Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by the Attorney-General (Senator Brandis) and the Minister for Finance (Senator Cormann) to questions without notice asked by Senators Gallagher and Ketter today relating to negative gearing.

I will start where the Prime Minister started back in September 2014, when he said:

It is clear enough that the Government is not successful in providing the economic leadership that we need. It is not the fault of individual ministers. Ultimately, the Prime Minister has not been capable of providing the economic leadership our nation needs.

Today—just under six months since that press conference, which led to the doing over of Prime Minister Abbott—the coalition party room got some advice from the former Prime Minister in which he challenged the current Prime Minister over his lack of economic leadership.

What we have seen over the past six months is a complete vacuum of ideas—there is a blank page of tax policy for the Prime Minister and for the government. It is in that context that all of the issues which the government is having both internally and more broadly lie. Today's questions on negative gearing policy goes to just one element of that tax discussion. We have already seen the GST tossed out as a good idea, as something that should be pursued and something that should be talked about, discussed and on the table. It was removed when cracks started emerging in the position the Liberal Party had. Today, again, and this follows the GST discussion, we have had speculation and some indication that the Prime Minister is examining negative gearing. I understand, from today's answers, he will not rule out retrospectivity. While Senator Brandis is saying here that it has always been our disposition to not apply retrospectivity on tax changes, and in the House I understand on multiple occasions in question time there has been a refusal to rule retrospectivity out.

There is confusion about what the government is doing in a whole range of tax areas but in relation to negative gearing I think there is obviously advice coming from internally and externally. We see reports that John Howard is now providing advice to Malcolm Turnbull on tax policy, we have the previous Prime Minister offering advice on tax policy and we have a group of backbenchers—including Senator Seselja, I presume—providing advice to the government on tax policy. I have seen comments from Senator Seselja on not wanting to see any changes to negative gearing. It is in this vacuum that we are getting inconsistency and no direction and no leadership from the Prime Minister, whose main argument to take the top position was failure of economic leadership. Six months on, numerous ideas have been tossed out. One by one they get ruled out or argued about internally and what we are left with just a few months from the budget being handed down is a complete policy vacuum. We have the embarrassing situation where the Treasurer turns up for his prebudget address to the National Press Club with nothing to say—it is unprecedented in my time watching politics that a Treasurer, the most senior minister responsible for the budget, turns up to a Press Club lunch so we can hear some ideas about what is feeding into the budget without having anything to say.

The contrast could not be more stark: we have the opposition filling that policy vacuum with a whole range of ideas—more than 50 policies that have already been released. We have revenue measures as part of that and ideas around education—a whole range of areas, more than 50 policies. Our negative gearing policy is one of those. We think it is a very good policy. If you ask first home buyers today whether they can afford to enter the housing market, most of them will tell you that they cannot. People younger than that are not even thinking they are ever going to own a home. Our policy has been well thought through and considered, and in this area the opposition is in stark contrast to the government, which has absolutely no ideas at all.

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

I am pleased to contribute to this debate on the motion that the Senate take note of answers given by Senator Cormann. Senator Gallagher did not mention it just now, but earlier today she said just how much Labor's negative gearing policy was going to whack Canberra. It is going to whack home owners right around the country. As Senator Gallagher acknowledged today, it is going to whack Canberra a lot more.

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

No I didn't. I did not.

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

It is worth getting the quote—

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

You have to tell the truth.

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

I will quote you—it provides a particular insight into how this is going to whack Canberrans and also it indicates Senator Gallagher's attitude to this. During a doorstop today she said:

Well, certainly, Canberra is one of those places where you see high levels of people utilising negative gearing. There is no secret about that. But, I don't think you can make policy, good policy that is good for the future of the country, determined by particular subpopulations or cities. You have to look across the board..

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

And?

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

'And'! Senator Gallaher says, 'Oh well, what about that?' The first thing is that you are a local representative and you are saying even if it is going to whack Canberra, even though we rely even more than the rest of the country on negative gearing, we cannot worry about particular cities—

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

Not what I said.

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

I am quoting directly—we can't worry about particular cities like Canberra, the place you represent—don't worry about them, don't worry about the fact that Canberra is going to get whacked even more than the rest of the country, don't worry about the fact that 13 per cent of Canberrans are investors but a whole lot more are homeowners and the very people who were forced to take out larger mortgages to get into the market as a result of Senator Gallagher's policies when she was Chief Minister are the very people who will be most affected by the Labor's negative gearing policy. They are the people who will be most affected because if you have gotten into the market in the last two years—let us say here in Canberra you have had to take out a $400,000 mortgage, or a $450,000 or a $500,000-plus mortgage—how are you going to feel about a policy from the Labor Party that is designed to drive the value of that purchase down, that is designed to probably put you into negative equity? That is the situation that many recent homebuyers in particular will find themselves in as a result of the policy proposed by Labor and supported by Senator Gallagher even though she knows it will hurt Canberra even more than the rest of the country. And it will not just hurt here in Canberra—it will hurt all around the country whether it is in Sydney or Melbourne or Brisbane.

Let us look at some of those capitals where people, in order to get into those markets, have taken out very significant mortgages in the belief that we would not have such a reckless policy from a major party as we have seen from the Labor Party, in the belief that the policy settings that existed would continue and that they could expect reasonable growth on their purchase. It is difficult getting into the market and it always has been, but the Labor Party's policy is not about fixing housing affordability—it is about whacking every homeowner. I say to the Senate that those who will be most impacted by the Labor Party's reckless negative gearing policy are recent purchasers—those families who are servicing large mortgages in the outer suburbs, often as a result of poor land release policies by local Labor governments.

Putting that aside for the moment, they have those mortgages and now the Labor Party are saying to them and to every other homeowner, 'We want the value of your property to go down.' How much will the value of those properties go down? We do not know. The Grattan Institute, who support the policy, say it is up to 10 per cent. That is their starting gambit. That is a quote from the Grattan Institute. They say it is up to 10 per cent, and that is around the nation. In places like Canberra, where there is a greater reliance on investors, it may well be much more than that. The fact is the Labor Party are so reckless that they have not even bothered to do any modelling, but we know this: if you take that many buyers out of the market, renters will suffer and everyone's home values will go down. This is the Labor Party policy. I repeat in closing that Senator Gallagher has revealed the greater than usual impact on Canberra and the fact that she simply does not care.

Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Senator Seselja's comments illustrate the degree of panic and political chaos which exist within this government. I want to particularly emphasise the response from the Minister for Finance today in relation to my question on the issue of negative gearing. We can see that this is a government which does not want to look at the reality of the situation. My first question to Senator Cormann referred to the comments by the Treasurer. One would have thought that the Minister for Finance would be on the same page as the Treasurer in relation to the implications of negative gearing, given that Labor has been courageous in putting forward a policy that is fully funded and costed. It is a policy that breaks the mould of oppositions by addressing issues of inequality as well as the question of budget repair. We have been on the front foot. One would have thought that the Treasurer and the Finance Minister would be on the same page on this, but what Senator Cormann said in relation to the Treasurer's comments was, 'You can't believe everything that you read in the newspaper.' So, in effect, he was denying that the Treasurer had in fact made those comments about excesses in negative gearing. Senator Wong offered to table the Hansard which showed Mr Morrison's comments—not in the newspaper but in parliament. On 10 February, during question time, he was asked a question by the member for McMahon. He said:

What the member opposite is really inquiring into is whether there is any potential for things to be done in relation to that measure that can deal with the excesses that might occur in negative gearing.

So it is quite clear that Mr Morrison has identified excesses. He has formed a conclusion about the fact that there is a potential for excesses in the existing negative-gearing policy, which many commentators believe is leading to a distortion in our taxation system.

Sensible commentators have referred to this fact. None other than the Reserve Bank of Australia has looked at this issue and, over the past 13 years or so, has been indicating that this is perhaps an area that the parliament needs to look at. No less than Mr Turnbull, then a backbencher, indicated in, I think, 2005 that Australia's negative-gearing regime was extremely generous. Most people concede that, around the world, our negative-gearing policy stands out as being an exception to the rule. We know that there are many other respected economists who applaud Labor's position in relation to this matter. We have put forward a thoughtful, considered policy initiative.

We know that the backbench on the other side are desperate because of the rudderless and leaderless position of their government in respect of economic matters. They are desperately looking for an opportunity and they see a political opportunity to differentiate themselves from the Labor position, so they are putting pressure on the government not to make changes to negative gearing, not for reasons as to the efficacy of negative gearing and not for reasons of fairness in our taxation system and what is right for the country. No. This is a poll-driven response and a short-term approach which is unbecoming. It is not the type of approach that one would expect from Mr Turnbull, who forswore using scare campaigns. He thought that his new brand of economic leadership was going to deliver a more enlightened approach in which ideas can be properly considered. That dream of an enlightened approach has been snuffed out in recent times. We have seen a panicked government. This is a government in total disarray.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Every serious commentator and analyst has confirmed that, were Labor's policy on negative gearing put into place, demand for established properties would fall by about one-third. Perhaps Labor senators are not aware—perhaps they have other investments—but for most Australians their biggest investment is in their home. The Labor policy would reduce the investment of every single homeowner around Australia, and I am quite sure that Labor has not modelled or thought this through properly. I would like to see the 'fully costed, fully funded' analysis that Senator Ketter talked about, but I am sure that any examination of that would show that it is a figment of Labor's imagination.

On tax reform, when we consider the current government against those unfortunate times when we have had Labor governments, the contrast could not be starker. Most Australians simply do not trust Labor with money and economic policy. I often relate this story because people tend to forget this: I was in this parliament when the Labor Party were in government, and, before an election which the Labor Party thought they would lose, they introduced legislation to cut income tax and it passed with the support of the then opposition because we are all about reducing income tax for ordinary Australians. But, no sooner did Labor unexpectedly win that next election, the first piece of legislation that the newly elected Labor government brought in abolished, abandoned, repealed that legislation that had provided for tax cuts. So why would any Australian ever trust anything the ALP said in relation to any form of tax reform or economic policy?

All Australians who are older than 20 would remember that the only tax cuts ever given by any government in recent history were those provided for by coalition governments, who introduced tax cuts in 1998, 2003, 2004, 2005, 2006 and 2007. What did you get from Labor, by contrast? You got a carbon tax, which Labor went to an election promising they would never introduce. Their first action when they got into power was to introduce a carbon tax, which put up the price of electricity and the general cost of living for ordinary Australians right around our country. Then they introduced a mining tax, remarkable only—being a typical Labor tax—that it cost a lot but raised absolutely no money.

If you look at the actions, the actual governance, of the Labor Party compared to those of the coalition over any period of time, you will understand that you simply cannot trust Labor with money, and this applies to their back-of-the-envelope proposal on negative gearing. I know that it was not well thought through. We all know that Senator Conroy devised his NBN program on the back of a beer coaster on a VIP flight somewhere over Australia. Perhaps the negative gearing policy was done by Mr Shorten, in desperation, in the same way as the NBN was—on the back of an envelope, without any serious understanding or thought about how it could impact on Australians. I say 'Australians' because most investors in negative gearing are ordinary people: policemen, nurses, firemen, tradesmen, civil servants and so on. These are the people that Labor are attacking in their approach to negative gearing. So I know that Australians will treat Labor as they always have: you can never trust Labor with money. (Time expired)

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The Prime Minister was asked yesterday if he had a recommendation for young people who could not afford to buy a home. His response had 351 words but not a single recommendation. This, of course, is just one recommendation less than Mr Hockey, who once unhelpfully suggested that young people should just get a better job—in an economy over which the coalition has presided which has the highest unemployment rate in years. This kind of response is typical of the government's approach to tax more generally, as evidenced in the answers provided to questions on notice today—lots of wasted words but no ideas.

It has become apparent that the Liberal Party have absolutely no idea what they stand for on tax. Is there a problem with negative gearing, and what would that problem be? The Treasurer believes that there are 'excesses' of negative gearing in the current system, yet Senator Back, our colleague in this place, this morning on ABC radio said:

I don't see any reason at all to change the negative gearing processes …

We heard from the Minister for Finance that the government continues to work on plans to make the tax system more growth friendly. It is absolutely extraordinary; he refused in this debate to allow Senator Wong to table the Hansard in which the minister in the House of Representatives referred to those excesses. It is bad enough that, as has become apparent, in this government the left hand does not know what the right hand is doing, but in this place we have now seen evidence that they do not want to know what the right hand is doing. They certainly do not want evidence of what is happening in the House of Representatives tabled in this place for the information of senators.

On another question, will reforming negative gearing affect housing prices? The Assistant Treasurer has said that it is:

… a policy that is going to increase the cost of housing for all Australians—for those people who currently own a home and for those people who would like to get into the housing market through their negative gearing policy.

In contrast, the Prime Minister says it would 'smash' the residential housing market. The Minister representing the Prime Minister said today:

… the value of most Australians' homes would collapse.

Where is the evidence for any of these competing assertions? There is absolutely none. We might have had some evidence or some analysis on the table to allow the Australian people to have a conversation about this, had we had a tax white paper, but the promised tax white paper has not eventuated, and there is absolutely nothing on the table that would allow the Australian people to assess the propositions which are so confusingly being debated by those opposite amongst themselves.

Is there any intention to reform capital gains tax? Back in 2005, the now Prime Minister said that the capital gains tax discount was fuelling an 'asset bubble in residential real estate'. In question time on Monday, he said:

… increasing capital gains tax is no part of our thinking whatsoever.

Today he said the comment only referred to the capital gains tax discount where it applies to individuals.

When the Liberals talked about having a national debate, it seems that they just meant having the Prime Minister and his inconsistent positions debate themselves, having the ministers debate themselves and having the backbench debate the frontbench. It seems that the government has completely abandoned the idea of a national conversation on taxation. I was surprised that Senator Brandis brought it up today, because I would have thought that he would have been too embarrassed to even raise this idea.

We are seeing anything but grown-up government. We are seeing anything but a serious policy conversation in which the Australian people could meaningfully participate. It seems that when the Prime Minister was talking about being agile he actually meant being really quick at avoiding any chance to make a decision on policy, and when he was talking about being disruptive he was actually talking about the coalition backbench.

The only party that is having a sensible, serious, mature policy conversation about taxation in this country is the Labor Party. Last year we outlined costed, detailed plans to reform taxation on superannuation. We outlined our plans on negative gearing and capital gains tax earlier this year. But this government, after 2½ years in office, with all the resources of the Treasury and with all the resources of the Department of the Prime Minister and Cabinet—with all the resources of the entire bureaucracy—cannot get a policy announced.

Question agreed to.