Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise on the issue of housing affordability. We do have a problem with housing affordability in this country, especially in our major cities. But a bigger problem than housing affordability would be a housing price crash, and that is what I am very concerned about for the people of my electorate, from the policies of the Labor government and the threat that they would pose to their housing prices.

The Labor Party's policies of removing the ability of people to negatively gear, and also reducing the so-called 50 per cent capital gains tax discount to 25 per cent, would absolutely smash property prices and destroy the wealth of many of my constituents. Take what a 10 per cent reduction in property prices could do. Someone in my electorate might have a mortgage which equates to 60 per cent of the value of the house. Their equity is 40 per cent. A 10 per cent reduction in the price of their property results in a 25 per cent destruction of their wealth. A quarter of their wealth could be destroyed overnight by the policies of the Labor Party.

What is truly frightening is the economic illiteracy of senior members of the Labor Party. We heard the alternative prime minister, the Leader of the Opposition, get up and talk about the so-called 50 per cent discount on capital gains tax as somehow being a subsidy. This just shows how wrong they could be. It is not a subsidy. If we go back to 1999, the previous way capital gains tax was calculated was that an allowance was made for inflation in the value of the asset. That is quite sensible, because there is no capital gain unless there has been a gain over and above the rate of inflation. We know since the year 2000 that inflation has been about 55 per cent until today. An asset that was worth $1 million, if it has increased to $1.55 million, all it has done is maintain its value with inflation. There has been no capital gain. But under the current system, you pay your tax on that, and you pay it at your full rate with a 50 per cent discount. The reason we do that is to allow what is a fair discount for the inflationary effects of that asset. The 50 per cent is not a subsidy, and reducing it to 25 per cent will smash property values and destroy the value of the housing of my constituents in southern Sydney.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

In accordance with standing order 193 the time for constituency statements has concluded.