Kate Ellis (Adelaide, Australian Labor Party, Shadow Minister for Education) Share this | Link to this | Hansard source

My question is to the Prime Minister. Are the reports accurate that the Prime Minister is preparing to walk away from changes to negative gearing because he has been backed into a corner by a full-frontal assault from the former Prime Minister and the backbench? Isn't it the case that, by rejecting Labor's housing affordability plan, the Prime Minister is choosing to protect $32 billion of tax loopholes at the same time he is cutting $30 billion from our schools?

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

I do thank the member for Adelaide for her question, touching as it does on the Labor Party's negative-gearing policy—or, as she described it and as it is headlined, its plan to help housing affordability. It is perfectly clear that the consequence of the Labor Party's policy will be to reduce the supply of rental housing, to increase rents and to reduce the value of the family home. It constitutes a massive shock to the housing market.

But it goes much further than that. I suspect that at least some honourable members opposite were not aware of how radical this policy is. The policy document is headed 'housing affordability', but in fact what it does is it removes the right to offset the losses from any investment against wages or salary—personal income—unless that investment is a piece of new residential housing. It expressly prohibits negatively gearing investments in shares and other assets, as the shadow Treasurer said this morning.

What this would mean, as I said earlier, in this extraordinary assault on business and especially small business is that, if people clubbed together in a partnership and bought a truck and it operated at a loss, they could not offset that against their wages. If some people set up a business and borrowed money to buy the shares in the company to capitalise the company, they could not offset any losses against their income. What this constitutes is a full-frontal assault on business in Australia It seeks to restrict citizens' ability to invest not just in established residential property but in every single asset class other than new residential property. The scale of this disruption is enormous. It goes well beyond property. It is no surprise that honourable members and, I suspect, the public assumed that this only related to housing because it was expressed in a document headed 'housing affordability'. This is an assault on private enterprise, it is an assault on economic freedom and, when the Labor Party talks about modelling and criticising modelling that was done before their policy was released, the real question is: why haven't they modelled their policy? Where is their modelling? Where is their assurance? (Time expired)