David Coleman (Banks, Liberal Party) Share this | Hansard source

It is really good to get a chance to talk about economic leadership on the part of the government and the extraordinary lack thereof from those opposite. I think nowhere is this more clear than in the area of taxation and tax policy, because tax is one of the biggest levers, if not the biggest lever, that government possesses. If you look at this government's record, you see a very consistent approach on taxation, which is about lower and fairer taxation. Just very recently—just before Christmas—back at the innovation statement on 2 December, the government said that if you invest in a start-up business, if you back a start-up business and you help it get off the ground, if that business is successful and you make a profit, you will not pay capital gains tax in the future.

That is a great policy, because what that means is that these businesses will be able to raise funds with greater confidence and investors will know that, if the investment works out, their return will be greater. What does that mean? That means more money into start-up businesses. That is a very good example of sensible tax policy. We did something very similar in relation to a tax rebate of 20 per cent on people's income tax returns, effectively, for those investments in start-up businesses. This is new government policy just before Christmas and it demonstrates the clear philosophy of this government when it comes to tax—as indeed does our earlier abolition of those very bad and little lamented carbon and mining taxes.

What about those opposite? We have heard a little bit more from them in recent weeks. They describe it as—capital R, inverted commas—'Reform', but what we have seen from those opposite in the last couple of weeks is two additional tax increases. These ones are going to have a very, very severe effect on the wealth of Australian households and on the broader Australian economy. Let us talk about the negative gearing proposal from those opposite. The key point here is that they say that investors will only be able to claim interest as a tax deduction if they invest in new homes, not in existing homes. Every single home in Australia today, by definition, is an existing home. It cannot be new if it exists, right? So every single one of the homes in Australia, which is about nine million, give or take, is an existing home. Under Labor's policy—in the unfortunate event that they are elected—once it comes in, from the middle of next year, investors will not be able to claim an interest deduction on any new investment in any existing home anywhere in Australia. And we know from ABS data that about one-third of owners of Australian residential property are investors as opposed to owner-occupiers.

The proposition from those opposite is that you can take this fundamental principle of tax law, which is that you can claim interest as a tax deduction, and take it out of the system completely—with the obvious consequence that investors will leave that sector—and it will have no impact on prices. That is just an absurd proposition. Just think about that. The notion that you can just take a third of the potential buyers for an asset out of the market and say that everything will just go on fine and the prices will stay the same and continue to rise as they would have—that is just absurd. Imagine if that were asserted in any other sector of the economy. Imagine if someone said to car dealers, 'We're going to take a third of the people out of the car yards, but it won't have any impact on your ability to sell cars.' It would be an extraordinary proposition. This is just an extraordinarily badly thought-through policy. This is something that came out of a Labor aligned think tank. This is one of those things that might be fun to kick around in a think tank, but that is where it should have stayed, because this is a very, very bad policy for ordinary Australian families.

The other thing they do is they say, 'Let's put capital gains tax up, effectively by 50 per cent.' They reduce the reduction from 50 per cent to 25 per cent. Let us say your marginal tax rate is 48 per cent. You would have paid 24c before. Now you will pay circa 36c, give or take, with the Medicare levy. That means your capital gains tax goes up by half. That is going to hurt investment in business, in agriculture, in housing, in all sorts of sectors. It is entirely counterproductive. It shows a distinct lack of understanding of how real-world economics works. It is to the eternal discredit of those opposite and it is a reminder of why they must never be elected. (Time expired)

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