Scott Buchholz (Wright, Liberal Party) Share this | Hansard source

It is great to have the opportunity to speak on these very wide-ranging bills, the Appropriation Bill (No. 3) 2015-2016 and Appropriation Bill (No. 4) 2015-2016. These bills provide an opportunity for me to reflect on negative gearing and the very poorly constructed policies of those opposite announced a week ago.

As time goes on, the tremendous pitfalls involved in these policies are becoming clearer and clearer to the Australian people—predominantly, the pitfalls with the policies put forward by those on the other side. When you look at the investor and homeowner market, for all constructed properties roughly 90 per cent of the banks lend to existing homes and 10 per cent lend to new dwellings. Then when you look at another bar graph of the mix that banks lend to, 70 per cent are homeowners and 30 per cent are investors. As I speak to real estate agents in my area, the issue that they are flagging with me about current policy positions of those opposite in this place is: if this policy ever takes effect in the market, you will have a position where you have 30 per cent of the investors being driven into 10 per cent of the new homeowner market. If you encourage 30 per cent of the investors to continue to invest in property, but if they will only get the tax benefit if they invest in new property, ultimately you will have a demand-and-supply problem—an under-supply and an over-demand of people wanting to buy new property. In turn, through the laws of economics and demand and supply, this will put upward pressure on new properties. There is a certain degree of inevitability that goes with that economic logic—it will push up new prices.

As a result of the remainder of the existing homeowner market, what will happen is that Labor will be pinning its economic credibility in espousing that new homeowners, wanting to enter the market, will be advantaged or better off. It is the opposition's intent to dilute the very property value that exists in a second-hand market by taking that 30 per cent out of the market that, traditionally, would have invested in it. So when you go to an election, make sure you campaign honestly and economically correctly in that your policy is built on the premise that, for most Australian homeowners existing in the market, you are diluting their single biggest asset—their home. It is unsustainable. On this side of the House, we oppose those measures. But I want to take the opportunity to thank the opposition for at least bringing a policy position to the table. That is what we are about on this side of the House. We are about engaging with the Australian public on having an adult, rational, intelligent debate in and around tax policy. I commend the Labor Party for bringing a position to the table, irrespective of the potential failings in that policy.

I want to also remind the Australian public of some of the other ill-thought-out policies that were rushed into this place—and, on occasions, that did not even come into this place—by those on the other side. I want to let history speak for itself. A policy decision the Labor government introduced had enormous ramifications throughout my electorate. I have three major selling yards in my electorate of Wright. I have the Beaudesert cattle yards. I have Moreton just on the border. I have Kalbar and, of course, the Silverdale saleyards. The instant effect of the poorly thought-out policy of shutting down the live cattle export trade overnight had immediate ramifications through my electorate. This policy position, with its ill-thought-out and ill-conceived genesis is not that dissimilar to the policy position that we have on the table at the moment. The pink batts scheme was conceived on the back of a drink coaster by a Prime Minister on route to a particular locality. Again, an ill-thought-out policy position which cost an enormous amount of Australians—hundreds of Australians—their homes, as they were, unfortunately and tragically, burnt to the ground. Losing one is enough. Regretfully, we had a loss of life in the rollout of that program. A percentage of money was spent on the program. The remainder of the funds was actually spent pulling the pink batts out. It was a policy failure it its absolute. Of course, then, I speak nothing other than the over-costed runs on our school halls scheme.

But it is important to start out by being very clear about what negative gearing is. Negative gearing is a very simple and basic concept. Just as businesses have a cost of doing business and are able to deduct those costs in calculating their profitability, people who invest in property can deduct their interest from their investment. You can deduct the cost of renovations, maintenance or whatever it may be on the investment property. You can also deduct the cost of interest. That makes sense because interest is a cost just as maintenance and renovations are costs. I think the average Australian business would find it novel in the extreme if they were told that there was some threat to their ability to claim interest as a cost of doing business. Equally, interest clearly is a cost for people who invest in property. It applies to investments in pretty much all investment classes. It is not just a special thing for investment property. If you borrow money to leverage into a share portfolio, interest will be your main cost.

Then we get to the question of what the Labor Party wants to do to negative gearing as it pertains to the property market. To paraphrase their policies as I understand them, it is to say that to extend to someone who wants to claim interest—negative gearing as it is known—on an investment property would only apply if there was a brand-new property. It would not be possible to negatively gear existing home loans, along with changes to the rate of capital gains tax that people would be required to pay. Therefore, for roughly nine million homes in Australia it would not be possible to negatively gear once Labor policy came into effect for any new investments past 2017.

For every single existing home in Australia, obviously investors are a very significant part of the market at the moment. As I suggested, they are just over 30 per cent. In the future none of the new investments in existing homes after 2017 will be able to make use of negative gearing. It is very difficult to see why investors are going to continue to invest in an asset class when they have just had the economic rug pulled out from underneath them in that they can no longer negatively gear on those properties.

Research suggests that somewhere around 30 to 33 per cent of investments in the existing property market is from investors, so it is significant. It is not just something that is conducted by excessively wealthy investors; it is a very widespread practice in Australia, and something around a third of existing homes are affected by this issue. The more fundamental issue is not just the impact upon someone who happened to have negatively geared but what happens to the prices for the nine million existing homes.

Negative gearing is primarily used by middle Australia. Labor is just playing economic envy. There are 10 times more negative gearers who are nurses, teachers or emergency service workers than those who are surgeons, anaesthetists of finance managers—more than 100,000 claimants compared with fewer than 10,000. According to the ATO, the greatest total loss of negative gearing over $1,200 in net rental loss is claimed by teachers, nurse, emergency service workers and clerks, compared with just $155 million claimed by surgeons anaesthetists and finance managers combined. In the short term, as I mentioned earlier, this will push up new home prices when supply cannot be quickly extended to meet the new demand.

This government will not implement anything as rushed, distorted and potentially disruptive as those on the other side. This government is focused on growth, jobs, innovation and improving the nation's infrastructure. This government recognises the economic transition well out of the mining boom with the introduction of there on 300,000 jobs to the economy just last year. The annual jobs growth rate is 2.6 per cent, well above the decade average of 1.8. Recently we had our finance ministers meet at the G20. Australia is the envy of the world with 25 consecutive quarters of growth, and we are transitioning well with a focus on jobs and a focus on a very solid plan. Every lever of our economic policy is directed at building on this strong performance. I suppose that is why people rate the performance of the current Prime Minister well against an alternative, Labor-led economy.

Recently there was a Newspoll on the front page of The Australian. An overwhelming 58 to 22 per cent of the Australian public supported the coalition's strong plan on managing the economy. That is why we have opened up overseas markets by signing historic free trade agreements with Japan and Korea as well as the multinational Trans-Pacific Partnership deal and why we are working currently with China and Indonesia. Three of the world's most influential economies are right on our doorstep, and we need to make sure we build those relationships with our economies. I am starting to see the benefit of those flow through to our saleyards, as I alluded to earlier, with the extra demand in the live cattle export trade being taken up, giving potential buyers the opportunity, if unhappy when faced with prices at the saleyards, to head back home, load their cattle into a boat and send it to another market. It is that flexibility in the marketplace that allows for the elasticity and upward trend of prices. We are experiencing prices in our markets that we have not seen for many years. I would even say that the current cattle prices are as strong as they have ever been. Of course, there are other significant issues—for example, our current exchange rate—which have an impact on that as well. Just over 70c provides that market incentive in the free trade market.

This government is investing more than $50 billion in infrastructure. In my electorate alone we have several large-scale projects going ahead, which means a great deal for my constituency base. This includes Bromelton international rail precinct, with just on $10 million of investment from the federal government, partnering with the private sector's $30 million. It will in the long term bring 1,500 jobs to the local economy of Beaudesert. The Toowoomba Second Range Crossing has over $1 billion worth of funding, an 80 per cent contribution from the federal government and a 20 per cent partnership from the state. I welcome it. The project will provide and drive economic growth as our transport corridors become more economically enhanced, removing up to 24 sets of stop lights and improving the travel time for cargo transport operators up to half an hour as they make their journeys.

I would also like to acknowledge the government's plan and its ongoing commitment to the national bridge program. Within my electorate I have four shire councils which are wholly engulfed in my electorate boundaries of Wright. The 'scenic rim' has no less than 132 timber bridges that need repair or maintenance in my electorate. Our national bridges program is an incredible investment in the future and will help shires partner with federal government.

Regarding the environment, this government has reinstated the Green Army project, which has been a resounding success in my electorate, with over 20 projects.

I would like to also quickly touch on the NBN rollout. Under Labor, in my electorate I was not going to see one piece of fibre in my electorate for another eight years. We are currently now well and truly in front of Labor's forecast of when telecommunications was going to be rolled out in my electorate, and without a doubt it is the single biggest issue that unites my electorate.

We have a plan for the future. It is an economy which is transitioning from the mining boom. We have an interest in addressing bracket creep and paying down debt. I commend this bill to the House.

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