Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is to the Prime Minister. Prime Minister, why is halving the general capital gains tax discount a terrible thing but halving the capital gains tax discount for millions of superannuation accounts a good idea?

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

I thank the honourable member for his question. I refer him to the answers I gave yesterday, to which he responded with a further question, about the impact of halving the capital gains tax discount for individuals.

As we know, that would mean that an individual who was paying capital gains tax at the top marginal rate—and that may not be someone who is habitually in the top marginal rate, but because the gain is large enough to push them there for the purpose of the gain they may very well be paying it even though their normal income is lower than that—would have that tax rate pushed up to 37 per cent.

Now, I ask the honourable member to reflect on this: the increase in property prices—

Jenny Macklin (Jagajaga, Australian Labor Party, Shadow Minister for Families and Payments) Share this | Link to this | Hansard source

He asked you!

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

The member for Jagajaga is warned!

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

has been in the order, over the whole decade, of about seven per cent. Of course, it has gone up—there were big years like last year and there will be flatter years; I will come to those in a minute. But what that would mean is that a person who had an asset that had grown at six or seven per cent over a period of years—five, six, seven, eight, nine or 10 years—under the Labor Party's proposal would be paying a substantial amount of tax on the real gain. I gave the example yesterday of somebody who had held an asset for six—

Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order—on direct relevance. The Prime Minister cannot be directly relevant unless he justifies—

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

There is no point of order. The member for McMahon will resume his seat—his microphone is off!

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

The previous Labor Party policy on capital gains tax which, of course, was introduced by Paul Keating, was to index capital gains for inflation so that the real gain—the real after-inflation gain—was always taxed at the marginal rate. What Labor is proposing here is a radical change that will provide an extraordinary disincentive to investment. We know that they have a fixation on property and that they want to drive down property prices—we understand that. But what they are proposing would apply to every asset: a new farming enterprise, a new technology enterprise, a cafe or a business—anything you like would be smashed by this dramatically-highest-in-the-comparable-world capital gains tax.

Ms Owens interjecting—

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

The member for Kingsford Smith will cease interjecting!

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

I just want to leave honourable members with this reflection: in this very vulnerable property market, where prices are forecast in some cities to decline and in others to increase by maybe one or two per cent, in that moment they are proposing the biggest shock to the most important asset for all Australian families.

Mr Mitchell interjecting—

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

I thank the member for McEwen for pointing out that it was not the member for Kingsford Smith, it was the member for Parramatta. So the member for Parramatta is warned.