Senate debates
Tuesday, 23 February 2016
Questions without Notice
Taxation
2:09 pm
Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source
My question is to the Minister representing the Treasurer, Senator Cormann. Is increasing capital gains tax part of the Treasurer's thinking?
2:10 pm
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
What is part of the Treasurer's thinking and what is part of the government's thinking is, every single day, how we can strengthen growth, create more jobs and improve our tax system to make it more growth friendly, more efficient and less distorting in the economy, and how we can facilitate stronger growth and do it in a way that is fair.
Unlike the Labor Party, which came up with a massive tax hit on an important industry for Australia, which did not raise any money, when they had already spent all the money they thought it would raise and more, this government actually goes through an orderly policy-development process, and we make our announcements when they are ready to be made. The Australian people will know in good time before the next election—
Stephen Parry (President) Share this | Link to this | Hansard source
Order! Pause the clock. Order on my left!
Opposition senators interjecting—
On my left!
Claire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | Link to this | Hansard source
Mr President, I raise a point of order on direct relevance. The particular question was about increased capital gains tax 'in the Treasurer's thinking'. So far we have not got to that term. We have gone to some general area but we have not had anything about increased capital gains tax.
Opposition senators interjecting—
Stephen Parry (President) Share this | Link to this | Hansard source
Order on my left! I believe the minister has been relevant to the question. It was related broadly to: 'Is it within the Treasurer's thinking?'—even though I think it is difficult for the minister to answer what is in the Treasurer's thinking. So the minister is in order.
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
As much as I am tempted to provide a running commentary, I will not. What the government is focused on is reforms to strengthen growth and create more jobs to ensure people across Australia have the best possible opportunity to get ahead. That is why in last year's budget we delivered tax cuts for small business. That is why we got rid of Labor's disastrous mining tax and Labor's disastrous carbon tax, which made us less competitive internationally, cost jobs and reduced the level of investment into very important industries here in Australia. That is why we are looking right across the whole tax system for opportunities to make the tax system more growth friendly into the future.
That, of course, is only one part of our comprehensive plan for stronger growth and more jobs, which also includes an ambitious free trade agenda, an ambitious deregulation agenda, an ambitious innovation agenda, an ambitious infrastructure investment program—all efforts of the government to strengthen growth and create better opportunities for people across Australia to get ahead.
2:13 pm
Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source
Mr President, I ask a supplementary question. Is a change in negative gearing concessions part of the Treasurer's thinking?
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
I think I have explained what the Treasurer's thinking is, in some detail, in answer to the first question. The Treasurer's thinking and the Treasurer's focus is on how we can best strengthen growth to create more jobs and create better opportunities for people across Australia to get ahead.
As part of our overall plan for stronger growth and more jobs, on top of what we are doing in terms of helping Australian businesses get better access to new markets overseas and on top of what we are doing in the infrastructure space and on top of what we are doing in terms of deregulation to reduce the cost of doing business in Australia, we are also continuing to look at how our tax system can be improved.
In last year's budget we reduced taxes for small business to help them be more successful in the future and to help them employ more Australians. In this year's budget there will be a series of initiatives and measures on the revenue and on the spending side of the budget to strengthen growth, create better opportunities and deliver them in a way that is affordable. (Time expired)
2:14 pm
Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source
Mr President, I ask a further supplementary question. Does the Minister for Finance have a role in the government's economic strategy, or does he just get wheeled out to clean up after the Prime Minister?
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
That is clearly not a serious question so I won't even treat it with any seriousness whatsoever.
2:15 pm
Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source
My question is to the Minister for Finance, representing whoever is in charge of developing the coalition's tax policies today. Minister, there are 44,000 young people and children who are homeless in this country today. Last night it was reported that there are children as young as two weeks old sleeping rough on Perth's city streets and there are more than 200,000 people on the social housing waiting list. An entire generation has been priced out of housing affordability. Last year the Parliamentary Budget Office estimated that the combined loss of revenue from negative gearing and capital gains tax exemptions over the forward estimates was more than $22 billion. How does the government justify leaving these massive incentives for property speculation in place when housing affordability is at such crisis levels for so many Australians?
2:16 pm
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
I thank Senator Ludlam for that question. The Australian government wants every Australian to have the best possible opportunity to get ahead, and that is of course why we are working so hard to strengthen growth, to create more jobs and to create the best possible opportunity for every single Australian to get ahead. When it comes to housing affordability that is a very important issue, and of course we want all young Australians to be able to afford their own home—of course we do. The way to ensure housing affordability at a time when prices go up because there is stronger demand than supply in the market is by increasing the level of supply. And there are a whole range of things that will need to be done in relation to this, and the Commonwealth and state and territory governments are focused on these areas of public policy.
To suggest, as Senator Ludlam seems to be suggesting, that the sort of approach that Labor is proposing would be the way to address it is entirely false. We reject that. To make the sort of change to negative gearing so called that Labor is suggesting would push up the cost of rental accommodation, it would push up the cost of rentals, and it would drive down property values in the established property market and it would drive down property values across the board, and that is not a policy that we support.
The Greens are quite entitled as part of their longstanding coalition with Labor to pursue increased taxes on middle-income earners across Australia—on the police officers, nurses and teachers that are taking advantage of the opportunity to invest in residential property and to deduct the cost incurred in generating income from that investment from that income before it is taxed. That is the way the system currently works. If Labor and the Greens want to go to the Australian people in their usual coalition and sell that sort of policy, good luck to you.
2:18 pm
Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source
Mr President, I ask a supplementary question. According to Moody's ratings agency and respected economists such as Saul Eslake, estimates are in the public domain that negative gearing adds nine per cent or around $44,000 to the price of a home. Could you explain, as finance minister, how it is economically or socially defensible to leave negative gearing and capital gains tax exemptions in place when it is so well understood that these huge taxpayer funded incentives for property speculation are artificially inflating home prices?
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
I do not accept the premise of the question that Senator Ludlam puts there. What is colloquially described as negative gearing is a very simple and very important principle in our tax system, and that is when you generate an income you are able to deduct the costs in generating that income from that gross income in order to determine your taxable income.
Senator Wong interjecting—
I can see that Senator Wong, who, instead of focusing on cutting expenditure and controlling expenditure, is always looking for an opportunity to increase taxes on middle-income Australians.
Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source
You're spending more than I ever did!
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
I can see that she is in there, right on cue, wanting to support the Greens—
Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source
Mr President, I rise on a point of order in relation to relevance. The minister has not answered the question. He is talking about Senator Wong. He has not come anywhere near answering the question. I ask you to direct him to please answer the question.
Stephen Parry (President) Share this | Link to this | Hansard source
Thank you, Senator Whish-Wilson. The minister did say he rejected the premise of the question upfront and did address some of the elements of the question. Minister.
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
Thank you very much, Mr President. Obviously, if tax arrangements were changed in the way that Senator Ludlam seems to be suggesting, it would make investment in private rental accommodation less attractive. It would reduce the supply of private rental accommodation. It would increase the cost of private rental accommodation along the way, and that is not something that we consider to be in the public interest.
2:20 pm
Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source
Mr President, I ask a further supplementary question. This is extremely instructive. Does the minister propose to engage in a rational and fact based way with proposals to transfer the huge taxpayer funded incentives for property speculation into genuinely affordable housing supply, whether it be emergency accommodation for the homeless, a rebooted rental affordability scheme, a housing supply bonds issue or direct investment in the community and public housing sectors? Do you intend to bring any such policies to the public debate, or will you continue to leave it up to the Greens? (Time expired)
2:21 pm
Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source
Senator Ludlam is entitled to his opinions. Opinions are not fact. Obviously, all of us in the lead-up to the next election will be putting forward our respective policies, and it will be a matter for the Australian people to determine which policies they support.