Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

Housing is central to the Australian economy for a whole range of historical reasons, so today's BIS Shrapnel report on Labor's negative gearing policy and economic data released today bring this to a point. Australia is now one of the fastest-growing economies in the OECD—almost as fast as South Korea, and almost twice as fast as Canada, the other great resource economy of comparable size. This shows that Australia, post GFC, is keeping unemployment down, the way very few other economies are managing to do, and driving consumption, public spending and home-building in particular, keeping our economy moving, particularly in the southern states where we have seen 4.6 per cent growth year-on-year. Of course, what is most impressive is that, in the first quarter of the Turnbull government, we have had 0.6 per cent GDP growth, taking our economy now to over $1.6 trillion. That really does show that Australia is right on track.

Obviously we have low interest rates. The low Australian dollar is starting to yield dividends. Plus there is a wealth effect as Australians become a little more confident to loosen the purse strings and reduce some of their savings rates as they start to have a little more confidence to spend—and that is despite low wage growth, which is obviously a problem right across the developed world.

But that does bring me to this point: what are the potential threats to that trajectory? And, hey, it is always easier when you are sitting in opposition and not releasing policies—and I have said a number of times: 'Congratulations to Bill Shorten for releasing a policy.' But right now he must feel very much like Donald Trump without any cash, because here we have a situation where he has finally come out with a policy that everyone is listening to, but increasingly we are seeing that there are a lot of rough edges and barnacles on that policy. That is because there are really no easy answers in tax reform. I do really sense that it was rushed by Bill Shorten when he saw, two weeks ago, a political opportunity to come out with a big, bold policy. But there are so few in tax, and it is very wise to be very cautious.

As BIS Shrapnel has emphasised overnight, renters, low-income households and young people are most at risk from changes to negative gearing.

Opposition Member:

An opposition member interjecting—

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

I know this does evoke some emotion from the other side, but look: you cannot simply rule out 90 per cent of sales from the negative gearing option and force 40 per cent of your investors into the remaining 10 per cent: new properties. It will cause extraordinary distortions, whether a bubble in the apartment market, or a drying up of rental opportunities; it is very hard to model the first-round and second-round effects. The first-round effects are that investors go and chase where they can get a reasonable deduction—that is, new properties. But do councils release land for new properties? Potentially, no faster than they currently do. Then you have the second-round effect that people know that it is just like the car that you drive out of the car yard: the minute the keys go in the ignition the value falls. Here the value falls because you know the next person will not get the negative gearing benefit from it.

I urge the Labor Party one more time: you are in a world of pain; this will hang around your neck at the next election; please reconsider your policy for negative gearing, because right now, around this nation, you are walking around with a massive target on your back.