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

My question is to the Prime Minister. I refer to the Prime Minister's claim that all investors would leave the property market under Labor's negative gearing reforms. What is the Prime Minister's response to Treasury evidence before a parliamentary committee in relation to negative gearing? I quote:

I do not see investor behaviour as being solely driven by tax treatment … it is just one factor inside all of the decision-making processes.

Mr Dutton interjecting—

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

The Minister for Immigration will cease interjecting.

Mr Albanese interjecting—

The member for Grayndler will not begin interjecting.

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

I thank the honourable member for his question. It is another opportunity to examine Labor's very ill thought out and dangerous policy on negative gearing. This is a very important point to understand—

Mr Bowen interjecting—

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

The member for McMahon will not interject.

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

The Labor Party's policy would preclude or prevent a taxpayer from deducting from their wage, salary and, I assume, although the document does not say so, professional income—the personal income, you might say—any net rental losses; that is to say, any losses on a rental property. Those losses are very often—perhaps most often—the result of the interest expense being higher than the rent. But, of course, in some cases the loan has been paid down, the rent has grown or it was not highly geared to begin with, and the property is returning a profit.

However, things do go wrong. Sometimes tenants leave. Sometimes buildings are damaged and repairs have to be made. Sometimes tenants go broke or abscond and it is hard to get a new one. What the Labor Party's policy means is that even an investor who had no gearing at all, who is debt free, if they suffered a net rental loss—that is to say, their outgoings on the property such as rates, repairs and utilities were greater than the rent—would not be able to offset that loss against their personal income. That would mean that any investor in a property runs the risk that they would not be able to offset any loss on that property at all, ever, against their personal income. That is a massive disincentive. It goes far further than discouraging people from borrowing lots of money to buy investment properties, even though, obviously, the vast bulk of them are leveraged.

So again, just as I was able to show the House in the earlier answer, this is an example of Labor not thinking it through. You have a policy which is calculated to discourage investment in residential property. The only investors in residential property who can offset their net rental losses are those wealthy Australians who have substantial investment income. These are apparently the beneficiaries of the shadow minister's economic policy. How confused has the Labor Party become!