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

Members on my right!

Mr Burke interjecting—

I gave the Manager of Opposition Business the opportunity to make his point of order without interruption. He will not add to it as he moves back to his seat.

Mr Pyne interjecting—

The Leader of the House will cease interjecting. I listened to the question very closely. I have made it clear before, and I am not going to restate my long rulings. The Prime Minister is on the policy topic—and, in any event, that question had a very broad tagline at the end.

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

The Labor Party's tax changes will have these certain consequences: they will reduce the amount of housing that is available for tenants—

Ms Plibersek interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for Sydney is warned!

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

they will increase rents and they will undermine the value of all residential housing. They will reduce home values and undermine the value of the largest single asset class in Australia, which overwhelmingly represents, for most Australian families, their largest asset. The economic consequences of that are very negative. It is called the wealth effect. When people feel their wealth is diminishing, they are much less likely to spend—they save rather than spend—and they are much less likely to invest. If this were not enough, at a time when we want to have more investment and at a time when the government is today introducing into the House legislation to provide real tax incentives for people to invest in start-up companies and capital gains tax exemptions, what does Labor do? It increases capital gains tax on every asset by 50 per cent. It increases capital gains tax with the absolutely certain consequence that there will be less investment. There will be lower house prices, higher rents and less investment.

Dr Chalmers interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for Rankin is warned!

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

That can mean only one thing: fewer jobs, fewer businesses formed and less enterprise. That is Labor's recipe; it is a recipe for economic failure.

Honourable members interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

Members on both sides will cease interjecting, including the member for Deakin. The member for Rankin will leave under 94(a).

The m ember for Rankin then left the chamber .