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

My question is to the Prime Minister. Yesterday, when speaking about Labor's negative gearing reforms, the Prime Minister claimed:

They are proposing to remove … from the market for established dwellings one third of demand. All investors would be gone.

Is the Prime Minister aware that in the United States, where negative gearing is not allowed, more than 30 per cent of the housing stock is owned by investors?

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

I am indebted to the honourable member for raising the matter of his policy because there are some issues associated with it that I will raise that he may be able to clarify for us. The Labor Party's policy proposes to eliminate the ability to deduct or offset any net rental losses against wage or salary income. The honourable member might clarify this: I assume he includes professional income because otherwise it would mean, for example, that someone who was working, an employee of a company, would not be able to offset a net rental loss but perhaps a barrister who had a large professional income—

Mr Husic interjecting—

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

The member for Chifley is warned.

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

as some honourable members have had in the past—would be able to offset it.

Mr Husic interjecting—

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

The member for Chifley will leave the chamber under 94(a).

The member for Chifley then left the chamber.

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

So the member for McMahon can clarify that point. I assume that he means all personal or professional income. But what he has unquestionably allowed net rental losses to be offset against is of course other investment income. Now from a champion of Australians—unionists and workers—

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

Mr Speaker, I rise on a point of order: direct relevance. The Prime Minister was asked if he was aware of evidence—

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

There is no point of order. The member will resume his seat.

Mr Bowen interjecting—

The member for McMahon will not stay at the dispatch box and bellow across the chamber when I have asked him to resume his seat. The Prime Minister is in order. There is no possible way he is not being relevant to the question that was asked.

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

Under the shadow minister's policy, somebody on a wage of a quarter of million dollars who had net rental losses of $50,000 but also had $50,000 worth of, for example, unfranked share dividends, could offset that net rental loss against his or her share income, against their investment income. They would be able to do that. But a middle-income family with a net rental loss of only $10,000 would not be able to deduct those losses against an income of $90,000 in salary and wages. So that is Labor.

What the Labor Party's policy is designed to do is to allow negative gearing to be available to that very small number of Australians who have substantial investment income, very wealthy Australians. They will be able to use negative gearing but people on wages and salaries and middle incomes will be excluded. It may be that was their intention. It may be that they were setting out to disadvantage the very people they claim to represent or it may be that, as is always the case, they did not think this through. They did not understand the consequences of what they were proposing. As their policy is examined, pieces start to fall off and it underlines the fact you cannot trust Labor with the economy.